Scenario Planning and Horizon Scanning for Strategic Risk Management

Presentation Transcript

www.samiconsulting.co.uk

Robust decisions in uncertain times

SAMI Consulting 2006

Agenda

Defining our terms

Strategic Risk
Horizon Scanning
Scenarios

Example – a project for the City of London: 5 stages

Horizon scanning
Scenarios
Analysis
Decisions
Implementation

5 Questions to ask

before starting on Scenario Planning or Horizon Scanning

The Risk Map

Reputation Risk

Organisational Risk

Political fragmentation

Climate change Pandemics

Global change Business cycles

Demographics Nuclear proliferation

Religious Fundamentalism

Operational

Country/Region

Organisational

Risk

Financial/markets

Legal & intangibles

External Risk

Political/regulatory

Strategic Risk

Horizon Scanning in context

External

Signals

Futures

Trends

Internal

Signals

Internal

Futures

Scenarios

or

Forecasts

Implement-

ation

Options

Decisions

Synthesis

Analysis

Horizon

Scanning

Decision-making

Scenarios

Scenarios are

“an internally consistent view of what the future might be”,
“not a forecast but one possible future outcome”
Professor Michael Porter, Harvard Business School

Forecasts Scenarios

Definitions – and questions

A strategic risk

Is one which threatens the organisation in potentially massive ways

Horizon Scanning

Provides advance warning to the organisation

Scenario Planning

Provides futures that “real people” can relate to
Allows an organisation to move to decision and implementation

Why is this difficult?

Problems of urgent vs important
Different types of thinkers

Why it is difficult

Horizon Synthesis Analysis Decision Implementation

Scanning maker

Horizon scanner Scenarios Strategist Corporate Line manager

manager

“843” trends Alternate Ideas & Portfolio Early indicators

interconnected futures systems management Timescales

Planning Decisions Resources

Agenda

What are

Strategic Risk
Horizon Scanning
Scenarios

Example – a project for the City of London

Horizon scanning
Scenarios
Analysis
Decision makers
Implementation

5 Questions to ask

before starting on Scenario Planning or Horizon Scanning

City of London project

SAMI project to explore the impact of China and India on Financial Services in the City of London
Used scenarios

Developed by Oxford Analytica
Three scenarios for China in 2015
Three scenarios for India in 2015

Workshops across the City
Interviews with key players
Report due this month

Horizon scanning

Sources:

Oxford Analytica reports, based on the daily brief
Oxford Analytica network of academics
Challenge Forum! Database
Conferences, seminars, books, articles

Deciding on relevance & accuracy

Dilemna is “boil the ocean” vs ignore weak signals
How would it affect FS – direct, indirect
In what timescale would it have an effect
Framework for analysis

Framework for Horizon Scanning

Scenarios

First cut developed in a one day workshop

Oxford Analtyica staff, experts, SAMI staff, experts
Decide main drivers and axes of uncertainty

Story line developed by a small team

Evolution path for the three possible quadrants

Critique within initial group

Plausibility, coherence

Pull out timelines, early indicators

Decide on names

Set in context of global trends
Write executive summary

Centralised system of governance

The Elephant Breaks its Chains

Liberalisation is reversed

Liberalisation accelerates

The Elephant Lumbers along

Federal, subsidiary style of governance

Retreat to the Woods

Now

Three Scenarios for India in 2015

Analysis

What are the implications for the City of London’s Financial Services?

Workshops for regulators, insurance industry, asset managers, retail banks, BoE, LSE, etc
Use a mixture of presentation and group discussion – both to allow participants to think through the implications and to allow us to capture their ideas.
Global trends & SWOT of City
India scenarios & implications
China scenarios and implications
Comparing China and India

Over 60 people consulted

Framework for analysis stage

A report in the City of London series

120 page report
Containing detailed scenarios
Importantly recommendations
Report to describe method & rationale behind the recommendations

Workshops designed to provide the recommendations in the report

Cover the range of FS organisations in the city
Engage in structured discussion
Provide a stimulating event for participants

Decision makers

Report reaches all the decision makers in the City
Conference planned to present results

Core conclusion is that the balance of the world order is changing and that the key threat is complacency

Some of recommendations cover some ways in which the City can create more ongoing relationships with Chinese and Indian decision makers

City institutions
Government bodies
Universities
Professional bodies

Framework for decisions

What types of decisions could be outcomes?
Who are decision makers?

Influencers, blockers

What is decision process?

Timescale, critical stages
One organisation or many involved?

Are there key protagonists

eg role models, early adopters?

How will you know when a decision has been made

Who will do what?

Implementation

The City of London project is about implementation

Through recommendations on opportunities, sectors and timescales are reasonably focused

In other projects we have designed benchmarks or targets which led to implementation eg

Affordable housing in Surrey –new cross- county body
Arts Marketing Association – Arts Olympics
Legal & General – create a Marketing Department
Scenarios for Scotland – change investment focus from MNCs to growing Scottish entrepreneurs