The need for financial scenario planning in a global crisis

Nadia Rawjee, Director of Uzenzele Holdings 

There is no overstating the fact that, worldwide, businesses are operating in an unpredictable and highly volatile market. Geopolitical tension, inflation, energy uncertainty and fragile supply chains aren’t isolated issues anymore – they’re all happening at once. Right now, the pressure is building again.

With the conflict in the Middle East, including tensions involving Iran, we’re already seeing the impact start to play out. Oil prices are rising, quickly feeding into higher energy costs for manufacturers. 

Margins that were already tight are being squeezed even further. If things escalate, the risk of fuel constraints – or even shortages – becomes very real.

Global shipping routes remain under pressure – and that’s where manufacturers are feeling it most. Ongoing disruptions and rerouting are driving up freight costs and adding time to already stretched supply chains. On the ground, that translates into longer lead times for critical inputs, tighter production planning, and less flexibility to manage delays without impacting delivery commitments. 

The knock-on effect for industrial businesses is hard to ignore.

Then there’s the Rand. Currency volatility makes it incredibly difficult for importers and exporters to plan, price, or protect their margins with any level of confidence.

As we’ve seen before – most recently with the COVID-19 global microchip shortage (2020–2023) – it doesn’t take much for supply chains to come under strain. Disruptions in one region quickly show up somewhere else.

Some practical examples that we have seen are with aluminium, where there are supply disruptions locally due to Gulf constraints and the Mozal plant closure. This has impacted downstream manufacturers. Another example would be with fruit exports, shipments to the Middle East are being delayed or rerouted due to trade route disruptions, with knock on effects on cash flow and margins.

This is not just a supply chain issue, but also brings forward other issues within financial decision making.

All of this reinforces something I think many businesses are starting to realise traditional financial planning just isn’t enough anymore.

Static budgets and single-point forecasts assume a level of certainty that doesn’t exist in this uncertain environment. We are no longer operating in a single “most likely” future – we’re operating across several possible ones.

That’s why I believe there needs to be a real shift in strategy – from trying to predict what will happen, to preparing for what could happen.

That comes down to two things: proper financial scenario planning and a very deliberate focus on working capital.

Why scenario planning is crucial now

I still see many businesses relying heavily on forecasts. While forecasts are useful, they’re built on the idea that tomorrow will look somewhat like today.

Right now, that’s a risky assumption.

Scenario planning forces a different kind of thinking; it asks uncomfortable but necessary questions: What if costs spike suddenly? What if demand drops off? What if the currency moves sharply against us?

More importantly, it forces you to decide in advance what you would actually do in each of those situations. Because in reality, when things move quickly, there isn’t time to start from scratch.

How working capital raises the stakes

Planning is one thing. Having the financial capacity to act on those plans is another.

Working capital has become one of the most important strategic levers businesses have right now.

It’s not just about having enough cash to keep operating. It’s about having enough flexibility to absorb shocks, adjust quickly, and act when opportunities present themselves.

That means covering your Operational Expenditure (OpEx) needs without constantly being under pressure. But it also means having enough Capital Expenditure (CapEx) flexibility to invest when you need to – whether that’s to secure supply, fix a hold up, or respond to a shift in demand.

Many manufacturers run lean when conditions are predictable—tight cash positions, minimal buffers, deferred investment. It’s efficient, and in stable markets it works. But when conditions turn, that same model leaves very little room to manoeuvre. Small shocks become operational constraints, and too many businesses find they’re underprepared from a funding perspective precisely when flexibility is most needed. 

Towards cohesion

Scenario planning and working capital should never be treated as separate conversations. Every scenario should come with a clear view of the financial implications.

If costs increase, can we absorb it—and for how long?
If revenue drops, how much headroom do we have?
If an opportunity comes up, are we in a position to move?

That’s the real test. It’s not just about identifying risks; it’s about being financially prepared for them.

The question is whether your management team are having these tough discussions. If you are not, it might be time to start doing some scenario planning – or bringing in experts to help you work through various scenarios. 

Practical tips for a new normal

I don’t see the current environment as a short-term disruption. If anything, this level of uncertainty is becoming the norm – which means the businesses that survive, and even thrive, are the ones that prepare for it properly. 

This is not done by trying to predict the future perfectly, but by ensuring they’re ready for a range of outcomes, and that they have the financial capacity to respond when it matters.