Improved Planning and Managing Risk
By James Crown, Chief Executive Officer, Knowledge Group Consulting

Too many organisations, both public and private, still pay lip service to the development of integrated strategic and business plans, tested by an ongoing strategic and operational risk management process that produces continuous improvement and guarantees a sophisticated level of corporate governance.

Corporate plans are full of motherhood statements, business plans are trite and filled with clichés, and risk management programs are non-existent or too shallow to be useful. Key performance measures are an end in themselves, and measures seldom have targets except in the financial dimension.

Strategy implementation is fuzzy because the strategy-objective level of planning lacks focus and clarity.

Our organisations need to overcome these well defined problems if they are going to excel in the increasingly complicated and competitive environment of the 21st century.

The solution is not difficult - return to fundamentals.

Manage the obvious risks inherent in clearly defining the business we are in, understanding our markets and customers, recognising and growing our core competencies, and providing rewards and incentives across the organisation.

The fundamental tools of enterprise-wide risk management (risk management across the whole organisation) and strategic and business planning (minimum of mission, critical success factors, objectives, performance measures/targets, strategies and action) are virtually inseparable.

Risk is defined as 'the chance of something happening that will have an impact upon objectives'. The definition alone requires strategic and business objectives to be well defined and understood at corporate and operational levels. How can you define the risks and mitigate (or lessen) those risks if you don't understand the objectives?

Risk management is one of the most powerful tools available. Think about it! Here is a tool that allows a manager and his or her team to actually examine a defined objective or goal and determine, in advance, what some of the problems might be in delivering that objective and then, proactively, doing something about it. It would be a foolish manager or executive not to recognise the advantages, financial and otherwise, of dealing with problems when they were still 'issues' on the horizon rather than 'crises' threatening the success of the program, project, or company itself.

The requirements are straightforward:

1.)  Ensure that strategic mission and objectives (with measures and targets) meet business needs, and are assessed for risks, with the risk emphasis on barriers to the successful rollout of the strategic plan.

2.)  Ensure all business unit or work area business plans interpret correctly and deliver the strategic plan through proper translation of objectives into work area goals (with measures and targets), with solid how-to strategies which are assessed for risks at both business and operational levels.

3.)  Ensure these higher and lower level risks are captured in an Unacceptable Risk Register and are mitigated and monitored.

4.)  Ensure 'how-to' strategies are properly implemented by action plans which deliver the goals and, ultimately, the strategic objectives. The risk identification, analysis and development of mitigation strategies for unacceptable risks should be ongoing.

5.)  Ensure that performance measurement and reporting is structured and aligned through the key dimensions: corporate/executive - function/process - job/task which should also include the mitigation of identified unacceptable risk.

We live in an imperfect world and there will be times when our attention to the details of planning and risk will still see us faced with previously unrecognised problems. This should be the exception, not the rule. There is now sufficient evidence to show that organisations that plan and manage risk far outperform those that do not.

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