Most discussion of risk management considers it as a separate component in the development and control of the enterprise. For simplicity this is often valuable as it focuses the attention of the business planner on creating systems that will manage the most common failure points within the enterprise or organisation. When one considers that every decision and action that the enterprise takes has an element of risk, any overall review of risk should consider the entirety of processes involved in creating and maintaining progress within the organisation. This approach will achieve a step by step reduction in the overall risk profile of the enterprise or organisation as each component is analysed and appropriate action taken.
In every element of the risk environment the planner needs to answer the following questions:
What are the risks?
Do they currently exist or are they potential?
Who is responsible for their assessment and management?
How potentially serious are they?
Can they be managed or significantly reduced through appropriate planning?
What is best practice for managing the risk and how can it be introduced into the enterprise?
Can the information system identify changes in the risk environment early so that corrective action if necessary can be taken as soon as possible?
Is there a key performance indicator that the information system and management team should concentrate on to identify these changes?
What external advisor or senior manager provides perspective on the choices made?
The role of the knowledge centre
Ibis focuses on the role of the knowledge centre as the core of its bottom up approach to business planning. Including risk assessment as part of the role of the knowledge centre improves understanding of risk (as it comprises individuals with the closest understanding of real market conditions) and control (as they are most likely to be aware of rapid changes in the environment).
Such inclusion of risk management is demonstrated in the business plan example provided as a download on the front page.
Designing out risk
Central to any approach to risk is that best practice suggests that designing out risk is far more cost effective than dealing with the effects of failure. It is probably the most important component of overall contingency planning, once the failure points have been identified. This analysis attempts to provide a reasonably comprehensive view of the major failure points within the typical enterprise and a comment on best practice to reduce the overall level of risk. This web site page is designed to provide the reader with a rough and ready assessment of areas of risk within their enterprise or organisation. It makes no attempt to weight the various components. From an understanding of key risk components will come a focus on how to design it out, share risk, or mitigate it.
Risk indicator and risk profile
By attacking each risk component within the risk universe and understanding the level of risk left at the end of such analysis (the risk indicator) provides the organisation or the enterprise with a quick method of assessing where the enterprise is (the risk profile). The development of a risk profile should be one of the final elements of the business plan, as a review mechanism to ensure that the organisation both understands the risks going forward and accepts the inherent risk within a particular policy. Using a Likert scale ranging from low risk to high risk for each component provides a rapid visual chart of the overall risk status of the enterprise or organisation.
Creating a simple risk chart
Understanding what is important in risk management is vital for any plan as it concentrates effort and resources in effective management rather than dealing with a host of issues that are unlikely to occur or if they occur will have little impact on the business. Combining risk elements into a chart enables the planning team to rapidly review the entire risk environment. There are 9 components that help organize the data:
Responsibility (knowledge centre) – decentralizes risk management to the operating unit;
Benchmark – makes the knowledge centre identify what is best practice for the relevant component;
Benchmark position – identifies how much of an outlier the enterprise is against best practice;
Risk level after designing out, sharing, mitigating on Likert scale from 1 to 10 – highlighting those high risk components;
MIS – is the MIS designed so that trends in risk development will be identified early;
Standard operating procedure – does a standard operating procedure exist so that risk management is standardized within the enterprise;
Contingency plan – does the risk element link to an existing contingency plan, and should one be developed;
Oversight responsibility – what individual or group is responsible for oversight and review of this aspect of risk.
An example would be the first component in alphabetical listing of risk elements – accounting methodology.
A sample full risk management chart is available as part of the model business plan, a summary of which is available as a download, and is used as part of Ibis business plan development or Ibis business plan training.
Backstopping the business model
Many of the components of risk management are similar to those that are identified in the creation of the business model. Leaving the assessment of risk towards the end of the business plan ensures that the options reviewed are not restricted to the third element of De Bono – “because”.
This approach to risk management places it clearly in the third of the key business questions:
Where are we?
Where do we want to be (and when)?
How are we going to get there cost effectively?
Managing risk is a clearly a cost issue within a specific set of strategic and operational goals. In common with the development of a detailed business model, the initial work will be somewhat lengthy and tedious. Once completed both the business model and the risk assessment can be rapidly updated as part of the business plan review within the overall planning cycle.
The components of risk management
To clarify the subjective evaluation of risk management in this on-line quiz, all topics are arranged alphabetically.
Accounting methodology. The more conservative the accounting system used, the lower the risk.
Risk indicator: The less and less conservative the accounting methodology, the higher the level of risk.
Risk indicator: High and rising CAT score
Administration expense ratio (AER). The administration expense ratio evaluates the percentage of revenue spent on the administration function.
Risk indicator: The administration ratio should fall as the enterprise grows; it should be below the respective benchmark. Variations in either or both of these will increase risk.
Advertising effectiveness. Poor advertising will reduce the generation of new and repeat sales. Evaluating advertising will require the creation of advertising objectives and the measurement of performance against these objectives.
Risk indicator: Poor advertising performance.
Advisor rotation. Long term relationships with advisors have disadvantages. They tend to have a single approach to problem solving, suffer from the effects of capture theory, and will often have conflicts of interest. Medium term fixed contracts without possibility of renewal remove this potential problem.
Risk indicator: Long term advisor relationships suggest a rising risk profile.
Alignment with market drivers. Best practice suggests that the creation of objectives should be consistent with the external and internal forces acting on the enterprise or organisation, dealing with the world as it is, and not as some would wish it to be.
Risk indicator: The further the enterprise is away from what the market is telling it, the greater the level of inherent risk.
Appraisal. An effective appraisal system will do much to improve productivity and reduce labour turnover, both substantial risk components in the enterprise.
Risk indicator: A poorly managed appraisal system will significantly reduce productivity, intrapreneurialism, and increase labour turnover and cost.
Arbitration. A major risk component in many operations will be the potential consequences of litigation, both for management time and overall costs. Using alternative dispute resolution methods will substantially reduce costs and improve operating efficiencies.
Risk indicator: High levels and/ or rising levels of litigation.
Assumptions. Formally identifying and agreeing on the key assumptions that underlie the future progress of the enterprise will do much to clarify major risk elements in the external and internal environments.
Risk indicator: Assumptions that are not rigorously tested and reviewed are often a major cause of enterprise failure.
Audit. The financial audit is part of the enterprise legal obligations, but when properly planned both the external and internal audits can provide further risk management information concerning reductions in the potential for fraud and in operating efficiencies of the financial management system.
Risk indicator: A poorly designed audit will both increase costs and fail to add to enterprise operating efficiencies.
Authority/responsibility. Misalignments of authority and responsibility are a potential source of major risk within the organisation.
Risk indicator: Authority and responsibility not clearly defined within the organisation.
Average sale. The value of the average sale provides a measure of customer satisfaction, product or service range acceptability, sales productivity and costs in servicing the customer base.
Risk indicator: Low and falling average sales compared to benchmark.
Awareness. The enterprise cannot achieve forward momentum in the absence of awareness as the prospective purchaser will not include the product or service offering in the potential purchase portfolio.
Risk indicator: Low and or falling levels of awareness.
Bad debts. High levels of bad debts or rising levels indicate serious levels of risk to cash flow and profitability.
Risk indicator: High/changing BDR.
Barriers to entry. Effective barriers to entry significantly reduce risk – with best practice requiring that enterprises build, maintain and ideally expand such barriers.
Risk indicator: Poor or weakening barriers to entry
Benchmarking. Identifying where the enterprise or organisation is effective or ineffective against its peer group will focus planning on exploiting strengths and attempting to eliminate weaknesses.
Risk indicator: Benchmarks not used; inappropriate benchmarks used.
Bonus systems. The creation of bonus systems that are both broadly based, reflect the relationship between achievement of all components of the balanced scorecard rather than a single component, and have a large deferred compensation element in shares rather than cash for senior employees will be an important component in the management of risk.
Risk indicator: Mismanaged bonus systems will substantially increase costs; fail to produce real productivity or profitability gains, and lead to declining morale.
Break even value (BEV). The lower the cost base, the quicker the enterprise will generate positive cash flows. As the break-even point rises, risk increases.
Risk indicator: A high and/or rising BEV
BS index. Stakeholder belief in management statements is important for organisational cohesion and the implementation of strategy.
Risk indicator: A high and/or rising BS index in all key stakeholders.
Budgeting. Budgeting creates two types of risk. When the budget is too tight profitable risk taking is reduced as the emphasis remains focused on meeting budgetary demands. Where there is no budgetary control, costs will escalate often out of control, draining cash from the enterprise. Best practice suggests that a middle ground between these two extremes needs to be created with clear cost management targets but the possibility of additional expenditure from enterprise free cash flow when expenditure meets investment appraisal hurdle rates.
Risk indicator: A budgeting system that fails to deliver effective control and/or effective intrapreneurialism.
Business model. The simpler the business model, the easier it will be for stakeholders to evaluate and support implementation. The greater the complexity, the greater the potential for confusion. The closer the business model is to meeting the market critical success factors, the lower the risk.
Risk indicator: Confused business models and those that fail to manage the market critical success factors.
Business monitoring. A monitoring system that incorporates regular and formal (monthly, quarterly) team responsibility (ideally within knowledge centers) based around key performance indicators, benchmarks, targets, projects, and budgets will significantly improve the responsiveness of the organisation and integrate with a bottom up planning system.
Risk indicator: Poorly designed, irregular and centralised business monitoring.
Capex. The capital expenditure ratio will measure the investment that the enterprise is making in plant and productive equipment. The failure to regularly update plant ( a low capex ratio) will lead to decreased productivity, often higher costs, poorer quality of goods and services, and lower customer satisfaction. Conversely excessive expenditure on plant can drain cash and management time.
Risk indicator: A capex ratio which varies considerably from benchmark.
Cascade investment. A cascade investment system with highest rates of investment return receiving funds will provide a means of focusing the enterprise on those components which yield the best return, subject to the over-riding requirements of the balanced scorecard.
Risk indicator: Subjective investment decisions.
Cannibalisation. Analysing the impact of new products or services to ensure that any cannibalisation that occurs will generate a net return to the enterprise will reduce potential risk.
Risk indicator: Lack of analysis in new product/ service introduction of potential effects of cannibalisation.
Capacity utilisation. There are risks at both ends of the range of capacity utilisation. Too high and the enterprise faces risks of failure to meet demand and dangers of plant failure due to high levels of activity; too low and profitability and cash flow will be under pressure.
Risk indicator: Poor and/or declining capacity utilization ratio.
Capital allocation. Poor capital allocation will reduce enterprise returns.
Risk indicator: Poor capital allocation ratio.
Capture theory. Too close a relationship between regulators and/or advisors will create an environment where higher levels of risk taking will become acceptable. Independent regulators and/or advisors will limit this tendency.
Risk indicator: Long standing relationships with the same individuals occupying senior regulatory positions and/or advisory positions.
Cash flow. Negative cash flow destroys businesses over the long term.
Risk indicator: Rapidly declining/ poor cash flow, poor CFROI.
Centralisation/decentralisation. High levels of centralisation and decentralisation both create risk. The correct choices of authority/ responsibility within the organisation, coupled with appropriate standard operating procedures and monitoring systems will be necessary to reduce the overall level of risk.
Risk indicator: Poor management of authority/ responsibility within the organisation.
Certification. Product or service certification and/or operating procedure certification stabilises product or service offerings and will reduce the potential for catastrophic failure.
Risk indicator: Systematic lack of product/service certification and or operating procedure certification.
Clustering. Locating the enterprise near other organisations involved in the same activity has many advantages in reducing operational risk.
Risk indicator: Poor location of operations reducing access to cluster benefits
Code of conduct. The creation and continued objective implementation of a comprehensive code of conduct will reduce the risk of major employee malpractice leading to failure.
Risk indicator: Poorly designed code of conduct and/or systemic failures in implementation.
Communicability. One of the six dimensions of product/service success. The more complex the benefits described, the less likely purchase will be. Understanding the key benefits required by the customer and identifying how these can be easily communicated will substantially increase the acceptability of the product/service.
Risk indicator: Poor and or falling product/service communicability.
Communication. Leadership which effectively communicates to all stakeholders their long term vision and short term decisions will reduce conflict, improve motivation and reduce risk. The effectiveness of the communication needs to be checked through KFR.
Risk indicator: Lack of understanding of key objectives, poor KFR.
Compatibility. One of the six dimensions of product/service success. All customers have “sunk” capital in existing methodologies. A failure to ensure that the product or service is not compatible with existing systems will reduce its acceptability.
Risk indicator: Low and or falling compatibility to competitive products or services.
Competitive advantage. A regular review of competitive strengths and weaknesses as part of the business plan development will reduce risk through failure to identify key trends, weaknesses and opportunities.
Risk indicator: Limited competitive analysis, poor POD score.
Complaints policy. Research shows that a well designed and managed complaints system enhances customer loyalty and reduces risk.
Risk indicator: Poorly designed complaints policy and/or one that is poorly implemented.
Complexity. One of the six dimensions of product/service success. The more complex the product or service, the greater the difficulty that the customer will have in using it effectively, substantially lowering the potential for repeat purchase. An emphasis on design to improve operational efficiency, flexibility, servicing and upgrades will reduce the impact of complexity.
Risk indicator: High and/or rising complexity.
Contingency plan. A well organised contingency plan will allocate responsibility, identify major failure points, attempt to design them out wherever possible, create an information system that can identify problems early and properly fund the necessary actions.
Risk indicator: No contingency plan or one poorly designed
Core competence. Building and maintaining core competence through appropriate recruitment appraisal, recruitment, appraisal, training, disciplinary/ grievance procedures and personal development planning will reduce risk through enhanced employee skills and competitive advantage.
Risk indicator: Lack of clear understanding of the components of enterprise core competence.
Core/non core employee ratio. The relationship between employees directly contributing to profitability and revenue generation and those that exist in staff roles has a direct bearing on the level of risk. Increases in staff roles will mean a steady increase in cost and risk.
Risk indicator: High levels of non-core employees.
Corporate governance. Research shows that the creation of a comprehensive corporate governance system which provides for checks and balances within the organisation means better performance and management of risk.
Risk indicator: Corporate governance concepts not utilised or poorly implemented.
Cost of capital. As the cost of capital rises, the enterprise will find it more and more expensive to finance operations.
Risk indicator: Cost of capital significantly above benchmark, and/or rising.
Covenants. Restrictive covenants pose major risks for the enterprise. They are most common in planning and loan agreements, though they obviously also exist elsewhere such as in brand or technology licencing, where they serve to contain operations within clearly defined parameters.
Risk indicator: Restrictive covenants that pose major operational problems.
Creativity. Enterprises that have single problem solving approaches are likely to face higher risks than those that have a formal system for identifying and analysing problems and opportunities.
Risk indicator: Poor creativity within the enterprise.
Credit management. Well management credit systems to ensure cash flow is maximised and credit risk minimised.
Risk indicator: No systematic planning on credit management, and/or failure to properly implement credit management systems.
Critical success factors. Within each sector there will be a set of critical success factors. Understanding and meeting these critical success factors will reduce the potential for failure and enhance enterprise performance.
Risk indicator: Limited match of enterprise output with critical success factors.
Customer investment review. A customer investment review as part of the planning process will focus attention on the specific needs of major customers, improving retention rates and levels of profitability.
Risk indicator: Customer investment review not included in business plan development.
Customer life value (CLV). The customer life value measures the rate of customer rotation or “churn”. High rates of churn lower the customer life value and significantly reduce the overall rate of return to the enterprise as greater and greater investments have to be made in recruitment of new customers. Increasing the CLV will substantially reduce enterprise risk.
Risk indicator: Poor and/or declining customer life value.
Customer satisfaction. Customer satisfaction surveys (including mystery shopper techniques where relevant) reduce the rate of customer loss, improve profitability and are key source of new product/ service development ideas.
Risk indicator: An unwillingness to carry out systematic and regular customer satisfaction surveys.
Customer spread risk. There are two extremes of customer risk – too few customers or too many. Managing the customer spread ratio will reduce risk and make it understandable.
Risk indicator: Customer spread at extremes.
Data management. Enterprises or organisations that fail to ensure effective data management procedures may face very high levels of risk.
Risk indicator: Easily accessible data, poor data storage.
Debt or gearing (DER) levels. Debt is often a major source of risk as debt has to be continually financed regardless of cash generation within the enterprise. High levels of debt when compared with the industry average will require very careful management to ensure that risk levels are not substantially raised.
Risk indicator: High debt levels and/or rising debt levels.
Debt age. High levels of debt that must be refinanced at the same time may cause increased risk, especially when credit markets are difficult. A phased debt profile achieves reduction in this potential problem.
Risk indicator: All debt of same age and/or all debt short term.
Debt source. A single supplier of debt will potentially raise risk as internal problems with the supplier may demand partial or complete early repayment.
Debt source: All debt from single supplier.
Decision making. The best objectives will be ruined by incoherent decision making. Best practice in decision making is complex, but the basic test will be whether the decision is reasonable in relation to the facts on which the decision was taken.
Risk indicator: A history of poor decision making.
Deferred compensation. Bonus systems that generate short term cash for senior management are generally guaranteed to increase appetite for risk. Deferring the compensation payment until later years during which the success or otherwise of the bonus generating activity will significantly reduce risk.
Risk indicator: High levels of short term bonus payments.
Design (DFCA, DFA, DFS, DFC, DFD). The failure to properly design for all eventualities will significantly increase levels of risk. The main components will be designing for fail safe (DFSS), competitive advantage, (DFCA) designing for assembly (DFA), designing for ease of service (DFS), designing for ease of upgrade (DFU), design for contingency (DFC) and design for disassembly (DFD).
Risk indicator: Lack of a systematic approach to design in products or services to ensure maximum productivity.
Design for operational efficiency. Regular reviews of plant and office layout will reduce costs, improve performance, and impact favourably on health and safety problems.
Risk indicator: Poor layout, poor integration.
Directed vs emergent strategy balance. Certain strategies are long term and demand centralised investment such as most international development, and most product development. Others such as consolidation and market penetration can benefit greatly from exploiting short term advantages in the market. Ensuring that the enterprise has the flexibility to exploit these short term advantages reduces risk.
Risk indicator: Too much emphasis on either type of strategy.
Disciplinary code and grievance procedure. An effective disciplinary code and grievance procedure improves decision making, morale, and information flow. Such a disciplinary code should pay particular attention to an independent appeals system and the treatment of whistleblowers.
Risk indicator: Lack of a comprehensive disciplinary code and grievance procedure.
Distant data capture. Many enterprises have operations or equipment that is not regularly supervised. Systems that provide distant data capture reduce the potential for this type of failure.
Risk indicator: The lack of distant data capture.
Diversity index. The more diverse the pool of expertise and opinion, the better in general the level of decision making. Analysing the employee base through the use of a diversity index will help in improving overall variety within the enterprise.
Risk indicator: Low and/or declining diversity within the enterprise/ organisation.
Dividend policy. A well managed dividend policy will ensure a focus on cash generation and improve shareholder relationships, and reduce the risk future funding requirements.
Risk indicator: An inconsistent dividend policy.
Divisibility. One of the six dimensions of product/service success. One of the crucial aspects of product/service sales development is the achievement of trial. The ability of the product or service to be judged on a stand-alone component of the range will reduce purchase risk of the entire product or service offering.
Risk indicator: Poor and/or decreasing ability of the product/service to provide trial opportunities.
Division of executive powers. Separating the chief executive officer powers from those of the president or chairman will reduce the potential impact of leadership psychosis.
Risk indicator: Concentration of power in a single individual.
Due diligence. Any failure to complete appropriate due diligence will substantially increase the level of risk. This will be most extreme in mergers and acquisitions where three types of due diligence (financial, legal, commercial) are usually employed, but should be extended to recruitment, new customers, and new suppliers.
Risk indicator: A continuing failure to apply due diligence in key decisions.
Economies of scale. Enterprises can either benefit from economies of scale (variable production vs fixed costs, experience curve effects) or suffer from diseconomies as large units create further problems.
Risk indicator: Production/ service delivery units disproportionate to market best practice.
E-enablement. The linking of more and more customers and suppliers into an information technology framework should improve service quality and reduce cost, thereby reducing overall enterprise risk. This will include web design components and web based delivery.
Risk indicator: Low levels of customer and supplier integration through information systems.
Employee satisfaction surveys. The ability of the entire enterprise to work together is crucial to the management of risk. The knowledge of whether this is working or not can be best obtained through a regular employee satisfaction review.
Risk indicator: A lack of information on employee attitudes and a lack of concern about these attitudes within management.
Employee suggestion scheme. Employee suggestion schemes reduce risk through identifying key opportunities and risks, while providing profitable cost cutting ideas, and improving motivation.
Risk indicator: Limited scope of employee suggestion schemes
Environmental audit. The environmental audit will reduce potential risks through environmental impact and legislative consequences.
Risk indicator: Poorly conducted environmental audit
Entrants. Preventing entrants or reducing their impact as much as possible will be important in the reduction of risk. Those markets where there is substantial potential for new market entrants will pose a substantially raised level of risk with lower barriers to entry.
Risk indicator: High levels of entrants or potential high level of entrants.
Equity bonus rate. High levels of equity as an element of bonus payments plus a deferred bonus system ensures that employees share risk with other stakeholders.
Risk indicator: High levels of cash in bonus systems.
Exit interviews. Identifying specific individual or group failures will be important in managing risk. This focused view is best achieved through exit interviews with key staff.
Risk indicator: Non-existent or poorly conducted exit interviews.
Exit planning. Every enterprise will need to divest itself from time to time of elements of the business that do not meet current or future objectives. The management of this will be complex and subject to considerable risk.
Risk indicator: Continual problems with the implementation of withdrawal strategies.
Expectations/fulfillment gap (EFG). Repeat purchase will be determined at least in part by whether the performance of the product or service matches what the customer thinks was offered. A wide EFG will substantially reduce performance.
Risk indicator: Wide EFG
Fail safe. Ensuring that products or services, systems and plant will fail safe will be of major importance in the designing out of risk in the contingency plan.
Risk indicator: Continual examples of systems and/or procedures not failing safe.
Fear. Every new initiative involves risk of failure. Where there is a substantial fear of failure within the enterprise or organisation, few new initiatives will be undertaken.
Risk indicator: Fear identified as a key factor in employee satisfaction surveys and exit interviews.
Finance expense ratio (FER). The cost of running the finance department will be an impact on revenue and profitability.
Risk indicator: High and/or rising levels of cost compared with benchmark.
Financial headroom. The ability of the enterprise to take new initiatives will be largely dependent on its financial headroom which will be a combination of existing cash, current and future cash flows, potential asset sales, potential to borrow and raise new equity. The greater the financial headroom, the lower the risk.
Risk indicator: Poor financial headroom and/or worsening financial headroom.
Focus. Best practice should ensure that the enterprise maintains its focus on its core objectives coupled with the enterprise critical success factors and is not unnecessarily diverted by short term external or internal events.
Risk indicator: Evidence of confusion about objectives; lack of prioritisation on key problems/ opportunities.
Forecast case. The forecast case is the choice of forecast proposals between the absolute best and the absolute worst case. The choice of forecast case is vital in managing risk in the business plan.
Risk indicator: Unrealistic forecast cases are a major indicator of risk.
Forecast error. Every forecast has an associated error; understanding what the forecast error is will provide the planner with the range of potential outcomes in the forecast.
Risk indicator: No attempt to identify the level of forecast error in the plan.
Forecasting systems. A forecasting methodology which uses a variety of techniques (both quantitative and qualitative), identifies the level of forecast risk for each major area of the business and demands that management formally accept high risk or lower risk outcomes on which to base future developments will be important in risk management.
Risk indicator: No attempt to align forecast importance with forecast systems through the use of a forecast grid.
Fraud. Extensive fraud can bring down any enterprise. A mix of policies to reduce the potential for fraud and to identify potential fraud will substantially reduce risk.
Risk indicator: No systematic policy to manage potential fraud.
Free cash flow (FCF). The creation and maintenance of free cash flow targets within the enterprise provides a cushion of revenue for exploiting opportunities, dealing with unexpected events, and enabling the development of an internal competition system to encourage intrapreneurialism.
Risk indicator: No FCF and/or declining FCF
Glass ceiling. The existence of a glass ceiling reduces the pool of talent available to the enterprise or organisation and has a significant effect on overall morale.
Risk indicator: Lack of diversity at more senior levels within the enterprise or organisation.
Gross profit. Research shows a clear linkage between levels of gross profitability and short term survival. A failure to maintain and increase gross profit levels will substantially increase the risk that the enterprise faces.
Risk indicator: Gross profit significantly below benchmark, and/or declining levels of gross profit.
Health and safety. Comprehensive health and safety procedures will significantly reduce risk and improve operational performance.
Risk indicator: Lack of a comprehensive health and safety system.
Health management policies. Poor health within the employee base, whatever the cause, will substantially reduce productivity. Establishing a formal health management system will reduce risk.
Risk indicator: Non-existent or poor health management policies.
Hedging. For many enterprises and organisations the use of hedging techniques will reduce risk through smoothing cost fluctuations.
Risk indicator: Hedging not used in areas where fluctuations are common.
Impact analysis. Change occurs and creates risk. Where the enterprise has a formal mechanism to identify the potential actions required it will allow change to be better controlled, thereby reducing risk.
Risk indicator: Enterprise does not attempt to control the environment by identifying potential impacts and analysing the potential best response.
Implementation options. Each alternative method of achieving the implementation of a particular strategy will have associated risk. Applying a portfolio theory approach to the balance of implementation options will identify risk and question the choice of decisions that have been made. Particularly high levels of risk will be associated with acquisitions (unless the acquisition is small in relation to the acquirer, returns from the acquisition are clear cost cutting goals, the acquisition is in the same product/ service sector and same region) and joint ventures.
Risk indicator: High proportion of implementation options involving significant risk.
Industrial relations. Poor employee management relationships will inevitably raise levels of risk.
Risk indicator: No formal industrial relations policies and/or poor implementation.
Inflation. Rising or falling inflation poses significant problems for the enterprise in managing prices, costs and cash flow.
Risk indicator: Rapid changes in inflationary pressures
Information overload. Too much information generated from too many sources will reduce the effectiveness of any organisation or enterprise. Decentralising information collection, focusing on key performance indicators, and limiting central systems to tracking a limited range of objectives will all reduce risk.
Risk indicator: Evidence of plethora of reports; limited use of key performance indicators.
Information technology expense ratio (ITER). IT expenditure may be a major drain on enterprise resources, especially when it is significantly higher than that required by best practice.
Risk indicator: IT expenditure high, and/or rising above benchmark.
Insurance. Risk management through the use of appropriate insurance other than that required by law will be a vital element in dealing with residual risk.
Risk indicator: Lack of annual insurance plan.
Internal satisfaction surveys. The failure of co-operation between separate departments may result in significant risk. Creating and maintaining an internal satisfaction survey to measure levels of intra-company co-operation will identify where such failure is occurring.
Risk indicator: Poor levels of satisfaction between departments.
Interest cover. As the ability of the enterprise to pay its debt declines, the risk that it will breach loan covenants will increase.
Risk indicator: A low and or declining level of interest cover.
Investment appraisal. The introduction of a standard investment appraisal system throughout the enterprise with an agreed rate of return (the hurdle rate) will help in identifying risk and the way in which risk will be controlled.
Risk indicator: No standardised investment appraisal system with common hurdle rate
James's rule. A failure to match revenues and obligations in the same currency will inevitably lead to increased risk caused by foreign exchange fluctuations.
Risk indicator: Poor matching of revenues and costs.
Joint planning. Joint planning with major customers, unions and major suppliers will substantially reduce levels of overall risk and potentially improve quality, cash flow and overall profitability.
Risk indicator: Limited or non-existent joint planning.
Joint ventures. Joint ventures involve substantial risk as they have a high failure rate. The potential for failure will be raised in those in which neither partner has overall control, there is no exit mechanism, no control over technology sharing, and no clear investment plan over the life of the venture.
Risk indicator: Poorly designed joint ventures in major areas of enterprise development.
Keep it short, simple (KISS). Confused and contradictory information throughout the enterprise lowers productivity, strategic implementation and morale.
Risk indicator: Internal and external statements lack simplicity and clarity, poor KFR.
Key performance indicators. Focusing the enterprise on key operational goals within each operational area will reduce risk.
Risk indicator: Limited knowledge of key performance indicators, none used in business monitoring and/or planning.
Knowledge centers. The creation of teams within each part of the enterprise responsible for specific operational implementation, guided by key performance indicators and benchmarks, will significantly reduce risk and identify those areas of the organisation most in need of investment and control.
Risk indicator: Limited and/or declining emphasis on operational expertise and authority/ responsibility for operational decisions.
Labour productivity. High rates of labour productivity reduce risk, low and declining rates of productivity substantially increase it.
Risk indicator: Poor and/or declining labour productivity
Labour turnover. High rates of labour turnover will reduce skills and internal cohesion, generating steadily greater levels of risk.
Risk indicator: High and/or rising rates of labour turnover.
Leadership. Good leadership will identify the best options, will achieve implementation of objectives both in the long and short term by making appropriate resources available, promote best practice throughout the enterprise and clearly communicate short, medium and long term goals.
Risk indicator: Stakeholders rate leadership poor.
Legal review. Substantial failure is possible when poor records are maintained and legal procedures not properly followed (employment, supplier, leases, convenants, data protection, customer contracts, IPR, planning for example). A regular level review coupled with a review of documentation and how it is kept safe will reduce the potential for failure.
Risk indicator: Regular legal reviews not operating, documentation not properly prepared or collated.
Major project supervision. Using completely independent external monitors to critically review the progress of major projects will reduce potentially high risk areas of enterprise development.
Risk indicator: Major project supervision not formally controlled by independent advisors.
Management by walking about (MBWA). Understanding the atmosphere of the business and identifying strengths and weaknesses early rather than late is a key component of good leadership.
Risk indicator: Management isolated and not in contact with all stakeholders.
Management information system. A well managed information systems, which is comprehensive, accurate, simple, timely and secure (CASTS) is vital to enable the enterprise to respond to opportunities and problems within the environment.
Risk indicator: Employees rate information system poor.
Management through objectives (MBO). Project management based activity has significant advantages in reducing risks as it establishes a disciplined framework within which decisions can be taken, with a better understanding of risks and risk management. Best practice in risk management suggests that the enterprise should transform tasks into projects wherever possible.
Risk indicator: Few investments and/or tasks converted to projects.
Market driver alignment. Should strategy not be aligned to market drivers, the level of risk will be substantially increased.
Risk indicator: Low market alignment ratio
Market growth. Different rates of market growth or decline pose a range of problems for the enterprise to manage.
Risk indicator: Enterprise growth rates against market growth (EG/MG ratio) poor and/or declining.
Market structure. Monopolistic or oligopolistic markets pose major risks for enterprises compared with those that have a fragmented structure.
Risk indicator: Market share of major players and/ or their competitive behaviour.
Marketing/sales expense ratio. Marketing and sales costs may be a major drag on enterprise profitability and overall performance.
Risk indicator: High marketing sales/expense ratio against benchmark.
Marketing plan. The marketing plan integrates the relationship between the product benefit and target segmentation and attempts to ensure that the product benefit can be properly delivered.
Risk indicator: A marketing plan that does not fully integrate the 13 components.
Materials requirement planning (MRP). A systematic analysis of component or raw material requirements will reduce risks from high levels of inventory and obsolescent stock.
Risk indicator: A MRP programme that leads to high levels of inventory.
Meeting management. Meetings often lead to significant reductions in productivity, with more and more time spent on trivia. Focusing on those meetings that are essential and using other techniques for others will significantly reduce organisational risk.
Risk indicator: Large amounts of time and/or rising amounts of time spent in meetings.
Mergers and acquisitions. Mergers and acquisitions are high risk investments. Best practice suggests the need for rapid and full integration, a focus on small targets relative to the size of the purchaser, a skilled and focused integration team, and a reliance on cost savings to deliver stakeholder value.
Risk indicator: Poorly designed and implemented mergers and acquisitions.
Mentoring. Mentoring systems reduce risk and improve performance in a number of key areas, by reducing labour turnover and improving project performance.
Risk indicator: No effective mentoring system in place.
Mission creep. Mission creep, the steady extension of goals within a project, has a very high level of risk. Effective project management with clear stagegate components – time, budget, specification, is essential for control.
Risk indicator: Most projects continue without effective review
Motivation. Regular reviews of the entire motivational mix, including non financial as well as financial components will be important in lowering costs as well as risk.
Risk indicator: No motivational policy.
Nepotism. Employment of relatives or friends within the enterprise leads to reduced motivation, communication and productivity.
Risk indicator: Family appointments common throughout the enterprise, poor recruitment policies, low employee satisfaction.
New product/ service expense ratio. New product/ service investment must yield effective returns and high costs must be matched by return on capital.
Risk indicator: High levels of investment against benchmark and/or inadequate returns.
New product/ service development rate. Research suggests that the rate of new product development is vital to enterprise success. Low levels of new product/ service development are symptomatic of future problems.
Risk indicator: Low levels of new product/ service development.
Objectives. Every enterprise needs to have objectives. Best practice demands that these need to be clear, agreed and well communicated and which are consistent with an overall simple business model. Poor objectives lead to failure and risk.
Risk indicator: No clear objectives, no balanced scorecard.
Order processing. A comprehensive order processing system improves productivity, profitability, and customer retention.
Risk indicator: Lack of comprehensive order processing system.
Outsourcing. Outsourcing is a major source of potential risk, with implications for core competence, reduced control on budgets, specification and timing for project completion.
Risk indicator: Outsourcing decisions that damage core competence; those that increase vulnerability, reduce quality and increase cost.
Overtrading. Rapid growth without effective management of the underlying financing of expansion is extremely risky.
Risk indicator: Worsening financial indicators.
Penalty clauses. Penalty clauses within agreements may be a significant element of failure. Designing them out by clearly understanding the demands of the project and allowing for sufficient head room will reduce this risk component.
Risk indicator: Large numbers of uncontrollable penalty clauses in contracts.
Perceived risk. One of the six dimensions of product/service success. The level of perceived risk will be heavily influenced by price (higher prices indicate higher risk), level of after sales support, company reputation (achieved through length of time in the marketplace and branding), and group dynamics.
Risk indicator: High levels and/or rising levels of perceived risk.
Personal development plan (PDP). Key employees are the future of the business. By concentrating on them annually during the appraisal process and developing a clear career path for them, the enterprise will improve the chances of keeping them and through joint planning create an agreed path for skills, authority and responsibility.
Risk indicator: No focused plan for key employees.
Personnel expense ratio. High costs such as recruitment, disciplinary systems, fines and employee compensation will all be a potential substantial drain on enterprise resources.
Risk indicator: Costs of personnel management high against benchmark, and/or rising.
Planning cycle. The creation of a formal bottom up planning system with regular reviews (including planning effectiveness) will significantly improve overall plan performance and reduce risk.
Risk indicator: A lack of a clearly defined planning cycle.
Planning horizon. Every enterprise needs to deal with timescales, with best practice suggesting the creation of a balanced scorecard and the creation of a planning horizon which is consistent with investment and the speed of change.
Risk indicator: Lack of link between balanced scorecard and planning horizon.
Plant age ratio. Older plant increases the risk of failure in production or service delivery.
Risk indicator: Old plant compared with benchmark and/or rapidly ageing plant.
POLITICS. Dysfunctional organisations pose major risks.
Risk indicator: An existing dysfunctional organisation, and/or an increasing trend towards dysfunctionality.
Portfolio analysis. The use of a range of portfolio analysis techniques (including segmentation, value chain, BCG, GE, Kinsey, innovation matrix) in the development of the business plan will improve investment decisions and reduce risk.
Risk indicator: Portfolio analysis techniques not used in plan development.
Portfolio theory. Each type of strategy will have an accompanying level of risk. Best practice would suggest that the enterprise should balance its overall investment levels to achieve an acceptable level of risk ideally within the golden circle.
Risk indicator: Enterprises with high levels of strategic risk, and or those that fail to properly analyse the strategic risk environment,
Pricing power. The ability of the enterprise or organisation to retain its pricing power will be a vital component in risk reduction. Improvements in pricing power should lead to greater gross margins, with consequent improved survival rates; a deterioration in pricing power the reverse. The most useful key performance indicator of pricing power is the price weighted index which identifies the overall average market price and enables the enterprise to evaluate price elasticities.
Risk indicator: Pricing well below benchmark and/or falling.
Premises review. Premises are one of the most expensive parts of most operations. Regular reviews of premises suitability, their location, their potential for re-location to a more effective site, and their costs will all be important in risk reduction.
Risk indicator: Poorly located premises, poorly integrated premises.
Product age spread. There will be two extremes of product age spread – too many old products or services or too many new. Managing the relationship through the product age spread ratio will reduce risk and make it understandable.
Risk indicator: Poor product age spread, and/or worsening product age spread.
Product investment review. A system which objectively analyses potential returns from existing products or services will improve returns and reduce risk from product sales declines.
Risk indicator: No product investment review.
Product spread risk. There are two extremes of product spread risk – too few products or too many. Managing the product spread risk will reduce risk and enable the enterprise to focus on those products that generate revenue and profitability.
Risk indicator: Poor product spread risk.
Production/ service delivery expense ratio. The total costs of production or service delivery, if extreme, will indicate that too much investment and/or cash is involved in this part of the business.
Risk indicator: Production/service delivery expense ratio significantly higher than benchmark and/or rising.
Production life cycle management. With increasing costs of re-cycling and other environmental impacts, the identification of and control over total inputs and outputs is essential to reduce enterprise risk.
Risk indicator: No attempt to manage production life cycles.
Production resource. Aligning the production resource with the enterprise plan to ensure that there is appropriate capacity, flexibility, sophistication, quality and skills will reduce implementation risk.
Risk indicator: Production resource requirements not evaluated as part of the business plan.
Project risk management. With large scale projects, the introduction of formal project risk management techniques will do much to both understand the nature of the risk involved and to properly manage it.
Risk indicator: Lack of formal project risk management.
Protocol. The protocol defines precisely the characteristics of the product or service, and is most commonly used in the new product/service development. Establishing this protocol clarifies the product/service development project and required testing, substantially reducing risk.
Risk indicator: No standard operating procedure, incorporating protocol for the development of new products/ services.
Public relations. A public relations campaign must be properly structured with clear objectives and skilled personnel in charge, otherwise it will be a high source of risk.
Risk indicator: A poor record of public relations and/or no standard operating procedure to establish and manage public relations.
Purchasing policy. A formal methodology to identify suppliers, evaluate their offerings, and control the definition of product/service requirements and payment systems will substantially reduce risk.
Risk indicator: No standard operating procedure for purchases.
Quality circles. The introduction of quality circles into the enterprise (ideally linked with knowledge centers will improve productivity, quality and team performance, with a consequent reduction in risk.
Risk indicator: Limited use of quality circles.
Quick ratio (Z score for manufacturing companies). Monitoring the quick ratio provides a mechanism for managing liquidity risk in non manufacturing companies.
Risk indicator: Poor quick ratio and/or worsening quick ratio.
Random inspection. Complacency is always risky. Ensuring that regular inspections occur when unexpected significantly reduces the potential for poor standards.
Risk indicator: No, or limited random inspection as part of management control.
Reality check. Incorporating a formal reality check into the planning and control process within the enterprise, with individuals or teams taking contrarian positions (Devil's Disciple, Six Hats) to perceived wisdom can identify problems with future developments that must be re-assessed.
Risk indicator: Reality check techniques not used in plan or project appraisal.
Recruitment. A formal recruitment system will reduce the risk of costly choices in the development of manpower resources.
Risk indicator: Lack of a systematic recruitment policy
Recruitment appraisal. Every recruitment decision involves risk. Analysing the true requirement for recruitment through a recruitment appraisal system continually reviews the organisational framework and the necessity for recruitment.
Risk indicator: Lack of a systematic recruitment appraisal policy which reviews the need for recruitment throughout the enterprise, especially at higher levels.
Region investment review. Identifying the returns from each region using an investment appraisal methodology will reduce risk in focusing investment where it is likely that it will generate the best returns.
Risk indicator: No region investment review.
Region spread ratio. There are two extremes of region risk – too few regions or too many. Managing the region spread risk ratio will reduce risk and enable the enterprise to focus on regions that generate the best profitability and revenues.
Risk indicator: Poor region spread ratio.
Relative advantage. One of the six dimensions of product/service success. The greater the relative advantage that a product or service has over the competition (measured from a customer rather than a supplier perspective) the greater the chances of initial trial and repeat purchase.
Risk indicator: Low levels of relative advantage and/or declining levels of relative advantage.
Return on capital employed (ROCE). Improvements in rates of return on capital employed demonstrate that the enterprise is using its assets more effectively with a consequent reduction in the level of risk.
Risk indicator: Low ROCE and/or declining ROCE
Return on plant (ROP). Investment in productive capacity needs to generate effective returns which should be continually monitored to identify trends and potential problems.
Risk indicator: Return on plant not used to monitor investment efficiencies.
Return per square metre (RSM). The cost of premises may be a major influence on company profitability and cash flow.
Risk indicator: High and/or declining RSM compared with benchmark.
Risk multiplier. Risk multipiers occur when a high risk strategy is achieved through high risk implementation – diversification through acquisition would be an example.
Risk indicator: Risk multipliers commonly used in the development of strategy and implementation.
Sales productivity. Poor sales productivity will add significantly to the enterprise cost base.
Risk indicator: Poor sales productivity compared with benchmark.
Sales promotion. Poorly designed sales promotions can dramatically harm the reputation of the enterprise.
Risk indicator: Limited testing and evaluation of sales promotion concepts.
Seasonality. High levels of seasonality pose a substantial risk to the enterprise in the management of cash flow. Policies to reduce the effects of seasonality will have a consequent effect on lowering levels of overall risk.
Risk indicator: High levels of seasonality within existing product/service portfolio and/or increasing seasonality.
Secrecy. Secretive organisations make poorer decisions than those that have a more open information policy.
Risk indicator: Information flow of all types restricted within the enterprise.
Security plan. A formal plan to reduce the impact of the loss and/or manipulation of data, safety of employees, loss of plant, access to data will reduce risk.
Risk indicator: No formal security plan
Sensitivity analysis. An understanding of how the enterprise is affected by changes in key underlying assumptions will greatly assist in identifying key risks and managing them.
Risk indicator: High and/or rising impact of changing volumes, prices.
Share buy backs. Share buy backs destroy cash and will only in rare occasions lower the cost of capital. The associated risk is often significant.
Risk indicator: Share buy backs a major component in the use of free cash flow.
Shareholder value policy. A loss of shareholder base can be expected if the enterprise fails to create a clear policy towards how shareholder value will be enhanced. This loss of shareholder base will reduce financial headroom.
Risk indicator: No clear shareholder value policy.
Skills. Research shows that higher skills levels throughout the enterprise drive long run profitability, enable more rapid decisions, and allow the enterprise to carry through more complex and demanding strategies and their implementation.
Risk indicator: Poor and or declining average skills levels.
Software alignment. Making sure that the right sections of the organisation receive the right data reduces risk that decisions are being made without comprehensive, accurate, simple, time and secure (CASTS) information. This is part of the development of knowledge centers.
Risk indicator: Poor software alignment.
Span of control. Too many managers creates risk, as does too few. Defining and controlling the span of control which is appropriate for the enterprise or the organisation will be a vital part of risk management.
Risk indicator: Low spans of control and/or steady reduction in span of control.
Special units. A proliferation of special units designed for particular tasks will increase cost, increase internal conflict for resources, and create confusion over the achievement of objectives.
Risk indicator: Special units feature of enterprise and/or growing number of special units.
Standard operating procedures. The choice of appropriate standard operating procedures will reduce risk, standardise performance in major areas of risk and enable greater autonomy within the enterprise.
Risk indicator: Standard operating procedures not created and/or not regularly reviewed.
Standardisation. Establishing standard core components of products/ services and modifying peripheral requirements for local conditions will tend to reduce risk.
Risk indicator: High rates of unnecessary variety.
Strategic business unit (SBU). The decentralisation of decision making into strategic business units wherever possible coupled with clear definition of authority and responsibility significantly reduces risk and improves both morale and operating performance .
Risk indicator: Fewer operating units than logic suggests and/or rising concentration into larger and larger units.
Stress. High levels of stress within any organisation will lead to substandard performance, high rates of labour turnover, absenteeism, disciplinary problems and low morale.
Risk indicator: High and or rising levels of stress.
Substitutes. Substitutes to the existing products or services of the enterprise can pose a substantial risk to long term profitability and customer retention. Plans which include appropriate decisions about actual or potential substitutes will help to reduce this potential risk.
Risk indicator: High level of substitute behaviour.
Successes, failures, lessons learnt. One of the most effective mechanisms for risk reduction is to build on successes and eliminate failures through a detailed analysis (but above all acceptance) of what the enterprise does well and what it does badly. The planning process itself should also be subject to review within a formal planning effectiveness review system.
Risk indicator: No regular formal review of successes, failures, lessons learnt.
Succession planning. Key employee development with the use of personal development plans (PDP) coupled with clear succession planning will improve the ability of the enterprise to withstand employee loss at all levels.
Risk indicator: No standard policy for succession planning throughout the enterprise.
Supervisory boards. The development of a supervisory board system in larger enterprises to enhance checks and balances will reduce the risk of major failure though it has associated risks of slowing down decision making.
Risk indicator: No supervisory board system in place.
Supplier review. The management of the supplier base to ensure that they match the enterprise current and future plan requirements will be important in the reduction of risk.
Risk indicator: Supplier review not incorporated in business plan development.
Supplier satisfaction. Higher rates of co-operation in specification, delivery and product/service development will be obtained from suppliers satisfied with the treatment that they receive from their principal.
Risk indicator: High and/or rising levels of conflict with the supplier base.
Supplier spread ratio. There will be two extremes of supplier spread – too many suppliers and too few. Managing the relationship through the supplier spread ratio will reduce risk and make what is left more understandable.
Risk indicator: Poor supplier spread ratio.
Supply chain management (SCM). Linking the supply chain as closely as possible to the demands of service or product supply will create clear targets for suppliers and reduce costs with consequent reductions in risk.
Risk indicator: Poor linkage of supply chain.
Synergy. Continually reviewing the operations within the enterprise or organisation to identify synergies and then to ensure that they are operationally possible will improve productivity and profitability.
Risk indicator: Synergies not investigated in the business plan.
Tax management. Tax is a major charge on enterprise cash. Ensuring that the minimum tax is paid will reduce risk and improve competitive positioning.
Risk indicator: Poor tax management, high tax charge ratio.
Team building. Teams substantially reduce risk through better decision making, morale, higher productivity, and skills development.
Risk indicator: Limited team development.
Temporary staff ratio. The more temporary staff the enterprise or organisation uses, the lower the likely skills level, morale, and productivity.
Risk indicator: High and/or rising temporary staff ratios.
Testing. Testing operating at all levels – game theory, role play, simulations, TEWT, product/ service review, plant, marketing mix, presentations, communication messages will significantly reduce risk by better understanding of the risk environment.
Risk indicator: No formal testing programme in place to reduce risk
Time based competition (TBC). Speed of responsiveness improves performance and reduces risk. Achieving competitive advantage in such areas as customer responsiveness, first mover advantage, delivery cycles, new product development timescales will all reduce risk.
Risk indicator: Poor responsiveness and/or declining responsiveness
TPM. A comprehensive total maintenance programme will do much to reduce the potential for failure through breakdowns of systems throughout the enterprise.
Risk indicator: Poor and/or increasing production downtime.
TQM. Total quality management systems are designed to reduce cost, to improve customer loyalty and to improve profitability. There introduction will have an impact on these risk components.
Risk indicator: Poor and/or declining quality.
Trade-offs. Optimisation within the enterprise or organisation requires the identification and analysis of a range of potential trade-offs.
Risk indicator: Failure to review trade-offs within the business plan development.
Training. A formal training programme operating at all levels from introduction (apprenticeship) to supervisory, management, senior management will improve skills throughout the organisation permitting more complex strategies and improving understanding of the risk environment.
Risk indicator: No formal enterprise wide training programme.
Unique selling proposition (USP). Research shows that the most important purchase factor for the potential or existing customer is the relative advantage of the product or service that is being offered. Creating and aintaining this relative advantage will reduce risk through product or service switching.
Risk indicator: Non-existent USP or poor differentiation.
+ Useful life index. Every investment that the enterprise makes in premises and plant has a useful life, some long and some short. Analysing the fixed assets of the business to identify their value and the time left to replacement, provides a valuable measure for planning replacement investments.
Risk indicator: A low and/or falling useful life index.
Vision statement. The creation of a clear, objective, and achievable long term goal for the enterprise or organisation will improve overall co-ordination of investment decisions and short to medium term implementation.
Risk indicator: Poor or confused vision statement.
Wages ratio. The mismatch between senior executive remuneration and that lower down in the organisation potentially leads to conflict and lower rates of motivation. A review of the wages ratio will keep a degree of control over this balance.
Risk indicator: High and/or rising wages ratio
Waste management. A formal, and regularly reviewed waste management programme will reduce risk and costs.
Risk indicator: Poor or non-existent waste management procedures.
Working capital ratio (WCR). The working capital ratio describes the investment required to generate each unit of revenue. The higher the WCR ratio, the larger the funding requirement for growth will be.
Risk indicator: High and/or rising WCR in relation to benchmark.
Working conditions. Regular reviews and improvements in working conditions will reduce stress and labour turnover and improve productivity.
Risk indicator: Poor working conditions
Z score (manufacturing companies only). Worsening liquidity is a potentially major risk element for all enterprises. The Z score provides a measure of identifying future failure and improving the management of risk.
Risk indicator: Poor and/or declining Z scores
The Ibis reference manual
All these risk management items have been incorporated in a reference manual of over 150,000 words which is continually updated.
This manual is provided as part of Ibis business plan training and business plan development, with participants receiving updates when completed via e-mail for addition to their existing manual.