You're creating a budget forecast. How do you spot and address potential financial risks?

When creating a budget forecast, start with a thorough risk analysis to ensure accuracy. Identify all potential financial risks, from market volatility to internal challenges like supply chain issues. Assess each risk by its likelihood and potential impact to prioritize which ones need more attention. This process helps you develop strategies to mitigate risks, such as diversifying income streams or building an emergency fund. By understanding and addressing risks upfront, your budget becomes more realistic and your business better prepared for future uncertainties.

To spot and address potential financial risks in a budget forecast, start by analyzing historical data and conducting a SWOT analysis to identify key risk areas like revenue fluctuations, cost overruns, and cash flow issues. Use scenario planning to create best, worst, and likely outcomes, and employ data analytics and forecasting software for accuracy. Implement risk mitigation strategies such as diversifying revenue streams, controlling costs, and maintaining reserves. Regularly track financial performance and adjust as needed. Engage stakeholders by consulting experts and communicating risks and mitigation measures.

Voici les étapes que j’utilise pour la gestion des risques : Identification des Risques Analyse Historique évaluation des Facteurs Externes Consultation Interne Quantification des Risques Scénarios de Simulation Matérialité des Risques Gestion et Atténuation des Risques Constitution de Réserves. Plans de Contingence : Pour les risques majeurs. Suivi Régulier Communication et Transparence Rapports Clairs Révision Continue

Es básico conocer la cadena de suministros e identificar los puntos frágiles que podrían perjudicar al proceso por factores externos.

One of the other things I find useful is to understand the mix of contracted revenue and projected unidentified sales for budget, that gives makes me understand the risk on the revenue. As a lot of resources can be added to the business based on projected revenue , which ends up increasing the overall fixed cost

Previously I had worked in marine industry. Accurately forecasting Yacht sales is crucial for financial stability. Comparing projected sales to historical data and industry benchmarks helps identify potential risks. Overly optimistic revenue projections based on uncertain economic conditions should be adjusted. For instance, a yacht builder might overestimate sales based on a booming economy. However, a downturn could impact luxury purchases. Creating various revenue scenarios, from worst-case to best-case, provides a comprehensive financial outlook. This approach helps mitigate risks and prepare for economic fluctuations in the yacht industry. Also need to check market trends regularly and coordinate with regular customer.

Colocar números retadores tendría que ser 50% posible y 50% que difícilmente posible. Todo va depende bajo qué escenario se nos viene. Si es a corto tiempo se debe ser pesimista con lo que se pueda realizar. Si la proyección es a mediano o largo plazo , si podrías ser optimista y colocarte números retadores

Los gastos siempre tienen que tener el concepto de causalidad, si proyectas ingresos pesimistas , pues los gastos deben guardar correlación. Tener mapeado toda la cadena de suministros y los controles de ella te ayudará a abarcar todos los posibles gastos a un corto y mediano plazo .

Doing a sensitivity analysis on key KPIs will enable the organisation of possible upside and downside of Revenue and EBITDA ensuring better contingency planning. For better scrutiny of targets/budget and to incorporate changes to business and political environment, rolling forecast (15 - 24 months) could be used.