Risk and scenarios

What if…?

You are being asked to think ahead: what could happen, and are we ready?

Go deeper · the full lesson · 50 minutes · C1The Risk Nobody ListedOpen the lesson →

The lens

  1. What could happen? The likely event and the severe one are often different.
  2. How likely, and how bad? Rough categories are enough: low, medium, high.
  3. What would warn us early? A sign you can actually watch for.
  4. What is our response? Prevent it, reduce it, prepare for it, or accept it knowingly.

It can lead to

  • Prevent it Stop the event from happening.
  • Reduce it Make it smaller, or less damaging when it comes.
  • Prepare for it A warning sign and a plan B.
  • Accept it, knowingly Low risk, high cost to avoid, and said out loud.

The thinking, step by step

A worked example

What happens to us if our main supplier fails in the winter?

  1. Likelihood: low. Impact: severe, because production stops within two weeks.
  2. Warning sign: two late deliveries in a row, or bad news about their finances.
  3. Response: a second supplier for the critical part, and a buffer stock.

How it might soundIt’s unlikely but very serious, so I’d prepare rather than accept it. We would qualify a second supplier for the critical part and hold a buffer stock. The warning sign I’d watch for is two late deliveries in a row.

Where it breaks. Numbers can give false comfort. The event that hurts is often the one nobody listed.

Practise it

Thinking tools

Real cases

Talk it through

  1. What is the risk in your work that everyone knows about and nobody plans for?
  2. Think of something that went wrong that nobody had listed. What does that tell you about lists of risks?
  3. When is it right to accept a risk knowingly? Who should be told?
Then say it
Land itpoint · reason · stopPause ita beat, not an “um”Hold itfirm and calm