Stress Testing and Scenario Analysis

Stress testing and Scenario Analysis

This will not only allow you to consider the opportunities, but more importantly manage risk and continuity planning in your business, providing a better position to navigate the uncertainty during this virus outbreak.

In the same way that many businesses stockpiled raw materials in the run up to Brexit, consumers are now doing the same, yet we believe that this is again unnecessary.

Supermarkets have some of the strongest supply chains in the business world. They have teams of staff planning for eventualities of short stock, supplier problems, changing consumer preferences, extreme weather conditions, and health scares.

So, have you performed any scenario analysis or stress tests on your business?

How confidently can you answer the following statements?

• My business will still have positive cash flow despite a three-month period of 20% lower sales;
• I can still service my customers with a 25% reduction in my workforce;
• I have performed scenario analysis on a disruption to my supply chain;
• We have the ability to support our staff base working remotely undisrupted.

Similarly, to Brexit, some sectors will be hit harder by Covid-19, but it is becoming apparent that no business will be immune to its impact.

It is not too late to plan, consider, document, and challenge how your business will survive uncertainty whilst responding to significant events, through a business continuity plan or other means.

The plans you put in place now will invariably help your business operate regardless of what happens in the coming months.

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