How do you deal with uncertainty and risk in operational planning?

Effectively managing uncertainty and risk in operational planning requires a systematic method. It commences with a comprehensive risk assessment, followed by the development of scenarios, the implementation of risk-reduction strategies, data analysis, ongoing monitoring, adaptability, stakeholder communication, and a commitment to continuous improvement. These elements collectively strengthen your capacity to handle uncertainty and risk in operational planning.

Addressing uncertainty and risk in operational planning involves 2 practical strategies: 1) Scenario Planning: Envision various future scenarios, preparing plans that can adapt to uncertainties. It's like packing for a trip with versatile items for different weather conditions. 2) Agile Planning: Break down the operational plan into manageable parts and regularly reassess based on real-time feedback. This is akin to making small course corrections while navigating a ship through uncertain waters. Incorporating these strategies creates a flexible and adaptable operational plan, better equipped to handle uncertainties and risks.

Effectively managing uncertainty and risk in operational planning involves a multifaceted approach, including comprehensive risk assessment, contingency planning, transparent communication, regular monitoring, and technology utilization. This approach is crucial for an organization's resilience and success in navigating uncertainty and change.

I will use "battle plan" in place of operational planning. You are preparing to battle for market share, resources and success via the ability to respond, adapt and overcome market & economic conditions. The key here is to take a brutally, hard, honest review of your performance during the scenario. The more pain you endure here the less pain you will endure in the battle. That is not to say you will not endure pain. You will endure pain but to a lesser degree due to your battle prep. Not only to you want to plan for the one scenario, but plan for multiple issues within the scenario. Measure the success of your battle plan and the reaction of key personnel in your plan to identify future leaders.

Faced with a range of possible scenarios which may become bewildering/overly time consuming, perhaps it is important to focus most on two: the most likely and the 'worst case' (or 'best case' if exploring favourable scenarios). When considering potential problems hope these two do not come together in one scenario; when looking for success hope that they do!

Another way is to stress test your system and processes to see how it will act when certain things happens. The results will help one prepare or mitigate against any future occurrences.

This and the other sub-topics are all traditional approaches to managing risk which are often subject to the slow actions of a bureaucracy that has limited delegation of authority. Missing here is a principle of effectuation - take affordable risks. This allows decision-making deeper in the organization since it has a built-in level of authority. It is also better at giving recognition for black swans (low probability, high risk events) that are often ignored because the expected value of the risk is low. Further effectuation encourages partners to spread out the risk and bring additional resources into the decision-making process.

In engineering project management, uncertainty and risk are managed through rigorous analysis and contingency planning. For instance, in energy projects like constructing a power plant, thorough feasibility studies, scenario analysis, and risk assessment are conducted to anticipate challenges. Mitigation strategies such as diversifying energy sources and flexible scheduling are implemented to address uncertainties, ensuring smooth project execution despite potential setbacks.

In global Internet banking, we have established an "on-demand" and routine monthly meeting mechanism to engage internal and external company-wide resources in listening, understanding, and acting upon risks and other important matters. The challenge lies in providing a secure environment to gather input and align stakeholders to promote, listen for, and appreciate feedback. These sessions are facilitated and allow for selective anonymous input from participants on risks and related factors that are known and not yet understood in today's circumstances. By capturing input, promoting active listening, and encouraging open communication, we have successfully facilitated early and effective management of risks and concerns.