The Problem is Not That We Fail to Predict Crises. It is That We Build Businesses Assuming Stability.
- Mohammad Kashif Javaid
- 2 days ago
- 4 min read
A little over a week ago, I had the opportunity to participate in an international roundtable discussion organized by ACCA's AB Magazine, where finance leaders and business advisors from diverse industries discussed the impact of the ongoing conflict in the Middle East on businesses and economies.
The discussion covered a range of topics, from supply chain disruptions and rising costs to investment decisions and business confidence. As I listened to participants from the manufacturing, logistics, development, and advisory sectors share their experiences, I found myself reflecting on a pattern I have repeatedly observed throughout my career.
The specific crisis changes. The business response rarely does.
Over the past two and a half decades, I have seen businesses navigate wars, financial crises, political instability, oil price shocks, terrorist attacks, regulatory upheavals, pandemics, and now renewed geopolitical tensions in the Middle East.
What strikes me is not how different these events are. What strikes me is how similar the business response tends to be.
When disruption first appears, most organizations freeze.
Management teams convince themselves that the situation is temporary. Projects continue. Budgets remain largely unchanged. Strategic plans stay intact. The prevailing assumption is that normality will return soon.
Sometimes it does. Often it does not.
As uncertainty persists, confidence begins to erode. Investment decisions are postponed, expansion plans are quietly shelved, recruitment slows, capital expenditure is deferred, customers become cautious, and suppliers become nervous.
Then comes the second phase.
The organization suddenly shifts from optimism to urgency.
Cost-cutting initiatives appear. Restructuring exercises begin. Hiring freezes are implemented. Assets are reviewed. Entire business models come under scrutiny. The same management teams that initially assumed the disruption would be temporary now begin planning for a prolonged period of uncertainty.
I have seen this pattern repeatedly.
The challenge is that by the time many businesses reach this stage, they are already reacting rather than adapting.
This brings me to a topic that was discussed extensively at the roundtable: scenario modeling.
As a finance professional, I strongly believe in scenario modeling. We use it regularly with our clients. It is one of the most useful tools available to management teams. However, I also believe that scenario modeling is sometimes expected to do more than it can realistically do.
No organization can reasonably prepare for every conceivable disruption.
Very few businesses model:
global pandemics,
shipping lane closures,
wars,
energy crises,
cyber warfare,
geopolitical fragmentation,
or simultaneous disruptions occurring across multiple regions.
Nor should they. The purpose of scenario modeling is not to predict every possible future. Rather, it is to improve decision quality under uncertainty.
The real question is not whether a business has modeled every possible crisis. The real question is whether its operating model can withstand crises that no one predicted. That distinction is very important.
Over the past decade, many organizations have become extraordinarily efficient. Supply chains have been optimized. Inventories reduced. Operations centralized. Functions consolidated.
As a result, Efficiency improved, but Resilience often did not.
COVID exposed many of these weaknesses.
Many of us assumed that the lessons learned during the pandemic would permanently change how businesses approach resilience. Yet in many cases, organizations gradually drifted back to the same concentration risks and operating assumptions that existed before.
The current geopolitical tensions are exposing some of those vulnerabilities again.
In my view, the future belongs not necessarily to businesses that can forecast every disruption, but to those that can absorb disruption without losing their ability to operate. And that requires a different mindset.
It requires leadership teams to think beyond cost optimization alone. It requires more agile supply chains. It requires diversified sourcing strategies. It requires distributed operating models. It requires geographically diversified capability centers. It requires organizations to reduce dependence on any single location, market, customer, supplier, or talent pool.
In many ways, resilience is becoming a strategic asset.
There is an interesting parallel in the tobacco industry. For decades, tobacco companies have operated in an environment of steadily increasing regulatory pressure. Advertising restrictions expanded. Public smoking bans became more widespread, consumer attitudes evolved, and governments imposed new taxes and regulations.
The industry eventually accepted that it could not simply wait for conditions to return to the way they were. Instead, many companies began fundamentally rethinking their business models. They diversified product portfolios, invested in alternatives, restructured value chains, and repositioned themselves for a different future. Not because they preferred change, but because the environment demanded it.
I believe many industries now face a similar challenge.
The organizations that thrive over the next decade may not necessarily be those with the most sophisticated forecasting models. They may be those that build operating models capable of functioning effectively even when forecasts prove wrong.
As finance leaders, we often focus on planning. Perhaps the next stage of the conversation should focus equally on adaptability. Because history suggests that disruption is not the exception. It is becoming part of the operating environment itself.
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FCCA, ACA, CPFA | Board & CEO Advisor | Global Partner – CFO Advisory, ACS SYNERGY | Finance Transformation, M&A & Infrastructure Finance | Advising CEOs & Boards Across GCC, South Asia, UK & North America🌐 acssynergy.com
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