Companies are successful because they consistently forecast what is ahead. No one can see the future, but we learn in business to use historic and current information for forecasting what may be ahead. This is an important management process because it allows us to plan, develop contingencies, and be ready for potential negative effects on the business. Forecasts may not be 100% accurate and at times, even far off from the eventual outcome, but they do provide a snapshot of the future and are vital to managing a business. Forecasts allow us to make assumptions with the data we have to anticipate the progress of the business. Planning is key to any business and without forecasting, it would be like navigating in poor visibility.
Understanding the importance of forecasting, it is equally important to be able to quickly change course and actions within the marketplace.
Anything can happen in business and usually does happen. If business booms unexpectedly, we need to be ready to take advantage of it. If business dips unexpectedly for any reason, we need to act quickly to mitigate the adversity. Change is inevitable and we have all been through volatile markets with various causes. As such, making quick decisions and taking prompt action is vital to sustainability.
When I was a young lad, I was a Boy Scout. Many young boys growing up had this opportunity to be a part of this worthwhile organization which taught us a great deal about life. One of its mottos which was engrained in our young minds was to always “be prepared.” To me, preparation means understanding when there is a change and having an action planned when it occurs. In business, there are many terms for this process and perhaps the one that is most popular is “risk assessment.”
Not only what is happening today, but successful leaders of business take risk assessment seriously and spend a great deal of time trying to understand “what could happen.” They identify as many risks as possible that could affect their business. Everything around the business can change overnight and when change occurs, it is usually quick.
If we are not ready to address these changes, the delay will be detrimental.
There is no business without risks. Successful leaders minimize risks as much as possible but are ready when they occur. While it may never be possible to identify all the risks, the more that can be identified the better. Once the risks are identified, mitigation measures can be developed. When such a risk becomes a reality, the mitigation action is already planned, and action can be taken immediately. If we expect to plan mitigation when a risk occurs, it will be too late.
It is possible that the risk and mitigation file sits on a shelf as the risks do not occur. That would be wonderful. However, if it does, preparation has been done. Risk assessment is not a one-time affair but it is reviewed consistently to ensure as much accuracy as possible.
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