Now, more than ever, it’s important to understand what shock modelling is, when it’s applicable, its key benefits and steps to achieve.
In short, shock modelling is a way to examine the financial impact and operational implications of changes to the external business environment. A core component of this activity is the development of a driver-based financial model which allows an organisation to modify the underlying assumptions, examine the related potential financial impact and pursue robust scenario analysis and scenario planning.
Clearly identifying and assessing key risks that businesses are exposed to and understanding how to react in potential or real uncertain environments have proven to be critical in recent months.
Robert Finch, Manager at Forecast, walks us through this in more detail in the video below.
