Organisations adapt and evolve their strategic plans to remain competitive and responsive to changes in their operating environment both internal and external. However, with every strategic shift comes a unique set of risks. Identifying these risks is crucial for effective risk management. In this article, we'll explore how to spot and manage risks that arise from changes to your organisation's strategic plan.

1. Understanding Strategic Changes

The first step is a comprehensive understanding of the changes in your organisation's strategic plan. What are the new goals, objectives, and initiatives? This clarity is essential for recognising associated risks. Sounds simple I know but some people don’t do this.

2. Risk Workshops and Brainstorming

Conduct risk workshops or brainstorming sessions involving key stakeholders to identify potential risks and opportunities associated with the new strategic direction. These sessions encourage diverse perspectives and can uncover risks and opportunities that might be overlooked. Hot tip: Ask “What can go wrong?” rather than “What are the risks?”. You will find this opens up the discussion and yields better results.

3. Scenario Analysis

Utilise scenario analysis to explore various future scenarios based on the strategic changes. This process helps uncover risks associated with each scenario, making them more tangible and manageable. Some may call it war gaming, red teaming or acting as the devil’s advocate. Setting the conditions for actively considering the consequences and impacts of the decision provides permission to constructively challenge others’ ideas.

4. Risk Impact Assessment

Evaluate the potential impact of identified risks on the organisation's strategic objectives. Assessing likelihood and consequence helps prioritise risks to allocate resources effectively. Ideally you are quantifying these and not placing a finger in the air.

5. Key Performance Indicators (KPIs)

Develop KPIs specific to the new strategic plan and monitor them regularly. A deviation from these KPIs can be an early warning sign of emerging risks.

6. Stakeholder Engagement

Engage with stakeholders at all levels of the organisation to gather their insights. Frontline employees often have valuable perspectives on operational risks, which senior leaders may not consider. Often the true subject matter experts in large organisations sit at lower levels carrying out the process day to day. By not engaging these important individuals you may not identify what is to them very basic considerations.

7. External Environmental Scanning

Keep an eye on external factors that could influence the success of the new strategic plan. Economic trends, regulatory changes, and industry developments can introduce external risks. Continuous scanning is not just good risk management but also good business practice all leaders should be conducting.

8. Continuous Monitoring

Don't consider risk identification a one-time task. Continuously monitor the strategic changes and their associated risks. This ongoing effort ensures that new risks are promptly recognised.

Conclusion

Effective risk management is not just about identifying risks; it's about doing so in the context of your organisation's strategic evolution. By recognising and proactively addressing risks arising from strategic changes, you empower your organisation to navigate its new course with confidence.

Closing Thoughts

As your organisation's strategic plan evolves, I encourage you to apply these approaches to spot and manage the associated risks. Recognising risks in the face of change is not a challenge; it's an opportunity to steer your organisation toward success.

Now, what would you do differently and what help do you need to get there?