International law firm, Slater & Gordon had a particularly painful reminder of the wide-reaching effects of ‘what if’ scenarios last week, when UK Chancellor, George Osborne announced an increase in the small-claims limit and the removal of the ability to claim for general damages from minor whiplash injuries. The firm’s stock price fell 68 percentage points to a low of 69 cents, which is a veritable plunge, from the highs of $8 a share in April this year – that’s $2.5 billion in share market value wiped away.
I can’t go into the details of the case, as I haven’t got them. The episode does, however, highlight the criticality of scenario planning for businesses to best identify and resolve the threats that could damage operations.
Most discerning organisations – and I include Slater & Gordon here – would undoubtedly have a risk register, which tracks the course of such threats, but the register is only as good as the threats that have been identified, which are usually borne of internal perspectives – that is, current employees. This is not wrong, but I would counsel organisations to have a heretic to hand. That’s right, the individual in the room who goes that bit further in terms of identifying nightmare situations. Such bravado is usually found outside of the business, as external advisors aren’t encumbered by the emotional baggage that hangs round the necks of most salaried employees – loyalty being one. Granted, such advisors don’t have the insights in regards to brand heritage or corporate politics, but these are gaps that can be addressed.
Scenario planning sessions are, if done properly, heresy writ large. Threats are duly recognised and tracked to gauge their impact from a range of perspectives – brand, political, financial, community and personal. In fact, it’s vital that the session gets personal as that’s what stakeholders – primarily, the media, are looking for if anything was to go wrong. In short, they need somebody to denounce. So, let us speak the unspeakable and save ourselves from the blame game.