What's your strategy's risk and opportunity assessment process?

1 Define your strategic objectives

The first step is to define your strategic objectives, which are the specific and measurable outcomes that you want to achieve with your strategy. You can use the SMART criteria to make sure your objectives are clear, realistic, and aligned with your vision and mission. Your strategic objectives should also reflect your competitive advantage and value proposition in the market.

2 Identify the risks and opportunities

The next step is to identify the risks and opportunities that could influence your strategic objectives. Risks are the potential events or conditions that could harm your strategy, such as market changes, customer preferences, competitors, regulations, or internal weaknesses. Opportunities are the potential events or conditions that could benefit your strategy, such as market gaps, customer needs, innovations, partnerships, or internal strengths. You can use various tools and methods to identify the risks and opportunities, such as SWOT analysis, PESTEL analysis, Porter's five forces, scenario planning, or brainstorming.

3 Assess the impact and likelihood

The third step is to assess the impact and likelihood of each risk and opportunity. Impact is the degree of positive or negative effect that a risk or opportunity could have on your strategic objectives. Likelihood is the probability of a risk or opportunity occurring in the future. You can use a simple scale of low, medium, or high to rate the impact and likelihood of each risk and opportunity, or use a more quantitative approach, such as expected value or risk exposure.

4 Prioritize the risks and opportunities

The fourth step is to prioritize the risks and opportunities based on their impact and likelihood. You can use a risk and opportunity matrix to plot the risks and opportunities on a grid, where the horizontal axis represents the likelihood and the vertical axis represents the impact. This will help you classify the risks and opportunities into four categories: high priority, medium priority, low priority, and negligible. High priority risks and opportunities are the ones that have a high impact and a high likelihood, and require immediate attention and action. Medium priority risks and opportunities are the ones that have a high impact or a high likelihood, and require careful monitoring and planning. Low priority risks and opportunities are the ones that have a low impact and a low likelihood, and require minimal attention and action. Negligible risks and opportunities are the ones that have a low impact and a low likelihood, and can be ignored or accepted.

5 Develop mitigation and exploitation strategies

The final step is to develop mitigation and exploitation strategies for the risks and opportunities. Mitigation strategies are the actions that you will take to reduce the impact or likelihood of the risks, or to avoid or transfer them altogether. Exploitation strategies are the actions that you will take to increase the impact or likelihood of the opportunities, or to capture or enhance them fully. You can use various techniques to develop mitigation and exploitation strategies, such as risk response planning, opportunity response planning, contingency planning, or risk and opportunity registers.

By following these steps, you will be able to conduct a comprehensive and effective risk and opportunity assessment for your strategy, and prepare yourself for any challenges or chances that may arise in the future.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?