Theme 3 - 3.6.3 - Scenario Planning

Question 1

What is scenario planning defined ?

Answer 1

Scenario planning is the process of anticipating possible changes in a business situation and devising way as of dealing with them - it incorporates the features of contingency planning

Question 2

What is the scenario planning process ?

Answer 2

Scenario planning is the process of looking at potential future situations and planning for what you will do in case these events occur

The idea is that if we look creatively into the future, then we may be able to put a plan into place to limit the damage on the business

Question 3

What are the key risks for a business to identify during a risk assessment ?

Answer 3

• Natural disasters - A disaster can strike any organisation either big or small - it may take a while for the business to return to normal operation after an incident
• IT systems failure - IT systems often contain data about customer details including: emails, addresses and stock control information which is all very important so if this information is lost it could be disastrous for the business and possibly for the customers - scenario planning may make backups etc so that if it does happen the risk would get mitigated
• Loss of key staff - A key figure in the business could leave the business which could leave the business in shambles and could have serious repercussions on the stakeholders - therefore they need to use scenario planning to plan for what will happen if one of these key figures leaves so that if they leave then the business would continue as normal

These are the risks that would need planning for just in case that they would happen. And these plans would mitigate the damage

Question 4

Whats are the degrees of risk mitigation ?

Answer 4

So when you plan ( scenario planning ) for future problems then you have to plan how you would mitigate risks and the following are the ways to classify the risks and how to deal with them - degrees of risk mitigation.

• Risk acceptance - there is always a risk between risk and reward - a business should calculate the risks and not just say that there is a risk and not think about it too much - risk acceptance means that there is an element of risk to every business venture
• Risk avoidance - Risk avoidance is the eliminations of hazards, activities and exposures that can negatively affect and organisations assets - so it just seeks to avoid compromising events entirely
• Risk limitation - this is the idea that some risks are both identifiable and manageable so limitation is identifying the risk and then managing it such as buying CCTV so that people don’t break in or hiring a good solicitor for the business just in case of a sue
• Risk transference - this is when you buy some insurance - so for example if a business buys new machines then they would ensure them just in case it breaks - they buy insurance such as employers liability which protects the business if an employee is injured and the business has been negligent

Question 5

Whats the difference between risk avoidance and risk acceptance ?

Answer 5

So if you are an MNC and you are in an unstable country in which its economy might fail then risk acceptance might be calculating the risks but accepting that there is always a risk in business venture but risk avoidance is the MNC pulling out of the unstable country

Question 6

What are the ways your can mitigate risk ?

Answer 6

So reducing the impact of a risk

• Business continuity
• Succession planning

Question 7

What is business continuity ?

Answer 7

• BC is about building and improving resilience in the business

• So can you carry on if something happened to the business - also if there is like no lights - do you have a generator ?
• It is about devising plans and strategies that will enable the business to continue operations and enable it to quickly recover to any type of disruption

Question 8

What it’s the definition of business continuity ?

Answer 8

It is defined as the capability of the business to continue delivery of products or services at acceptable levels following a disruptive incident

Question 9

What is Succession planning ?

Answer 9

• Succession planning is a process for
identifying and developing internal people with the potential to fill key business leadership positions in the company.

• Succession planning increases the availability of experienced and capable employees that are
prepared to assume these roles as they become available.

Question 10

Whats the definition for succession planning ?

Answer 10

• Succession planning is defined as a process for identifying and developing potential future
leaders or senior managers, as well as individuals to fill other business-critical positions, either in the short- or the long-term