Business Planning | Risk Analysis

By now, you should have little problem identifying risk types … they come from everywhere. It is useful to apply some categorisation to them; for example: financial, people, reputation, operational, economic etc. An actual risk is then an articulation of a potential occurrence that could jeopardise the success of your business. The assessment is about judging each risk’s main characteristics – specifically, the probability of it manifesting and the impact on your plans if it does. Finally, this leads you into response planning; the effective ‘so what?’ you draw from this exercise. Response planning comes in many variants. You can seek to prevent risks (e.g. changing your course of action to avoid completely), reduce them (e.g. actions to lower probability and/or impact), transfer them (e.g. an insurance policy), contingency plan (in response to the risk coming about), or simply ignore them.

The value of this part of your plan is not about the words you set down on paper (albeit this is a useful reference point) but the quality thinking you should have applied to arrive at this point. Keep all of this proportionate, however. It is easy to become paralysed as a result of risk analysis and, in worst case, you see some people acquainting risk management with long list administration. Keep it simple; say, the capture of your top ten strategic risks with considered mitigating actions resulting.