3.6.3 Scenario Planning

Question 1

define scenario planning

Answer 1

where a business considers specific events that may happen in the future and plan how to mitigate the risk and minimise any negative effects of change

Question 2

what are the steps of scenario planning

Answer 2

• identifying specific risks and possible scenarios that may bring about the risk (risk assessment)
• a response is then planned for the scenarios (natural disaster, IT or machinery failure) which are most likely to occur and that have the most detrimental effects (risk mitigation)

Question 3

what are the 4 forms of risk mitigation

Answer 3

1 acceptance - when the cost of planning for the risk is more expensive than letting it happen
2 avoidance - avoiding the risk altogether
3 limitation - planning to reduce the negative impact
4 transference - risk is transferred to a third party e.g. an insurance company

Question 4

what are the problems with scenario panning

Answer 4

• it is expensive and time-consuming
• may require specialist knowledge which will be costly for a firm to employ

Question 5

what is continuity planning

Answer 5

• planning to minimise disruption after an incident occurs
• devises a plan on how to return to normal business operations in the quickest time
• it will determine what resources are needed for a minimum acceptable level of operations and plan ways to achieve this
• plans would be reviewed regularly and training and testing of the execution follows

Question 6

what is succession planning

Answer 6

• planning for the loss of a key staff member
• high-quality succession planning will create a smooth transition as someone else fills the job role
• characteristics required are identified (experience, qualifications etc. )
• the person is chosen and trained (job rotation or shadowing)