ERM Pioneer Shares Technique for Anticipating Long-Term Risks and Opportunities

Thinking about the long-term is not something we automatically do…after all, with the constant ups and downs and various trip wires out there, we feel that if we make it through the next year or even the next quarter, we can consider our corporate strategy a success.

This mindset can be destructive in the long-term though.

Scenario planning is a valuable tool for understanding short-term dependencies and consequences of a particular goal, be it for a project, a new product launch, or marketing campaign. While it’s an important topic I discuss on a regular basis, scenario planning takes a more short-term outlook.

But in order to truly know if a particular strategy is the right fit, you have to address questions like what the business environment will look like 10, 20, 30 years from now and will our strategy and targets be relevant for the future we’re facing.

A recent discussion with Hans Læssøe dives into the tool of strategic scenarios as a way for understanding and preparing for long-term uncertainty. Hans refers to it as uncertainty because any possible issues can be risks or opportunities depending on how the company decides to respond.

Although I’ve discussed methods like risk sensing and signpost analysis, Hans’ method is by far the most comprehensive for understanding the proper risk response for long-term issues.

Hans outlines the strategic scenarios method in his book Prepare to Dare (pgs. 118-130) but the interview contains additional commentary that can be helpful for understanding this method.

Below is a list of points we discuss for easy reference.

  • What is strategic scenario planning?  (0:40)
  • Why do you think people should use strategic scenario planning? (1:58)
  • What preparations do strategic scenario planning sessions require? (2:56)
  • What process(es) people should expect during strategic scenario planning? (8:20)
    • Using the “2×2 method” for understanding drivers of uncertainty. (10:40)
    • Understanding what each of the scenarios mean to your company. (12:58)
    • Triggering imagination to identify “issues” that your current strategy hasn’t accounted for. (14:52)
    • Assessing identified issues through modeling. (16:40)
    • Bridging the gap between scenarios and your current strategy. (21:40)
    • Assigning responsibilities for action items. (24:56)
  • With such a long list of to-do items, how do you prioritize? (25:56)
  • One potentially huge roadblock to a successful strategic scenario session. (29:30)
  • Including the Board in the strategic scenarios process. (31:39)
  • Origins of Hans’ process. (33:20)
  • Who should be involved in a strategic scenario session? (34:40)
  • What would be your 3-sentence description that people should expect as the outcome? (36:35)

I want to take a moment to thank Hans for helping us understand methods we can use to understand long-term uncertainties. As he says in the beginning of our discussion,

Strategic_Scenarios

I look forward to future conversations with Hans on this and other important risk topics.

Does your company examine long-term scenarios that could impact goals and objectives?

To share your insights on the importance of understanding long-term uncertainties, please feel free to leave a comment below or join the conversation on LinkedIn.

And if your company is struggling to meet goals and doesn’t know where to start, please don’t hesitate to reach out to schedule a one-on-one conversation to better understand specific issues and develop an approach that will work for your company’s needs.

Posted in

Sign Up For Our Newsletter

Sign Up For Our Newsletter

SDS-Logo
about-sidebar-v2

Meet Carol

Helping companies achieve their vision and strategy, and succeeding in today's turbulent world, is something I'm honored to be a part of. Whether you're an occasional blog visitor or a long-term client, thank you for letting us be a part of your journey.

Most Recent Posts

The 12 Days of ERM Christmas

Without a doubt, one of my family’s favorite holidays is Christmas. Part of the fun, especially for our son, is seeing what “Santa” brought, but most importantly, we treasure the spirit of peace and goodwill the season brings. And after what seemed to be a never-ending warm spell, the weather is expected to be good…

Read More

Don’t Let Goals and Initiatives Be Blindsided by External Events

As the end of the year draws near, I think we’d all agree that while it wasn’t without its challenges, this year also wasn’t quite as turbulent as the previous two. While a lot of people are juggling company parties, shopping for friends and family, and special activities for the kids, most companies are putting…

Read More

Going the Distance: Ensuring Successful Execution of Strategic and Annual Initiatives

Strategic planning is a challenge – of all people, I understand… After all the meetings, risk and data analysis, and brainstorming of the preceding months, it’s tempting to think this is the end of the road and you can relax. Contrary to this common perception though, this is exactly not the time to relax, but…

Read More

Avoid Rookie Mistakes and Protect your Internal Reputation

Be honest – have you ever done something that you soon realized was a real rookie mistake? Me raising my hand… Considering the nature of ERM’s role to ask questions and challenge assumptions (often during conversations with executives), it can be argued that, in at least some cases, the expectations bar for risk professionals is…

Read More

ERM at Thanksgiving – An Illustration of Risk Management in Action

On occasion, I like to take some of the concepts we risk professionals think about in our jobs and apply them to different personal situations…take some of the same concepts we use when working with executives to develop corporate strategy and manage risks or uncertainty around that strategy. It’s Thanksgiving week in the U.S. –…

Read More

Why Quantitative Risk Assessment is Not Just the Best But the Only Option – A Conversation

Periodically, I have the pleasure of speaking one-on-one with Hans Læssøe on a variety of topics around ERM, strategic risk, and other issues and trends. As you know from my previous conversations (here, here) and posts featuring his work, Hans was formerly a practitioner at the iconic LEGO Company, but even more notably, is a…

Read More

The Three Lines Model – 3 Reasons Why I Don’t Like It

Everyone likes a clear-cut template that offers an easy way to create or manage something…I mean what’s not to like about a step-by-step process for accomplishing what you want? Sometimes this can work without any issues, such as the case with the Project Management Book of Knowledge (PMBOK), ISO 9001 standard, or a new cooking…

Read More

5 Avenues for Expanding your ERM Knowledge

One thing I was taught to appreciate from a young age was the value of education and knowledge. It didn’t necessarily matter what the subject was, just that I always maintain a learning or growth mindset regardless of my current status in life. This mindset has served me well over the years, and it’s a…

Read More

Storytelling and Risk Management – Developing Skills that Technology Cannot Replace

It’s amazing how technology has developed and changed our working world over time. Imagine trying to run my risk and strategy consulting firm without tools like Zoom, Box, Slack, and other ERM-specific technology tools. There is no way we would be able to serve our clients the way that we do. Just consider how the…

Read More

3 Phases to Creating and Launching an ERM Program Focused on Organizational Success

If you’ve been handed the task of creating an ERM program for your organization, let me first offer my congratulations quickly followed by my empathy for the task ahead of you. I don’t say that to scare you but to provide a small dose of reality. Building, launching, and refining an ERM program that is…

Read More