Risk Management

In this chapter of your business plan you should list the potential threats identified, e.g., in your market research and analysis. It is important to make these threats visible and demonstrate which actions will be taken by the institution to avoid serious problems.

Typical examples of threats are: lack of trained trainers and experts, economic crisis, dependence on good will of public authorities or organisations, credibility of services offered, etc.

$image\checkred.gif$ Note 6 Development of a Risk Portfolio

ü	List all potential risks and threats for your institution
ü	Rate every single threat in terms of “impact: high – low” and “likelihood: high – low” (use points 1 – 100 in steps of 10)
ü	Draw your portfolio with separators on the impact and likelihood axes at 50 points
ü	Focus your attention for all risks rated likelihood > 50 and impact > 50
ü	Monitor these factors/threats regularly
ü	Define in advance actions to avoid any escalation or mitigation

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Example “Risk Portfolio”:

“Not getting enough SCM experts as trainers for our institution” was rated a very likely and highly damaging threat. As a consequence you will monitor your need for these experts and the available pool of resources (the job market for trainers and SCM professionals, the interest of SCM members to act as trainers and the willingness of companies to let their SCM professionals act as trainers or presenters). You will develop strategies to enlarge your pool of resources consistently (partnership with other associations, volunteering programs with corporate members, etc.). You will plan much more in advance for your needs as you know it will take at least 3 months to find suitable trainers. You will start a promotion programme to show SCM experts the benefits of being a trainer. You will build your own training of trainers programme for members.

$image\templates.gif$ Calculate and draw your own risk portfolio with the help of the attached template.

Unfortunately, life is not computable. A very damaging threat can endanger your institution even if it was rated “very unlikely”. Wouldn’t it therefore be better to monitor all possible risks and develop “disaster strategies” for all? The answer is simply NO. You will never be able to preview and manage all possible risks. This is why you need to prioritise the risks with the help of the risk portfolio technique.