Scenario Planning and Role of Government CFO – It’s Go Time!

Sonora & Associates is a HubZone federal contractor focused on financial modernization and analytics. We help the Office of the CFO use data and analytics to align budgets with agency goals. In 2020 we are helping government leaders improve their scenario planning capabilities. Scenario Planning in the public sector is something we need to address with a greater urgency. 

The commercial sector has embraced several standards and frameworks for scenario planning to protect profit and continuity of operations. Does it matter for the government? Absolutely. It is the time to make Scenario planning in government a priority.

Here is why it is so important. Government must optimize resources to ensure economic growth and the delivery of services to society. The focus may not be on protecting profit, but it is critical to deliver on an agency’s mission. One pandemic throws everything off if you are not prepared. 

In How to Use Scenario Planning to Navigate a Crisis, Marc Seewald, Vice President of Product Management at Oracle notes: 

The point of all this isn’t to obsess over possible outcomes. It’s to help prepare your organization for whatever might happen. When you have a plan for multiple outcomes, you can communicate those plans to employees, customers, investors and other stakeholders, instilling confidence in your organization and its finance leadership.

A Strategic Imperative: Bend Don’t Break

There will always be pressure to grow vs. protect. Growth drivers (boosting the economy) are reactive and require short-term shifts in budgets and resources. Protection on the other hand (protecting the health of citizens) tends to be proactive and requires a longer-term view. 

Sometimes these are at odds, especially in a pandemic. 

When short-term urgency causes unanticipated demand on resources things break, programs get cut, and society suffers. Scenario planning helps agencies prepare for the unexpected and minimize negative impacts on resources, infrastructure, vital services, and citizens. Scenario Planning in the public sector can also improve reaction time and help government make hard decisions faster – so things do not break.

If the government does scenario planning well, we can ensure economic and social growth at the same time.

Leadership: The Vital Role of a CFO 

Prioritizing scenario planning is an act of responsive leadership we need in government. It requires coordination and engagement from all agency and department heads. The CFO function needs to sit right in the middle. 

Whether it’s lost tax revenue, the need for a surge in resources and labor, almost every scenario has significant financial implications. Because of this I believe that finance teams and the CFO should play a vital role in scenario planning. 

They have key skills and access to data. Planning, budgeting, and reporting is inherently collaborative. Those involved have a keen understanding of stakeholders, department priorities, risks, and dependencies. The office of the CFO also has access to the financial and operational data needed for unbiased and collective decision making that is critical to scenario planning.

They see the financial threads. Consider the implications of a payroll tax deferment and reduced tax income on the ability to meet benefit obligations to DHS workers on the front lines. The CFO function armed with big data and analytics can identify programs and budget areas that can bend, not break. They can model the impact of scenarios on operations, labor, funding and help make sure informed decisions can be made fast.  

In conclusion: Scenario Planning in the Public Sector is 100% a team effort. All agency and department heads must come together to develop and understand how different scenarios will impact their operations and mission. I envision the CFO playing a lead role, and the team at Sonora is happy to offer support. 

Sonnie Oratokhai 

CEO, Sonora & Associates