Scenarios, Contingency Planning, & Simulation to Achieve Your Goals & Strategy
Monday, December 18, 2017
The world is changing very rapidly. Planning and budgeting for either one expected outcome or the sum of the probabilities of several outcomes, no longer makes sense. Accountants must help their organizations and their clients think about several scenarios. It is more important to be prepared to adapt to different scenarios than to try and pick out one scenario. Contingency Planning usually deals with one issue rather than a variety of potential outcomes, and it is extremely important to deal with that issue because that one issue can have a material impact on your organization. We will also discuss “Simulations” which involves specialized software for complex issues like designing a new factory or evaluating oil deposits thousands of feet underground. Simulations also occur when accountants have to do forecasts for mergers, estimated taxes, quarterly and annual estimates, etc.
*Be able to sell executives on why creating a single plan for a whole year is not practical in a fast changing world
*Understand that accountants are frequently creating financial simulations
*Understand difference between contingency planning simulations and scenarios and where they overlap
*Understand why organizations need to create several scenarios of potential future outcomes
*Understand components of scenarios and how to make them simple or complex depending on the organization and the scenario