Using scenarios to stress test your business


Transcript from the video

Today, I’d like to talk about how using scenarios can be helpful to stress test your business in different circumstances and help alleviate some of the anxiety associated with extreme uncertainty. Right now is a particularly interesting time as the uncertainty we face will unfold over weeks and months not years.

It’s important to try a new scenario planning to help gain some insight into your future and incorporate some potential outcomes into your business plans that are operational today. Scenarios just stories they tend to represent a slightly extreme but still plausible future that can be really useful tools to help
in assessing current business capabilities.
And if you can spot trigger points in the future such as a change in regulation that can really help you plan for today.

The way to use scenarios is to create different scenarios and assess what makes your business successful today against requirements of that scenario in the future. To be clear you are not being asked to bet on one scenario, you’re using these scenarios not to predict the future but to plan for different futures,
so that as they arrived your best prepared and you’ll be in your already had time to consider some of the uncomfortable choices that they present.
I’m going to outline one possible scenario, which I believe the economy may play out over the next year.
For instance, over the summer, the public starts to demand a relaxation of the restrictions that are in
place pent-up demand fuels rapid recovery as infection rates drop and household starts to travel
more and increase their discretionary spending. Businesses continue to open but with a new health
and safety guidelines customer footfall is down by 50%. The government have taken a stance that working restrictions will not be relaxed until the vaccine is developed.
An air bridge is established between the UK and the EU and quarantine is dropped.

The furlough scheme has reduced along with a government-backed loans as the banking sector comes more active.

By winter their relatively low levels of infection and vaccine manufacturers taking place at several global locations, including the UK, all schools universities return to normal for the next academic year.
And by the end of the year vaccination is in full swing. Large public events are allowed to continue such as football but under strict crowd control and the number of people vaccinated against covid-19 potentially hit 15 million with each person vaccinated receiving a certificate.
Only certified people can return to work. Brexit we’ve forgotten about that but Brexit negotiations reached fever pitch as a government aims to achieve the next stage of separation from the EU. The bank of England reports mild economic recovery in quarter 3 of 2020 after the worst two courses ever
and international travel starts opening up between the UK and the rest of the world.
Welcome 2021, it starts with new regulations being put in place requiring businesses to conform to new procedures adding additional costs for businesses to operate however, even with these measures in place a new variant of covid emerges almost simultaneously in London and New York.
And hello UK is in the second lock down then days of identification of seasonal covid.
London is locked down along with the major airports, several regional travel restrictions are in place
and continue until March, fortunately covid or the seasonal covid turns out to be not as contagious as Covid-19 and most cases respond well to the antiviral drugs, but it is a kick in the guts for the UK High Street, which is making a gentle recovery, breaks in negotiations deliver the equivalent of a hard Brexit.
So, the question is this particular scenario poses depending on your business could be so say if we consider pent-up demand fuels a rapid recovery if it happens in your particular industry how might you scale up your operations to meet the demand for the new product or service.
Or, if your customer footfall is down by 50% how might you how you’re going to cover the ten to twenty percent as the furlough deficits?
How might you set up monitoring and implementing registration schemes so identify which are your workforce are immune. If there are new regulations put in place requiring businesses to conform to new procedures how might you plan for the increased cost to your business?

How would you manage staff being off again if we have a second peak of the infection in January?
And how would you deal with another period of disruption to your supply chain?
You don’t need to test your action plan against a worst-case scenario and just review how you might change your plans if circumstances were not as optimistic as the scenario that I just described
for instance, Public Health could fall off a cliff and the pandemic continues with increasing deaths in the UK over the summer months.

Come the Autumn, schools do not return to school and scientists are still struggling to create a vaccine that’s been effective.
In December, it’s announced the UK will leave the UK with a no deal Brexit and small businesses are hit by a lack of funding and increased trade tariffs and there’s a Resurgence of the virus in 21 causing another period destruction.
Only the new strain is resistant to any antiviral drugs and the death toll continues to rise. This scenario is deliberately bleak and it is not a prediction but clearly as many options that may potentially play out over the coming months and it’s important to take the time to work out
what your game plan is to minimize the impact on your business.
Business and give you the opportunity to prepare for some different outcomes.
Hopefully that’s a some help and sparks some serious debates within your team.

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