In a business plan, it is critical to define the inherent soft spots, loss drivers and incongruities that could dramatically affect performance and execution. The budgeting and forecasting processes supporting the business plan also must be effective in managing risks. Two important risks to consider are ensuring the plan itself can be delivered according to expectations, and ensuring the company won’t run out of money as it delivers the plan.
While strategy-setting defines an enterprise’s overall strategic direction, differentiating capabilities and required infrastructure, the business plan lays out how the company intends to execute the strategy during an annual period or the operating cycle. This issue of Board Perspectives: Risk Oversight illustrates how risk should be integrated into the annual business planning process.