This blog continues a series on developing an operational plan for your business, one of the core components when studying a business traineeship.
Identifying and Managing Risk
Risk management is the process where an organisation weighs the costs of activities against benefits. As you develop your operational plan, you should assess the risks and what you can do to mitigate them. Risks are conditions under which the objective is expected to function, but which can cause problems. By identifying the risks associated with the goals you have set, you will be able to determine the likelihood of not achieving them and the impacts that would have.
Risk assessment is not only appropriate for workplace, health and safety issues, it is also essential at an operational and organisational level. Use a risk-based approach to diagnose systemic problems, evaluate effectiveness, and link performance to consequences – to strike a balance between risk and return.
Having identified the risk involved in the operation, you must then decide what to do about them if they occur. Developing contingencies follows on closely from your risk assessment. When conducting a workplace, health and safety audit, it is necessary to suggest methods of removing or controlling the risk. The same applies when conducting risk assessment for an operational plan.
Contingency plans enable functions and processes to be put in place to compensate for situations, in which, either internal or externally generated conditions might cause interruptions to operations and/or have a destructive impact on continuity.
These are important to management plans in all environments and circumstances. The time-critical nature of operations requires backup plans to enable quick reactions to operational failures or changes in the social or physical environment. Environmental scanning (internal and external) is the process by which organisations generate comprehensive analyses of risk factors.
You need to develop at least one contingency plan for each of the risks you identify. Consider it as having a plan B.
Integrating Resource Strategies
A key part of any operational plan is deciding how you can use the available resources to the best advantage. The available resources you have are:
Human Resources: is the human capacity and skills required to implement the plan, and should be developed with the involvement of appropriate staff. Although your core project team members will take the lead in many areas, they will require strong support, often involving staff from different parts of the organisation. Human resources need to be organised so that tasks can be achieved, and are done to the required standard by the right people. Efficient operational planning and implementation requires continuous and open collaboration between the core project team and these other staff.
Financial Resources: the financial resources will be finite, meaning you will have a certain amount of money to use. You will need to find methods of controlling costs, which invariably puts pressures on the other two resources.
A general assessment of the financial requirements to implement the plan over the expected lifetime should be carried out. This can be a fairly simple estimate for smaller, shorter term plans. For longer and more complex plans, a comprehensive financial estimate is recommended. In general, this estimate should be a high level (not too detailed) evaluation of the current and potential sources of income, the estimated costs of the action and monitoring activities, and any projected financial resource gaps.
You should also consider long-term expenditure and funding needs, particularly for larger projects and programs where the scope of your strategies may be far beyond your current capacity, and you envision the need to scale up, raise more funds, and engage more partners in order to carry out the work.
Physical Resources: these are resources that are available to the organisation in the form of buildings and other machineries needed for the day-to-day running of the business (e.g. ovens, reticulation systems, computers, etc.). You must use your existing physical resources to their best advantage before you decide to bring in the new resources.
Careful planning in the operational area can bring you meaningful rewards. Analysing the day-to-day operations of your business will pay off in the form of increased profits as you find ways to reduce costs and improve productivity. Learn how by undertaking your traineeship in business studies today.