Scenario Planning
Business: BTEC Level 3 National Extended Diploma, topic 5.3.3
Scenario Planning
Businesses can minimise some of the risks they face through risk assessments, continuity plans, and succession plans.
Natural disasters
- The impact of natural disasters may be considered for risk assessments, and the business is likely to take steps to minimise this risk should a natural disaster ever occur.
- Oil companies like Royal Dutch Shell and BP plan different scenarios at different oil prices.
IT failures
- The impact of an IT systems failure may be considered for risk assessments, and the business is likely to take steps to minimise this risk should a system failure ever occur.
Losing staff
- The impact of losing key staff may be considered for risk assessments, and the business is likely to take steps to minimise this risk if key staff left the business.
Disadvantages of risk assessments
- Risk assessment cannot be used to identify all possible risks and risk cannot be eliminated entirely.
- The process of identifying risks and continually updating risk assessments can be time-consuming, complex and expensive.
Continuity plans
- Businesses can create continuity plans to mitigate risk.
- Continuity plans involve businesses planning how they can ensure that their business can continue to operate during and following a disaster.
Succession plans
- Businesses can create succession plans to mitigate risk.
- Succession plans involve businesses planning how they can identify and develop new leaders to replace current leaders who leave the business or die.
- This ensures that the business can continue to operate following the loss of a leader or director.
Test yourself on Scenario Planning
What might be included in a risk assessment?