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Risk Analysis & Contingency Planning. “Failing to plan is planning to fail” -Effie Jones. What Happens When a Good Plan Goes Bad…. The CVE Bakery: How Can You Plan for the Impossible?. And Even When Things Go Right, Things Can Go Wrong…. NW Works Janitorial and Business Plan - PowerPoint PPT Presentation
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Social Impact, May 2008
Risk Analysis & Contingency Planning
“Failing to plan is planning to fail”
-Effie Jones
Social Impact May 2008
The CVE Bakery: How Can You Plan for the Impossible?
What Happens When a Good Plan Goes Bad…
Social Impact May 2008
And Even When Things Go Right, Things Can Go Wrong…
NW Works Janitorial and Business Plan Actual growth exceeded plan by 330% Board of Directors, staff and infrastructure issues Mission in question
Social Impact May 2008
NW Works Lessons Learned
Business plans need to be flexible and dynamic. Where you start is not where you’ll finish
Getting the culture ready is not something that is often addressed as a part of making a NP business successful- it needs to be
Core issues need to be addressed ahead of time or as they arise, including:
Social Impact May 2008
Valuable Questions to Ask
What if scaling has some negative impact on clients?
What if the success or failure of scaling threatens to change your mission?
How will your stakeholders deal with a failure? How will your stakeholders deal with a success? What is your scale?
Social Impact May 2008
Contingency Planning
Use “what if…” scenarios Develop “Plan B” (and Z) for major
decisions Analyze major risks and make plans to
mitigate them Test Business Plan assumptions Conduct a sensitivity analysis
Social Impact, May 2008
Most Common Problems of implementing scaling plans
Social Impact May 2008
Mouse trap’s built and nobody comes
Grand expectations Insufficient marketing Wrong product Wrong market
Social Impact May 2008
All things to all people
No clear: Niche Target market Differentiation strategy Lack of clear
competitive advantages
We sell everything!!
Social Impact May 2008
But we still have checks…
Undercapitalization Slow start up Unexpected expenses Overstocked inventory Didn’t plan for
business cycles
Social Impact May 2008
Low capacity to deliver
Inexperienced business management Untrained/wrong staff Weak systems & infrastructure Chaos
Social Impact, May 2008
Risk Analysis
Exercise
Social Impact May 2008
What is a Risk?
Possibility of loss or injury
Someone or something that creates or suggests a hazard
Social Impact May 2008
Risk Analysis
What can go wrong? What exactly is the risk (cause not symptom)?
What are important risks? What shall we do to mitigate or reduce severity or avoid risk? (actions)
Don’t confuse risk with cost If risk materialize can have costs
Social Impact May 2008
Remember the SWOT?weaknesses Likelihood of becoming a real risk?
Budget size Probability
Outcomes/impact if risk does happens? Staff Money Time Customers Etc. T
hreats
Social Impact, May 2008
Sensitivity Analysis
Exercise
Social Impact May 2008
Risk Management Start with the most severe risks
List possible actions to reduce probability and/or cost
Some risks can be avoided (e.g. avoid a specific requirement)
Contingency Planning - for the most severe risks that cannot be mitigated
List actions to take should the risk materialize/occur
Social Impact May 2008
Ongoing Process
What did we learn? What are the tasks of RM? What is the risk status? What has to be changed?
Social Impact, May 2008
Business Plan Pointers
Social Impact May 2008
What’s it for? Sales document for raising grants from donors and investors.
Internal management guide for all business functions.
Communication tool to inform key stakeholders
Social Impact May 2008
What’s a “Good” Business Plan?
Solid business concept Viable business model Realistic and quantifiable financial projections Achievable targets Meaningful social impact Demonstrates demand A competent management team Analyzes risk and plans for it Doable!
Social Impact May 2008
Tips #1 Analysis to action (situation and risk) Information relevant to decision-making Data, facts, stats, numbers – back it up!! Timeframe Format
Use of titles and subtitles Graphics / pictures
Length annexes
Social Impact May 2008
Tips #2 Language
Repetition Crisp and clear Compelling
State assumptions Executive summary
State problem, goals and needs up front Key points
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