#LOCKDOWN DAY 12: RISK MANAGEMENT NOTES ABMI ? Practice Guideline B1: Strategic Planning Framework

Strategy and risk are proverbial sides of the same coin - inseparable in their design; both in conception and execution. Their results are tied to each other. They are twins conceived together, separated at birth but united at all stages in life. King III and King IV pronouncements in this regard are both sacred and logical in advocating for inseparability of strategy and risk.

You may have heard the famous saying, “failing to plan is planning to fail” which captures the essence and relevance of discussing strategic planning in our risk management debate. I have also recently come across a wise saying, which states that “where there is no vision, the people perish” and is made in reference to the Biblical Proverbs 29:18 in the King James Version (KJV) of the Bible. The solution and spring-board to solve these challenges is strategic planning.

If you look around and perhaps at circumstances within your organisation, you will note that the strategic planning process signals the kick-start of the organisation’s priorities and focus areas over the ensuing years. This indeed should be the case and all officials and partners should be on-boarded into this significant process.

For some organisations, there will be an assumption that strategic planning is obvious. Granted; but my observations over the past decades in auditing, risk management and consulting have re-educated me on these assumptions. They are dangerous and misleading in some instances.

Whilst those organisations that are directed by regulation to develop strategic plans will get into the habit of periodic strategic planning, there is a sizeable proportion of organisations that do not engage in any form of strategic planning whatsoever and go from day to day without a global vision and guidance framework.

For those organisations that are directed by legislation to conduct periodic strategic planning, I have also noted an uncomfortable interest in meeting the expectations of reviewers and auditors, rather than an actual focus on strategic direction with the result that, although documents are titled strategic plans, they in all material respects fall short of being defined as strategic plans. It is therefore just as harmful to not have a strategic plan as it is to develop one, purely for compliance purposes with no underlying intent to be strategic or indeed to create actual value.

This doesn’t in any way mean that organisations without strategic plans will not do well based on reasonable assessment. They probably will do well but whether they are going somewhere and deliberately so remains questionable particularly when viewed from a longevity and sustainability perspective. The best solution is to develop the habit of formalising strategic plans periodically as well as track your organisation periodically on the basis of such strategy, even as a small business.

Do not go where the wind takes you; rather use the wind to navigate yourself to where you desire.

The foundation of an organisation’s business activities lies in the establishment and formalisation of a clear strategy. Strategic planning as a sub-set seeks to define that desired future. According to Goodstein, Nolan, Pfeiffer (1991:3), strategic planning is the process by which the guiding members of an organisation envision its future and develop the necessary procedures and operations to achieve that future. As a part of strategic management, strategic planning forms the foundation of all subsequent interventions. Strategic planning will define the desired performance outcomes of the organisation at a high level and over a multiple / long term period. It will focus its efforts on defining what success looks like for the organisation in an often-unpredictable business environment. It is therefore important in that it sets a clear path for the organisation towards attainment of required outcomes. (Extract from ABMI Reference Library, 2018 edition, p60)

RISK MATURITY ATTRIBUTE STATEMENT:

The organisation is expected to have a formal strategic plan that is defined, implemented and communicated across the organisation. This is in terms of the competence standards of the attribute-based maturity index (ABMI Reference Library, 2018 edition, p8).

KEY SUB-ATTRIBUTES OF B1: STRATEGIC PLANNING FRAMEWORK

Please note that in terms of the attribute-based maturity index there are 7 core components of risk management that comprise 26 primary attributes. These primary attributes are in turn split up into 93 sub-attributes. Below I analyse the sub-attributes of one of the 26 primary attributes. Keep coming back for more articles that unpack the other elements.

Some elements aren’t explained in full save for the focus item. All elements, however, are explained in detail in the ABMI Reference Library which can be obtained directly using a self-registered user profile on www.abmi.co.za

B:1-1 Strategy setting

The organisation has a formalised process in which it determines its medium-term and short-term strategy with the involvement and approval of the governing authority.

B:1-2 Strategy implementation

The strategic plan and its supporting documents is communicated widely throughout the organisation to drive further implementation tasks and entrenchment thereof.

B:1-3 Strategy and organisational alignment

The organisation assesses the implications of the strategy on its resources, organisational structure, systems, and business processes (if any) and ensures alignment where needed.

For an organisation to optimally realise its vision and strategic purpose, it should capitalise upon its resources and capabilities optimally. Resources which can either be tangible or non-tangible entail the inputs into its value-chain and production processes, which may take the form of financial, human, infrastructural or legal structures. Capabilities refer to an ability to integrate resources and apply them towards a desired outcome. To optimise strategic performance, the organisation should ensure that at each strategy review, the relevant resource implications are considered and adjusted for as required.

CONCLUSION:

For additional context, register a free user profile via www.abmi.co.za and download our free ABMI Reference Library Preview document or explore additional value-added offerings. Good luck and feel free to share your views. We are all here to learn and no idea is unwelcome!!!