scenario planning

Question 1

what is scenario planning?

Answer 1

Creating plans/solutions for unpredictable events to cover critical elements of business

Question 2

how does scenario planning work?

Answer 2

• Identify possible issues/future trends
• Plan a response based on scenario
• Identify probability/most likely incidents (decision trees can be used)
• Put in place a plan for the scenario if it happens

Question 3

identifying key risks through risk assessment

Answer 3

1. natural disasters = loss of infrastructure, supply chain, raw materials
2. IT SYSTEMS FAILURE = making/receiving payments, leaking data, can’t place orders
3. LOSS OF KEY STAFF
   - loss of expertise, problems replacing

Question 4

what are the 4 types of risk mitigation?

Answer 4

1. acceptance
   - cost of preparing for risk is higher than risk itself, small businesses use this
2. limitation
   - e.g. it backups, have stocks of products
3. avoidance
   - actually doing something to stop the risk e.g. monitor trends
4. risk transference
   - move risk to someone else e.g. insurance, outsource

Question 5

define business continuity

Answer 5

• Business Continuity = capability of the business to continue to operate/sell/produce following a setback
• Impact analysis – know what might happen
• Recovery strategy
• Testing and training of the strategy to ensure it works
  E.g. Stockpiling in case UK ports see delays post Brexit

Question 6

what is succession planning? and how do you do this?

Answer 6

Succession planning= identifying and developing internal staff to potentially replace a key leader / fill a key position when someone leaves
- How do you do this?
- Job share / enrichment / enlargement
- Job shadowing
- Effective training / gaining qualifications
- Ensuring your structure allows for replacements

Question 7

pros and cons of succession planning

Answer 7

+ saves recruitment costs
+ internal people know the business
- no new ideas

Question 8

pros of scenario planning

Answer 8

• Reduce the negative impact of changes
  E.g.
  Less disrupted supply
  Less lost sales
  Less reputational damage

Question 9

cons of scenario planning

Answer 9

• Can’t stop negative impact overall
• Trade off / opportunity cost of undertaking scenario planning
• Hard to know if plan is effective before carrying it out