Scenario Planning: A CEO Checklist for 2026 Uncertainty
Scenario planning is now effectively mandated for UK listed companies: the UK Corporate Governance Code’s Provision 31 requires boards to test prospects against “severe but plausible” scenarios before signing the viability statement.
For CEOs, this is no longer a document the finance team produces once a year. It is a live test of whether the executive team can show its workings when a director, an auditor, or an activist investor asks how the strategy survives a genuine shock.
What Is Scenario Planning, and Why Is It a Board Requirement Now?
Scenario planning is the disciplined practice of stress-testing strategy against a small number of severe but plausible futures, rather than a single base-case forecast. It has moved from a strategy-team exercise to a governance obligation. Provision 31 of the UK Corporate Governance Code requires the board to state whether it has a reasonable expectation the company will remain viable over an assessment period, based on named severe-but-plausible scenarios rather than generic risk commentary or an unexamined going-concern statement carried forward year to year.
The pressure to get this right is rising. According to PwC’s 29th Global CEO Survey, 35% of UK CEOs are questioning whether they are doing enough to ensure their company remains viable over the medium to long term, and confidence in three-year revenue growth has slipped to 51%, down from 58% the previous year. According to EY’s UK CEO Outlook, 78% of UK CEOs have already altered their investment strategy — delaying, accelerating or stopping planned investment — in response to geopolitical and trade policy shifts in the past year. Boards are not asking whether disruption is coming; they are asking whether management has modelled it, quantified it, and can point to a mitigation plan.
Executive Action:
- Confirm who owns the viability statement narrative — CEO, CFO or Company Secretary — before the next annual report cycle.
- Ask your risk function whether current scenarios were built for this year’s principal risks or copied forward from last year’s document.
- Diarise a board session specifically on scenario assumptions, separate from routine risk-register review.
How Should a CEO Build a Scenario Planning Framework?
A workable framework starts with the principal risks the board has already agreed — not a fresh brainstorm and not a template borrowed from a competitor’s annual report. From that list, build three to four severe-but-plausible scenarios: a demand shock, a cost or supply shock, a geopolitical or regulatory shock, and one compounding scenario that combines two of the above, since single-variable scenarios rarely reflect how real crises unfold. Each scenario needs a quantified impact on revenue, margin and liquidity, plus named mitigations — new funding lines, cost actions, capex deferral, disposal of non-core assets — that the executive team could actually execute within the modelled timeframe, not aspirational actions with no owner.
The discipline that separates a credible scenario from a compliance artefact is specificity: naming the trigger point at which a mitigation is activated, and who is accountable for pulling that trigger before liquidity is already under strain. INFORMD’s technology strategy review template provides a structure for stress-testing technology and capital-intensive decisions against exactly this kind of scenario set, so that AI investment and infrastructure spend are tested with the same rigour as core operations.
Executive Action:
- Build scenarios from agreed principal risks, not a generic industry template.
- Quantify each scenario’s liquidity impact, not just a narrative description.
- Name the trigger point and owner for every mitigation before it is needed.
What Should the Board See When Scenarios Are Presented?
Boards do not need more paper; they need clarity on where management’s judgement could be wrong. Present scenarios alongside the existing risk register so directors can see the read-across, rather than as a standalone appendix that never gets discussed outside the audit committee. State explicitly which scenarios were stress-tested this cycle and which principal risks remain unmodelled, so the board is not left assuming coverage that does not exist — a gap that has drawn criticism from the FRC in post-implementation reviews of viability reporting.
This is also where board-level self-assessment earns its keep. INFORMD’s executive self-assessment tools help boards pressure-test whether their own oversight of scenario planning and viability reporting is keeping pace with the Code’s expectations, before the auditor or an activist investor asks the same question and finds the board unprepared.
Executive Action:
- Map each scenario directly to a principal risk already disclosed in the annual report.
- Flag unmodelled risks explicitly rather than implying full coverage.
- Have the audit committee, not just the executive team, sign off scenario assumptions.
How Do You Stop Scenario Planning Becoming a Box-Ticking Exercise?
The failure mode is treating scenario planning as an annual reporting task rather than a live input to strategy. The fix is to connect scenarios to actual capital allocation decisions — if a scenario shows a supply shock could cut margin by four points, that should visibly change what gets funded this year, not just what gets disclosed in a document nobody revisits until the next audit cycle. Revisit scenarios quarterly against real events, not annually against a template, and retire assumptions that events have already overtaken, whether that is a resolved trade dispute or a supplier that has since diversified.
INFORMD’s briefing library tracks how UK boards are adapting scenario and viability practice as the Code’s expectations evolve, and our video briefings will shortly cover board-level scenario presentations in more depth, including how peer companies structure their disclosures.
Executive Action:
- Tie scenario outputs to this year’s capital allocation and investment committee decisions.
- Review scenarios quarterly, not just at annual report time.
- Retire or update any scenario that recent events have already overtaken.
Provision 31 requires listed company boards to state whether they have a reasonable expectation the company will remain viable over an assessment period, based on named severe-but-plausible scenarios rather than generic risk narrative, supporting the annual viability statement.
The CEO should own the strategic framework and trigger points; the CFO typically owns financial quantification; the audit committee reviews and challenges assumptions before they support the board’s viability statement. Treat it as a shared executive responsibility, not a finance-only task.
Most boards need three to four: a demand shock, a cost or supply shock, a geopolitical or regulatory shock, and one compounding scenario combining two others. More scenarios rarely add insight; specificity and quantification matter more than volume.
Quarterly, not just at annual report time. Real events, such as resolved disputes, new suppliers, or rate changes, should trigger updates so the viability statement reflects current conditions rather than assumptions built months earlier.
INFORMD provides intelligence briefings, tools and frameworks for senior business leaders across technology, finance, strategy and compliance. Based in Milton Keynes, UK, we help executives stay informed and act with confidence. Explore our full briefing library (/resources/) or access our free assessment tools (/tools-assessments/).
Questions on building or presenting your own scenario framework? Contact INFORMD.
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