282 CHAPTER 11 MANAGING RISKS
a combination of events – e.g. R&D is six months late with the product update, sales are
20% below expectations, and interest rates rise three points.
When you have changed the inputs to your forecast, and confirmed that the strategy
reflected in the forecast holds good under these new conditions, you will have a new
bottom line. It is usually enough to explain the basis for this scenario and include a brief
summary of the end results in your business plan. You will want a short, reassuring com-
mentary. And, of course, an indication of the likelihood of the worst case happening. I
have already shown you how to use the normal to do this (see page 256).
The aim of this chapter is to help you think about and assess risks. Unfortunately, or per-
haps fortunately, your analysis might have taken you back to revise your strategy and
operating plans. This is what the business planning process is all about: finding the best
path to the future. When you have gone around this loop enough times to maximise your
strategy while controlling and minimising risks, you have completed your business plan-
ning process. You can then write a few pages demonstrating to readers of your plan that
everything is under control. Remember, you want to try to anticipate their concerns.
Congratulations. Now all that remains is the satisfying task of pulling it all together,
tidying up your plan and getting it approved. The ‘grand finale’ is in sight.
Nine times out of ten, the people approving your plan will want to know
about the likely effects of delayed production and lower-than-expected sales.
By the way, what will happen to your profits if your main competitor
announces that they have taken over that upstart company that has a great
product but was too small to threaten you?