Scenario and Capital Planning Is No Longer Optional. It’s a Strategic Imperative
As a CEO or CFO, your leadership sets the tone. Scenario planning isn’t just a risk management exercise, it’s a strategic discipline. It empowers your teams to think expansively, act decisively, and lead with resilience.
The future will reward those who prepare, not just for what’s likely, but for what’s possible.
In today’s volatile financial landscape, the only certainty is uncertainty.
For institutions managing significant scale and complexity, the stakes are high and the margin for error is narrow.
While predicting the future is impossible, preparing for multiple plausible futures is not only possible, it’s essential.
Next generation capital planning must evolve beyond a single base case. The world is too dynamic, and the risks too interconnected to rely on static assumptions. Consider the following scenarios:
- We pursue sizable M&A opportunities, how do we position capital to support strategic growth?
- We enter new markets, what are the implications for liquidity, risk, and capital allocation?
- We accelerate technology investments, how much can we invest before revenue catches up?
- Payments revenue materially, what are the long-term mitigations, and how might this impact other business lines? If we become irrelevant in payments, will we still be the primary destination for deposits?
- Stablecoins become mainstream for US consumers, how do we adapt if non-interest income declines? How might this impact our balance sheet strategy?
- Interest rates move against us, how resilient is our financial strength and strategic flexibility?
These aren’t hypotheticals. They’re real possibilities that could unfold simultaneously. The question isn’t whether we’ll face disruption, but how prepared we are to navigate it.
Why Scenario Planning Matters
Institutions that proactively explore these possibilities are better equipped to:
- Understand the ripple effects of key decisions across the enterprise
- Prioritize actions that hold up across a range of environments
- Move quickly when conditions change
- Create consistent value for customers, even in turbulent times
Stress testing isn’t about passing or failing, it’s about gaining insight and building a resilient financial structure.
