Scenario Planning Flashcards
Define Scenario Planning
- The process of anticipating possible changes in a business’s situation & devising ways of dealing with them
What are the three hazards commonly covered by business risk assessments?
- Natural disasters
- IT systems Failure
- Loss of key staff
How are natural disasters commonly covered by business risk assessments?
- Natural disasters are often unpredictable but their impact can be so devastating to business operations that they are a common element of risk assessment
- Identify types of NDs that could be expected to occur & likelihood in a particular area
- Assess the potential extent of the impact of natural disaster on business & its assets
- Identify & implement measures to reduce the risk (e.g. evacuation plans)
How are IT systems failure commonly covered by a businesses risk assesment?
IT systems are used extensively by most businesses & an IT systems failure can have devastating effect on business’s ability to carry on operating normally
Business IT systems are at risk for variety of reasons, such as:
- Malware (e.g. viruses) can infect a business’s IT system & cause significant damage including loss of data & system downtime causing financial loss
- Phishing involves cybercriminals tricking employees into giving away sensitive information such as login or financial details
Insider threats come from within an organisation & can include:
- Employees who intentionally or unintentionally cause harm to business’s IT systems
- Stealing sensitive information or causing a system outage
- Employees who aren’t adequately trained or aware of cybersecurity best practices can pose a significant risk to the security & integrity of business’s IT systems
How is loss of key staff commonly covered by a business risk assessment?
Losing key members of staff can cause difficulties especially if they are unplanned (e.g. as a result of sudden illness or incapacity)
- Loss of experience & knowledge can impact business competitive edge
- Losing a figurehead or influencer can affect the morale of remaining employees as well as the culture & direction of the business
- Business contacts & relationships with customers & suppliers may be lost
What is risk mitigation?
- Plans identify & assess risks & then prioritise & plan responses to those risks
What are the two key elements of risk assessment/mitigation plans?
- Business Continuity Plan
- Succession Plans
What is a busines continuity plan?
- Sets out how a business will operate following a serious incident or diasater & how it expects to return to normal as soon as possible
specific stages may vary depending on business size
What are the different stages of a business continuity plan?
1. Risk assessment
Involves identifying potential risks that could disrupt business operations
May include natural disasters, cyber attacks, supply chain disruptions, & other events that could impact the business
2. Impact analysis
Is assessment of potential impact of these events on business
May involve identifying critical business functions & determining the potential financial & operational impact of disruptions
3. Strategy development
Formulates the approaches to be taken to respond to disruption
May include measures such as implementing backup systems, developing communication plans etc
4. Plan development
Outlines the specific steps that will be taken in event of a disruption
May include detailed procedures for handling different types of disruptions
5. Testing and training
Ensures that the plan is effective and all stakeholders understand their roles and responsibilities
May involve conducting drills & simulations, as well as providing training to employees
6. Maintenance and review
Involves the regular review & updating of the plan to ensure that it remains relevant & effective
May involve reviewing & updating the risk assessment, revising procedures etc
What is succession planning?
Involves identifying & developing current employees who have the potential to move into key roles in future
Often used to preparing for the eventual retirement/death/departure of a senior executive & ensure smooth transition of the business to the next generation of leadership
What are the different elements of succession planning?
Identify potential successors
Businesses may look at family members, key employees, or outside candidates to develop a pool of potential candidates
May involve assessing their skills/experience a& commitment to the business- comparing to desired characteristics
Develop a plan
Once potential successors have been identified, plan to prepare for the transfer of leadership is developed
e.g. amending the organisational structure of the business
Train and mentor
Potential successors need to have the skills & knowledge needed to take over business
May involve providing education, coaching & on-the-job training
Communicate with stakeholders
All stakeholders need to be informed of the plan including employees, customers, suppliers, & investors
Can help to build trust & ensure a smooth transition
Review & update the plan
Should be done regularly to ensure the plan remains relevant & effective as the business evolves over time
What can successful business succession planning help a business do?
- Help to ensure the long-term viability of a business
- While also providing peace of mind to key leaders or employees as they plan for their departure
