Unit 2 - Strategic planning and risk management

Question 1

Define strategic planning

Answer 1

Strategic planning is the process used by organisations to determine a successful path towards the achievement of their objectives and to develop or coordinate the organisation’s strategy.

Question 2

Describe the strategic planning process

Answer 2

The strategic planning range is usually 3-5 years but can be longer in some industries e.g those producing chemical waste.

The planning process blends objective analysis and business judgement to maintain competitive advantage. Understanding the firms objectives and goals will enable the risk manager to be more specific in mapping risk management to strategy.

The strategic planning process involves a detailed analysis of the internal and external factors and may utilise tolls such as SWOT analysis (Chapman 2011).

Increasingly, companies are considering ranges for their assumptions, using probability based simulations of the future, exploring different world view scenarios, for their long range planning, as well as sensitivity analysis, stress testing and reverse stress tests.