David Porteous has led many scenario exercises over the years which seek to identify different possible outcomes as the basis for building robust strategies. As the Covid-19 crisis has grown, he has become involved with BFA clients in various countries, applying scenario logic to this situation. In this webinar, he shares some emerging general insights, as we all grapple to understand what this might mean in our own countries.
Scenarios are plausible stories not forecasts or predictions. They create different worlds within which you an consider the robustness of different actions. You need a driving question as the focus point and then you can begin to decide on factors to watch. It helps filter out the noise and allows you to focus on certain data and information.
In the webinar, David focuses on the question – how can an organisation and its partners respond to the effects of the COVID-19 pandemic to improve the financial health of their clients through 2020. David walks through the factors and scenarios for an organisation in Mexico, but many aspects of the analysis are relatable to countries in Africa, Asia and South America.
There are three possible economic recoveries, bounce back in 2021, limpback in 2023 or fallback by 2025. We are hoping for the bounce back, but it is important when considering appropriate actions to take that all the potential scenarios are considered. The four layers of uncertainty driving macro shape of the crisis are:
- Health – when the level of infections peak
- Restrictions – the severity and length
- Stimulus package – the size, spread and efficiency of delivery
- Social cohesion – the trust in the state and the response from civil society
By looking at the above four factors, different scenarios can be mapped against options for economic recovery and data can be identified and monitored to help determine which scenario is most likely or is occurring.
David encourages you to get together in your own countries to complete this scenario exercise, which will help influence the likely expectation of recover and appropriate actions to be taken.