How are you handling this mayhem? To better understand how to manage it, in this practical guide, we will look into four major dimensions.
Traditional forecasts and plans typically use single-point estimates and metrics with little or no discussion of risks & opportunities (R&O), and without showing correlations among multiple R&O that could have a major impact on performance. R&O adjusted forecasting and planning is an approach to forecasting that generates a range of possible outcomes and probabilities based on an analysis of multiple variables of R&O.
At a corporate level, risks can be very well mapped and controlled using e.g. the COSO framework. Defining the risks is often source driven. This means: the source of the risk is identified leading to the impact being measured by the possibility of occurrence (chance) and the size of its impact on the P&L (money). How much appetite for risk does the company have to achieve its goals?
Running a company, among other things, requires dealing with ambiguity. How this is done depends on the people – some are more open to embrace the challenges, while others prefer to continue with the past practices, thinking that the change is not going to last. The behavior is not exclusive to a specific industry, it is primarily to do with the management style of people leading the company.