Scenario Analysis
Definition
A financial modeling technique that produces multiple complete financial projections, each based on a different coherent set of assumptions about the future, to understand the range of possible outcomes. A compliant scenario analysis under the FFI Standard must contain at minimum a base case and a downside case. Each case must be internally consistent: the revenue assumptions, cost assumptions, and hiring plan must all be consistent with the stated scenario description.
Common Misapplication
The most common misapplication is producing a base case and a downside case where the downside case uses lower revenue assumptions but the same cost structure as the base case. A genuine downside scenario involves lower revenue and a management response to that lower revenue; a cost structure unchanged from the base case implies management would not respond to a revenue shortfall.
FFI Standard Reference
This term is defined and applied in Book 2, Section 2.4: The Scenario Analysis Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Scenario Analysis. https://ffistandard.org/glossary/scenario-analysis/. 2026.