X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
“Risk-adjusted forecasting” is a new buzzword in financial planning and analysis (FP&A). What, exactly, does it mean? Risk-adjusted forecasting and planning involves shocking the financial forecasts with major risk drivers in an integrated and flexible manner,” says H-K Bryn, strategic risk partner at Deloitte in the U.K. “The approach allows a more robust and transparent evaluation of volatility and risk within current plans, helping to build a better understanding of the potential upside—and downside—inherent in the future of the business.”

Mark Pellerin, a principal at Oliver Wyman, which conducts an annual risk survey with the Association for Financial Professionals (AFP), puts it another way: “When I think of risk, I think about having a clear understanding and definition of the relationships between the variation in expected outcome and risk factors,” he says. “Risk-adjusted forecasting is coming up with alternative forecasts that have clearly defined relationships with the variables and risks.” It’s not about having a crystal ball, but about achieving a better and more precise definition of the drivers of, and risks to, the organization’s financial performance.

“You cannot get away from uncertainty in the world,” Pellerin says. “No matter how precise the prediction, there’s an extreme level of unpredictability” in the corporate planning process, adds Steve Player, managing partner of the Player Group and program director for the North American arm of the Beyond Budgeting Roundtable (BBRT).

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

 

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.