Risk in work unit business planning: What is it?

In business planning, ‘risk’ is just the possibility that your unit’s outcomes for the year will be different from those you promise.

What to read first: Risk in work unit business planning: Start here

New to this Version 3.0 Beta

You have found a how-to guide for confidence. It shows you how to have confidence in a good outcome from your unit.

That outcome is the total outcome from the year covered by your unit’s business plan.

Confidence is the result of understanding and managing risk. Understanding and managing risk delivers more than confidence for you as the unit manager. It delivers confidence that your boss can share, along with the rest of your organisation.

What you’re doing is managing. It’s not an optional extra role called ‘risk management’.

You don’t need to know anything about ‘risk management’ before building confidence in your business plan. You need to know your business. And somewhere between you and your boss, you need to know what’s acceptable to the organisation.

In the Clear Lines on Audit and Risk, risk management is always done for the right reasons. It exists only to achieve confidence in outcomes. You will have that confidence, and you will share that confidence with others.

Each of the how-to steps in this guide are toward that confidence. The goal remains in sight at each one of those steps. None of the steps require that you believe in ‘risk management’ as a process.

This guide is designed for big and small work units. It expands for work units big enough to contain many other units. It is also intended for single work units barely big enough to have their own business plan.

The Clear Lines on Audit and Risk do not know your business the way you do. The guide recommends steps for you to take. It does not advise you on the particular risks in your work unit’s activities, or on the risk in your organisation’s business. You need to know those yourself. Following this guide may lead you to finding out more about them, using your own capabilities.

This guide does not cover Enterprise Risk Management, project risk, or thematic risk such as safety and security. Neither is it about quantitative risk work for financial services. The full meaning of ‘risk management’ is explored in another series on this site.

You may have been given some corporate guidelines on risk in your business plan. There will be some differences between this guide and the corporate guide. Either way, you can get the confidence you need from using this guide.

In business planning, ‘risk’ is just the possibility that your unit’s outcomes for the year will be different from those you promise.

You start with the business plan, whether it is a polished draft or just a general idea of how things are to be. ‘Risk’ is just the possibility that your unit’s outcomes for the year will be different from those expected by your organisation. Risk isn’t bad, or good. Taking more risk can be the way to better performance outcomes.

These views come from the International Standard ISO 31000. It says that risk is the effect of uncertainty on objectives.

‘Risk’ can mean a lot of things, but risk in business planning leaves out a lot of the complexity.

Risk in work unit business planning: A how-to guide

What is it?
Why you might care about risk in work unit business planning This article

First steps

Next steps

Final steps

Find the unit outcomes that matter

How your unit might not deliver the outcomes

Taking action

Why this way?
How the Clear Lines are different


Next article for Managers

Risk in work unit business planning: Why this way?

Every step takes you closer to confidence in delivering on the plan, and getting credit for your unit. The steps in this guide guarantee that your risk work will line up with what’s important to you, your boss, and your organisation. You can take all the steps in self-protection, without any support from the boss. This process can be followed by units at multiple levels, all at once. You can take all of these steps without any corporate support or guidance from risk specialists. There are some areas where you may run into differences with risk specialists or corporate expectations. You will be way ahead of typical corporate ‘risk management’.

New to this Version 3.0 Beta

Next article for Managers

First steps to confidence: Find the unit outcomes that matter

The first step is validating the unit’s objectives. ‘Risk’ is meaningless without the objectives. You understand each objective only when you see how success and failure are different. To see that difference, draw pictures. The outcome pictures must show your real world as it might be at the end of the planning period. You will use the outcome pictures to understand the significance of unplanned developments during the year.

New to this Version 3.0 Beta

Drill-down articles

Starting from the business plan

A business plan explains what the unit delivers to the organisation in exchange for the resources it uses. The business plan document is usually a formal record of decisions already made.

New to this Version 3.0 Beta

Assumptions

To reach assurance you must know your business. You and your boss must know what’s acceptable. It helps if you can talk with the boss. ‘What’s acceptable’ includes behaviours, numbers, delivery, real-world outcomes, and outcome likelihoods. It’s the real-world outcome likelihoods that matter.

New to this Version 3.0 Beta

Risk management driven as a prescribed process

The Clear Lines on Audit and Risk lead to meeting the assurance demands of the boss. Corporate risk specialists may drive ‘risk management’ as a prescribed set of steps, regardless of assurance demands.

New to this Version 3.0 Beta

Exclusive focus on Enterprise Risk Management

Your organisation may understand ‘risk’ exclusively as Enterprise Risk Management (ERM). Understanding business plan risk for work units is not ERM. It is a component of ERM.

New to this Version 3.0 Beta

What the risk work delivers: confidence

Building confidence in your business plan results in auditable ‘risk’ documents. The documents explain the decisions you make within business planning and over the year. They also explain the assurance you give the boss. The documents are not the end result. The process is not about filling templates. The end result is outcome assurance based on smart decisions and effective actions.

New to this Version 3.0 Beta

Understanding ‘risk’ for business planning

The focus of business planning is the end of the planning period. ‘Risk’ in work unit business planning is the uncertainty of the year-end result for the organisation, from all possible causes. ‘A risk’ is one pathway by which the year-end outcome can be different to the success outcome you planned. That limits the range of ‘risk’ you need to think about right now. Risk isn’t bad, or good. Taking more risk can be the way to better performance outcomes.

New to this Version 3.0 Beta

Previous article for Managers

Risk in work unit business planning: Start here

New to this Version 3.0 Beta

Index to the topic Risk in work unit business planning

Leave a Reply

Your email address will not be published. Required fields are marked *