Strategic Risk Assessment–2/6

/ July 22nd, 2010/ Posted in How to do Risk Assessment / No Comments »

This is a revised series on the risk manager’s role in achieving strategic resilience. I discussed in part 1 risk methodologies, and establishing context in terms of companies’ mission statements. In this post I address the remaining parts of Strategic Identity: Special Relationship and Values, Unique Assets and Competencies, and process for Innovation.

Stakeholders and Organizational Values Special Relationship signifies a particular stakeholder or client group that your mission may serve and that therefore is part of the organization’s identity. It refers to the history and unique sorts of connections your organization has with regard to this group. The Vision statement will illustrate the desired future state of this group; i.e., its anticipated evolution. Values may be less familiar as defining elements of an enterprise. They give character and humanity to the organization, and define how it wishes to engage with the world. Values can take the form of ethical or professional standards, or business rules and operating guidelines, whether required by statute or not. While treated as platitudes, the enactment of values affects the quality of the organization’s contribution to the world. The point in planning is to consider how how values contribute to the organization’s reputation, and how they constitute a source of economic worth.

Competencies and Process of Innovation
Unique Assets and Competencies will be: 1. concrete, like a certain technologies and associated equipment and infrastructure; 2. less tangible, such as skill sets and intellectual capital; 3. abstract, such as the configuration of the business model or place in a supply chain that gives competitive advantage. Some of these might be so unique and deeply ingrained that they define the character of the firm itself.

Finally, process of  innovation is not a fringe activity, but a core competency. It signifies organizational vitality, as these quotes indicate:

“…management innovation has created the most enduring source of competitive advantage.” ~ Gary Hamel

“The ability to learn faster than your competitors may be the only sustainable competitive advantage.” ~ Peter Senge

What the Capacity for Innovation requires is the subject of the online course Creating Value: Risk Manager as Innovator. We suggest that the risk manager is in a good position to facilitate the systematic identification of opportunities to acquire new income streams, and develop new practices and business models. This is now a virtual necessity. This model of Strategic Identity, which started in the last post with Mission and Vision, might help you to differentiate and better articulate the characteristic elements of your organization. You don’t have to use all parts of the model. Notice that they consist of both content (assets, knowledge) and process – particularly, innovative capacity which signifies adaptability and flexibility. While all parts of the strategic identity are subject to change, the idea is to set out the relatively stable basis of the firm. The reason for doing so is to give a frame of reference for the wider purpose of this series of posts: to integrate risk assessment and strategic planning. The next post will address environmental scan.

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