Flashcards in Scenario Planning Deck (11):
Risk is the possibility of loss or business damage or the chance that a hoped-for outcome will not occur.
How do businesses deal with risk?
- Ignore it
- Reduce the probability of risk
- Share or deflect the risk
- Make scenario plans and prepare for it
- Treat it as an opportunity (particularly if it also affects other competitors)
Define SCENARIO PLANNING
Scenario planning is the process of identifying uncertainties that may affect the future of the business and putting in place procedures to deal with these events if they occur.
What are the steps involved in scenario planning?
1. Identify potential internal and external threats
2. Brainstorm and simulate potential scenarios
3. Identify potential outcomes for each scenario
4. Plan an approach to respond to the scenarios
5. Prioritise the most likely scenarios
6. Implement and rehearse procedures, so the business is well prepared.
What are key risks that all businesses should be aware of?
- Natural disasters
- IT systems failure
- Loss of key staff
Define RISK MITIGATION
Risk mitigation is the actions taken by a business to minimise or eliminate risk through a process of: identifying, assessing and prioritising.
Define BUSINESS CONTINUITY
Business continuity is the ability of a business to continue to operate during times of uncertainty caused by unexpected changes.
Define SUCCESSION PLANNING
Succession planning is the process of planning for the loss of a manager or a key member of staff to ensure a smooth transition and minimal disruption. Could involve work shadowing.
Define CONTINGENCY PLANNING
Contingency planning is the process by which organisations try to prepare for unexpected and potentially disastrous events by developing alternative strategies.
What are the 4 degrees of mitigation?
1. Risk acceptance - if the full costs of mitigation are higher than the cost of risk, then the risk may have to be accepted.
2. Risk avoidance - extreme risk mitigation which involves ceasing to pursue the activity that caused the risk.
3. Risk limitation - the most common strategy, reducing the risk but having some mitigation strategy in place.
4. Risk transference - involves handing the risk over to someone else.