How do you deal with uncertainty and risk in your Business Plan?

Risk is a natural part of any business environment. Embrace it. You won't get ahead by ignoring your potential challenges. You must be proactive.

Consider completing a Failure Mode & Effect Analysis (FMEA) on your key and critical processes. This tool will help you understand what risks exists, the potential magnitude of the risk and the likelihood of it occurring. Anticipate undesirable outcomes and plan for how you can prevent, mitigate and or respond to them. @Matt Rebeiro - Challenge the Status Quo #BPM #process #FMEA #LSS #LeanSixSigma

May suggest that there are many degrees of risk. I believe the one you're referring to is "predicting the unpredictable". The others are much easier to find the categories using the PESTEL model. To predict the risk of the unpredictable requires that you reach outside of your team to what many refer to as the "RED" team. These are individuals that review and participate as an outside contributor that have no stake but the success. Outside your team actually means "outside". Perhaps someone from the space program, global financiers, or professional diplomats and political scientist. One successful discussion I incurred was a briefing with the BoD's advisory team. These individuals were chosen for their expertise and knowledge.

In addition to fantastic set of tools listed (SWOT, PESTLE, scenario planning), using Porter's 5 Forces analysis provides a framework to ask questions and look at the potential of risks from different perspectives including your customers, competitors, vendors.

A crucial step in planning is differentiating between risks and facts. Risks are uncertain events with a potential negative impact. They typically have a medium or low probability of occurring, and you can take steps to mitigate them. Facts, on the other hand, are established truths or conditions you can rely on. If something has a high probability of happening, it's not a risk anymore; it's a reality you need to factor into your plan. By identifying these "facts," you can develop more realistic and actionable plans.

Prioritizing and categorizing uncertainties and risks is crucial for effective business planning. 📝 Tools like risk matrices, registers, and maps not only help in ranking risks but also in visualizing their potential impact. This structured approach ensures that you focus your resources on the most critical issues, enabling proactive rather than reactive management. 🚀 Remember, a well-prioritized risk management plan is your safety net in navigating the unpredictable business landscape. 🌟

One of the go-to tools I have used for years in this type of issue is to formalize a "pareto" graph that visualizes the top driver of the issue or quality driver or complaint category...whatever you want to slice, that simplifies the "what is the biggest thing to go after" and then that will lend to an easy "do we have the means to tackle that issue now or not?" conversation. By having a straight-forward and data driven way of prioritizing options, this helps drive quicker conversations to action

In business process improvement, addressing uncertainty and risk involves a combination of strategic planning, scenario analysis, and risk mitigation techniques. One approach is to conduct thorough risk assessments to identify potential threats and their impact on operations. Utilizing techniques such as SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) can help in understanding both internal and external factors affecting the business. Additionally, implementing agile methodologies allows for flexibility and adaptability in response to unforeseen challenges. Continuous monitoring and feedback loops enable timely adjustments to the business plan, ensuring resilience in the face of uncertainty. Thanks.

No organization has infinite means to resource all risk mitigations at once, so risk owners inflate their risk to acquire limited funds and FTEs. External Auditors and Compliance Organizations also see their “findings” as THE most important item to be addressed. Use tools like FMEA to rank the risks and challenge the assessments to assure they are normalized and not inflated.

Identifying and understanding risks is one thing, but knowing what to do is something else entirely! Whether using PESTLE, SWOT, or some other tool in your toolkit, have an awareness and understanding of what to do if and when something goes awry. Things will go wrong, but having a plan will always soften the impact and allow the team to adjust and get back on track sooner than later.

The pandemic's necessity for pivoting provided profound insights into the resilience of companies and their personnel, highlighting the unpredictable nature of the future. Embracing uncertainties and risks as catalysts for growth and innovation is imperative in business. By capitalizing on lessons learned, integrating best practices, and employing continuous improvement strategies, organizations can convert challenges into invaluable insights, strengthen their core competencies, and enhance their business strategies for heightened resilience and success.

A comprehensive approach is required to effectively manage uncertainty and risk in a business plan. The importance of identifying and assessing uncertainties and risks, prioritizing them based on likelihood and severity, implementing mitigation and contingency plans, regularly monitoring and reviewing progress, and fostering an innovation and learning culture is emphasized in the literature. I encountered numerous uncertainties while working in the aerospace component manufacturing industry, such as supply chain disruptions and design modifications, as well as risks such as quality defects and production delays. Utilizing comprehensive risk management strategies was critical to effectively mitigating these challenges.

- Realize that you can never avoid risk - you can only estimate, strategize, and move forward with an acceptable degree of risk. This is an essential switch in mindset for many people, especially those who have yet to work in strategy or own a business. - Secondly, realize that not all risks are bad. The definition of good or bad depends on your risk-reward ratio and how well your risk management plan is structured and executed at critical times. - If there is no risk, there will be no growth. Your business has reached maturity. If your strategy is not defensive but innovative or transformative, embrace risk. - Turn risk into growth and opportunities. The sooner you embrace these facts, the sooner your business will thrive.

It’s risky to deal with risk alone. The challenge is having a fixated view, single perspective and limited information to make decision. Work out the approach with a good mix of cross functional members, talk to the stakeholders to gather their opinions on the risk, open to news from the region/sector that might have direct or indirect impact to your risk. Ensure that the Risk Register are updated and the historical information kept for the other teams to get access and learn from the success or mistakes. Perform AAR to determine why the approach is successful or failed and determine how can the organisation do better, improve the approach continuously.

- Calculating and managing risk can be psychologically tricky. Your plan can be mathematically and statistically correct, but your emotions will ruin your risk control at critical times. - To minimize emotion, you need a team—not just any team, but a team of individuals who have a growth mindset, understand that risk is a part of the equation, embrace it, and are willing to pivot and change plans. This is especially important for businesses in the introduction and growth phases. - A bold, agile, and flexible team will enable you to minimize panic and excessive processes during challenging times. - Be transparent when communicating your risk and situation. Combining this factor with the right team, your chance of success will be higher.