Knowing what is essential

Disruptions can be caused by various factors. Some occur from natural events like an earthquake, and others can from market forces. Although uncommon, the disruptive effects of market forces may be long term or permanent, such as innovation disruption, change in supply, market demand and regulations.

Threats and probability

Scenario planning looks at what is a likely threat to your business and drawing up a plan of action. How beneficial this is largely dependent on industry type and what is currently in development by others. To understand what are the threats, it is recommended to do your own research or get an industry expert’s opinion.

Scenario plan

You could draw up a scenario plan that is based on Scope, Risks and Function.

• Scope – we want to look at the extent of effect the disruption has on the business.
• Risk – Industry assessment, look at the probability/likelihood that the disruption would affect the industry.
• Function – What kind of resources are available for your business function to utilize? The purpose of this is to make changes to the business such that the effect of the disruption is mitigated. Consider what the business is doing now, and what products or services it could diversify into should the current business environment change.  How could this be achieved in the event of a disaster?

For example, Within the House of Representatives, there are talks about banning certain pesticides containing chemical X. Your business retails this product and is the main source of profit. Your business identifies this as a probable threat to its existence and decides to draw a scenario plan in case this ban passes. It was devised that your business had 3 main options. Lobby enough political support to reject the proposal ban, find an alternative product that is profitable or diversify the product range so that profitability is not dependent on 1 product.