From Wars to Pandemics – Reinventing FP&A in Times of Worldwide Crisis

Interview with Bryan Lapidus, FPAC, Director Financial Planning and Analysis (FP&A) at the Association for Financial Professionals. 

In the past couple of years, the world has changed, beginning with the Covid-19 pandemic before relapsing into the horror of war in Ukraine. These devastating transformations changed the way companies project their financial forecasts. In these times the FP&A function has emerged: a truth-telling prophet, the King’s advisor, and ingenious business partner aiming to steer towards the right course of action.

To get a better understanding on this subject and the different implications for the FP&A field, we interviewed one of the most influential names in FP&A – Bryan Lapidus, FPAC, Director Financial Planning and Analysis (FP&A) from the Association for Financial Professionals.

1. We already see the world changing due to Covid-19 and now the ongoing war between Russia and Ukraine is sucking us into a black hole. The sanctions and steps taken by many European countries and the USA are rapidly changing the world’s economy – how will this affect the FP&A field? 

Pandemics, wars, market disruptions, crises large and small. Finance’s response to unpredictability is to hold multiple points of view simultaneously. For FP&A, that means several things: we need to balance long-term strategy with up-to-the-minute market data; be able to create new forecasts quickly based on updated data; design scenarios for different ways the world could turn out; understand how operational levers drive the financials to provide flexible responses. This agility in our operations also means agility in our mindset: capital gets reallocated, and budgets are not mandates.

2. Many companies worldwide depend on FP&A’s and their forecasts, how and why is their role becoming ever more crucial?

Demand for planning is up. AFP’s research shows that the number of forecasts per year is increasing—just think how many iterations and what-ifs we ran in the start of the pandemic and again as companies try to understand the impact of the war. The C-suite is keeping FP&A on speed-dial. And budgets have been criticized for years as static and slow, but our longitudinal research shows increased support for budgets: now 85% of practitioners agree or strongly agree that budgets are valuable tools. The difference is that now, there is an increased willingness to deviate from budget and manage more agilely.

3. Are there any ways that FP&A and other financial professionals can prevent certain crisis scenarios? If so, how? 

I don’t know if FP&A can prevent crisis scenarios, but we can do two things: react rapidly by strengthening the planning muscles and hold different options and plans at the ready. The forward-thinking groups would look for synergies between the risk teams and the planning teams.

4. In this new reality we live in, how will the war in Eastern Europe affect the businesses and companies? 

In a crisis you focus on survival—survival of people first and if you are fortunate, survival of the company as a going concern. Long-term forecasts lose meaning in these situations, and so the emphasis is on cash flow and operations.