3.6.3 Scenario Planning Flashcards
What is scenario planning?
-The process of anticipating possible changes in a business’s situation + devising ways of dealing with them.
Scenario planning process
-The idea is that if we look creatively at what the future could look like (e.g. energy needs) + the implications involved, the business can create a series of strategies to control these situations.
3 key risks identified through risk assessment:
1.) Natural disasters
2.) IT systems failure
3.) Loss of key staff
1.) Natural disasters
-A disaster can strike any organisation.
-It may take some time for the business to return to normal operation after an incident.
-Climate change means UK businesses must plan for extremes of weather.
2.) IT systems failure
-IT systems often contain data about: Customers details including; e-mails, phone numbers, addresses, supplier’s details, stock control information, how much stock is in the warehouse, location etc.
-Human resources data; sensitive information on contracts, pay rates, health matters and personal circumstances.
-If this data is lost it could be disastrous for the business.
-Scenario planning means that adequate firewalls, backups and alternatives are planned for and in place.
3.) Loss of key staff
-When a key figure leaves whether it’s a band or a business , it can have serious repercussions on that organisation’s stakeholders.
-It is important to plan for the loss of key staff so that when it happens the business continues as normal.
What are the 4 degrees of risk mitigation?
1.) Risk acceptance
2.) Risk avoidance
3.) Risk limitation
4.) Risk transference
1.) Risk acceptance
-Balance between risk + reward is the very essence of business.
-Difference between calculated risks + those taken carelessly.
-Accepyance that there is an element of risk to every business venture is at the heart of successful business + risk management.
2.) Risk avoidance
-The elimination of hazards, activities + exposures that can negatively affect an organisation’s assets.
-Risk management aims to control the damages + financial consequences of threatening events, risk avoidance seeks to avoid compromising events entirely.
-E.g. A multinational pulling out of an unstable country.
3.) Risk limitation
-Some risks are both identifiable + manageable.
-Risks can be limited by: -Watching what is said + done to reduce possibility of getting sued.
-Managing data carefully.
-Become a ltd to gain limited liability.
-Hiring a good solicitor.
-Having plenty of insurance.
-This can also be done by investing in security systems such as CCTV for a business, or a dog or fences.
-In the ICT, a business may have a firewall or password protection levels.
4.) Risk transference
-A business will buy insurance, e.g:
1.) Public liability insurance; covers the business for claims made against the business by a client or member of the public for accidental injury.
2.) Employers’ liability; protects the business if an employee is injured + the business has been negligent.
What is mitigation?
The action of reducing the severity of something.
What are the 2 ways you can reduce the impact of a risk?
1.) Business continuity
2.) Succession planning
What is business continuity?
The capability of the business to continue delivery of products or services at acceptable levels following a disruptive incident.
1.) Business continuity; What are it’s factors?
-BC is about building + improving resilience in the business.
-It’s about identifying the key products + services and the most urgent activities that underpin then and then, once that analysis is complete —>
-It’s about devising plans and strategies that will enable the business to continue operations and enable it to recover quickly and effectively from any type disruption whatever its size or cause.
