Gifts of Sight: Put Risk Management And Strategic Planning Together

Events like 9/11, the BP Oil disaster in the gulf, and civil unrest in the Middle East have brought about huge challenges for major companies. It’s these challenges which have solidified the belief for many that risk management is an essential ingredient for successful businesses – so much so that it should be part of strategic planning. This blending of risk management and strategic planning leads to scenario development: the ability to foresee potential risks and create strategies to mitigate those risks (while also proving out the value of doing so before the risk actualizes). As this pdf article by Katherine Heires explains, the value to strategic planners is great:
The advantage of strategic planners’ using such tools in concert with risk managers, Carey says, is that it integrates these important processes and avoids treating the risk component as just a “bolt-on” function. Done correctly, strategic planning is imbued with a “far more articulated view of risk.” Carey notes that risk managers thus gain more relevance in corporate decision-making. He warns it is too late “if you wait until the end of any strategic planning effort to participate. The decisions are made, the resources are allocated.” Other new developments in risk techniques which are discussed in the article include using crowd sourcing to help reduce the cost of risk intelligence while expanding the ability and likelihood of those risks being mitigated. Yet another technique is “serious play”, wherein the nature of gaming is used to harness the curiosity and power behind gaming culture to solve real world problems. This can lead to inventive thinking and problem solving, as is the case with the online game World Without Oil where players are challenged to come up with power solutions after the natural resource has been exhausted. These new developments in risk techniques spell out an interesting future between strategic planning and risk management. As these two continue to blend together, risk managers and strategic planners will start working alongside each other to intelligently expand the business while reducing the potential risks both within the company’s control as much as outside of it.

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