Preparing for a Euro Zone Breakup: Scenario Planning
In Brief: As the EU crisis deepens, many companies are enhancing their contingency planning efforts and safeguarding their cash in preparation for what once seemed unthinkable: a potential collapse of the euro zone. Meanwhile, on Monday, Moody’s Investors Services warned that all 17 EU nations were at risk of being downgraded.
Our View: As the threat of a potential euro zone breakup looms, we strongly advise companies to enhance their scenario planning disciplines. Leading companies in our network begin by documenting project assumptions and building scenarios off of those variables to test profitability under a range of outcomes before committing capital. Don’t make the mistake of assuming that entire projects, P&L’s, or budgets need to be reconfigured under volatile outcomes. Instead, build your contingency plans around critical, controllable line items.
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