Financial contingency planning

Asahi Group (a large beverage manufacturer and distributor) recently experienced a cyberattack that didn’t destroy the business, but did create the kind of operational and financial mess most mid-market companies recognize. Orders couldn’t be processed normally, shipments were delayed, call centres were disrupted and some products became temporarily hard to get in retail and hospitality channels. The impact showed up quickly in results. Domestic sales dropped materially for a period while systems were restored and workarounds were put in place.  

This is a clean example of how contingency planning often gets tested. If you haven’t already modelled what a two-to-six-week distribution disruption does to cash collection, customer service levels, overtime costs and short-term revenue, you end up scrambling to build scenarios while the issue is unfolding. And even when the disruption is temporary, the speed and accuracy of your response determines whether it’s a contained or a dragged-out margin and service problem. 

Risky business

Manufacturers, distributors and retailers play an integral role in the economy, providing the goods needed to keep businesses and households functioning optimally. The Covid pandemic revealed to the world how disruptions in the supply chain decrease supply, slow production and lead to price increases—all of which can wreak havoc on everything from the supply of toilet paper in the grocery store to the production of automobiles.

A global pandemic isn't the only threat companies should consider, think new regulations like tariffs. Over the last decade, several big-name companies (including the US's oldest department store, Lord & Taylor) closed their doors, many of the victims of changing customer preferences, inability to digitally transform and lack of planning. Proactive stakeholders must consider how the following factors affect the company's bottom line.

1. Consumer behavior shifts Laments about changing consumer behavior is familiar among retailers. About 20 years ago, all eyes were on the impact of big box stores in local communities. Today, the talk centers around the rise of online shopping. In 1999, online sales accounted for less than 1% of all retail sales, increasing to more than 13% by 2021. Retailers and distributors must offer omnichannel services and be using  data to segment customers so you can adapt to changing customer needs be new product choices or different pricing options. 

2. Cyber Attacks: Digital transformation has helped companies improve efficiency and allowed them to compete in the global economy, but it also increased the potential risks of cyber-attacks and related security threats. A single data breach can cost a company millions of dollars. 

3. Inflation and interest rates: In the coming years businesses will continue to face high inflation and  interest rates. Higher wholesale prices and transportation costs cut into profits, and higher consumer prices increase the cost of living for employees who may demand higher wages. At the same time, interest rate hikes have lowered access to capital for some companies. 

4. Regulatory changes and sustainability: Regulations sometimes change frequently, and falling out of compliance can be costly to an organization. For example, NAM reports that US  manufacturers spend an average of $277,000 per company per year to stay within compliance. 

Is more speed and precision required in your contingency planning?

You already know why contingency planning matters. The real challenge is doing it quickly, with enough granularity, and keeping it ready to execute as conditions change.

A financial contingency plan isn’t just a document you file away. It’s a living, decision-ready dataset that lets you answer, at speed and recalculate at speed how far you can flex before performance breaks.

That’s where the right FP&A tooling makes the difference.

What is a contingency plan in CFO terms

A contingency plan is your pre-built financial response to disruption or a risk ready operating plan. It can define

• the threat scenarios you’re planning for

• the financial impact under each scenario

• the triggers that determine when you act

• the sequence of actions to protect liquidity, profitability and continuity

• the owners and timelines for execution

Contingency planning is the work that makes the budget more flexible

Contingency planning is the analysis that results in a plan your team can put into use when circumstances change. Contingency planning starts with a clear view of exposure and impact. First, you assess where the business is realistically vulnerable. From there, you quantify what those disruptions would mean in financial terms, translating risk into outcomes like revenue decline, cost pressure, working-capital stretch and changes to run-rate. This combination of exposure mapping and impact sizing ensures you’re understanding the consequences of risks.

Next comes building confidence in your ability to respond. You test resilience by modelling sensitivity to the drivers that matter most to your business, such as price, volume, FX, input costs, staffing levels, or supply lead-times, so you know how far results can move before breaking. You then map the response levers available. What actions you can take, what they achieve, and how quickly they land so the plan is operationally ready. Then you set clear trigger points by defining the specific metrics or thresholds that activate the contingency plan, removing ambiguity and enabling faster action when conditions shift.

Where contingency planning usually breaks down

Where contingency planning usually breaks down is in the execution complexity. Scenario modelling often takes too long to build and even longer to refresh, while key assumptions sit in disconnected spreadsheets that are hard to reconcile. Rolling forecasts then struggle to keep pace with volatility, and sensitivity analysis remains shallow because it depends on manual effort. On top of that, operational leaders may not trust the numbers or have any ability to self-serve insights, and without a single source of truth, decision-making slows just when speed matters most. That’s exactly the gap Phocas Budgets & Forecasts is designed to close.

Phocas gives you a planning environment built ready for volatility. Instead of rebuilding models when things change, you can act quickly and execute confidently.

Scenarios and sensitivities can be adjusted quickly with key drivers like volume, price, cost, FX, labour or headcount without rewriting models. You can compare base, downside, and severe cases side-by-side, model at the level you need such as by business unit, product line, customer segment or region. You can then roll everything up automatically for board views while still drilling down instantly to validate exposure and actions.

Rolling forecasts stay current as the business changes, so the contingency plan also remains relevant. Phocas also makes execution clearer by letting you define explicit financial triggers — such as a margin drop, liquidity buffer breach, or volume decline ensuring finance and operations act from one aligned plan. By bringing operational leaders into the same numbers and workflows, they can review, contribute, and own the levers in advance, so accountability is embedded before a crisis hits instead of negotiated in the moment.