What it is
Scenario analysis compares alternate outlooks — base, upside, downside — on one shared driver model so boards can see sensitivity without separate shadow workbooks.
How it’s done
Lock actuals, vary a small set of drivers (new ARR, churn, hiring, win rates, collections), and present ARR, P&L, and cash under each case. Name the drivers; don’t just paint three hockey sticks.
Where it breaks
Scenarios break when each case uses a different ARR definition, when downside ignores cash, or when upside assumes hiring that the cash scenario cannot fund.
In the board pack
Scenarios belong with the rolling forecast and cash forecast, not as a detached appendix.
Keep the written definition stable across close, the board pack, and diligence so the same word never means two math models.
When this metric moves, point to the source schedule and the bridge components — not a screenshot from a private workbook.