18th January 2017
If ever there was a year which exposed the futility of trying to predict geopolitical and macro-economic outcomes, it was 2016. The Brexit vote in the UK, the outcome of the US elections and the behavior of capital markets after these tumultuous events have all defied expectations, leaving many pollsters, market pundits and economists licking their wounds.
But it’s not just global events that can be challenging to predict. When it comes to forecasting business outcomes, commerce generally does not cover itself with glory. A recent FSN study1, “The Future of Planning, Budgeting and Forecasting”, highlighted the fact that despite the wealth of data and technology at their disposal, 50% of finance organizations are unable to forecast revenue beyond the 6-month time-horizon and 60% are unable to forecast revenue to within plus or minus 5%.
Some of the difficulty in predicting financial performance can, of course, be laid at the feet of unprecedented market uncertainty, volatility and unquantifiable risk. Yet, at the same time, organizations have never had such rich information with which to counter the uncertainty and drive more meaningful insights.
So, what’s going wrong and how can finance professionals tip the balance in their favor?
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