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3.6.3 Scenario planning Typeit
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There are four types of risk , which is the steps that a business can take to reduce the negative effects of potential risks to the business. These risks could be anything from a natural such as an earthquake to an IT systems failure or even a global pandemic.
Risk : where the cost of changing the action is more expensive than the risk itself; a tolerable level of risk, e.g. a skydiving business accepts that it is risky to take customers up
Risk : ceasing an action, e.g. withdrawing from an international market where the country was at war
Risk : accepting the risk but planning for it, e.g. saving files onto a cloud
Risk : outsourcing the problem to a third-party company, e.g. accountants or solicitors
planning is the strategy of identifying possible future problems; for example, oil companies are investigating a world without fossil fuels and planning for alternatives.
planning is when a business plans for the loss of key staff who may be retiring or may leave the business. For example in a top restaurant a head chef leaving would be a huge problem, unless the business had planned in advance and trained up deputy head chefs who could take over.