Forecasting Challenges Equal Earnings Uncertainty

Finance executives cite increasing volatility in company earnings.

In an increasingly volatile world, companies are finding it more difficult to forecast various factors, and that is creating greater uncertainty around corporate earnings.

A survey of North American finance executives by the Association for Financial Professionals (AFP) and Oliver Wyman Group found that 53% said earnings uncertainty is a bigger concern than it was five years ago, prior to the financial crisis. And there’s little relief in sight, with 52% predicting that earnings uncertainty will increase over the next three years.

Asked to pinpoint the weaknesses in their forecasting, more than half (52%) of the executives cited problems in capturing relevant data from within the company, while 47% said that integrating risk and forecasting data to make strategic decisions was a challenge and 44% cited difficulty in gathering data from external sources.

“Finance respondents saw that the challenge with their forecasting is not so much about resources, like staff, it’s about data capture and integrating information,” Beckoff said. “More of them put the finger on what I would describe as big data challenges¾making sense of a lot of information and being able to act in a quick time frame.”

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