The rise and rise of horizon scanning in risk management programmes

Get free weekly news by e-mailEvery ambitious business wants to know what’s coming next and how to handle it. So much so, that the practice of horizon scanning is becoming a major strand in proactive risk management and business continuity. Chris Woodcock, managing director, Razor, summarises the current state of the art and focuses, in particular, on how it is being applied in the food and drink industry, among those who need it most.

Anticipating and preparing for future challenges, trends, threats and opportunities is an essential part of any organisation's strategy. The more complex and global your market, the more you are going to benefit from looking beyond the parameters of your one-to-three year business plan.

Increasingly, public sector organisations operating in the health and safety arena and businesses in fast-moving markets – from finance to food – are realising the advantages of the need for the long-term view, served up in the short term. It’s really the demand for turning information – lots of it – into intelligence, in both senses of the word.

The more responsible and lateral-thinking boardroom teams are also beginning to understand that a proactive horizon scanning policy and approach can serve the dual purpose of anticipating both risks and opportunities and giving yourself a decent chance of pre-empting them, converting them or exploiting them to the full.

In fact, somehow, the future seems to land on our doorstep faster these days than it ever did before. Many in the futurology world, as it is known, regard the critical challenge facing all businesses today as being how we grapple with the future – now. The vista is vast: it includes identifying future sources of uncertainty and risk, identifying and assessing short-term market opportunities ahead of the competition and discovering new ideas that can enhance performance and effectiveness.

Faced with such challenges, organisations are increasingly making use of systematic, bespoke horizon scanning methods as a means of identifying future risks, opportunities and improvement ideas.

Nowhere is this more the case than in the food and drink industry, where opportunities and threats in relation to products that are increasingly sourced globally can flash around the planet, sometimes in minutes. Obvious examples are the food scares that can translate into product recalls or mass consumer alarms about whether to eat foods that contain particular ingredients, colours or elements deemed or proven to be unethically-traded.

The outputs of daily and weekly horizon scanning programmes – where a dedicated team build up a regular dossier of intelligence – include regular reports of emerging issues and can lead to more detailed studies of particular topics. Each programme is tailored to the specific identified risks and opportunities in that business’ strategy and product range.

In our experience at Razor, the areas that most food and drink manufacturers are apt to be concerned about, and around which they might design a horizon scanning system, will fall mainly under the following headings:

- Trends in public, influencer and media attitudes, anywhere in the world, towards food-related health and safety risks;
- Scares and shifts in use or application of raw materials, flavours, colours and ingredients;
- The UK and international political agenda, including major policy developments by government departments and crusades led by prominent politicians;
- The European Union regulatory agenda – and development in the Food & Drug Administration in the USA
- Socio-economic trends that affect the labour market and questions of ethical derivation.

Of course, broader horizon scanning can also be used to identify issues with the potential to present significant novel or changed work-based risks over the medium to long term (three to ten years) as well as country or regional risks affecting the fundamental trading security for a global business operating within in a more perilous regime than its head office location.

The benefits of a well-designed horizon scanning system – properly integrated into the thinking of a senior management team – can be extremely attractive, relative to the time and effort applied.

They include:

- Identifying external influences, perceptions, trends and developments against which the organisation can review and refine priorities and policies;
- Being able to translate this knowledge into competitive and commercial advantage – or to avoid pitfalls and threats that may afflict others;
- An improved capability to predict and pinpoint implications of emerging science and technology, including specific recommendations for gathering new evidence or demonstrating due diligence;
- Insight into different, perhaps conflicting, perspectives on the future to challenge the organisation conventional wisdom;
- An improved capability to recognise and share futures information across the divisions in the organisation, for mutual gain;
- Recognition of gaps in knowledge and identification of potential areas for further research and investment.

Putting the future into practice – painlessly
Crucial to the success of any horizon scanning programme are the buy-in of the senior team and the relevance of the search criteria. There’s no point in having a programme that fulfils the need for a tick in a corporate governance box but which has limited relevance to the people and their products or services. It’s also vital to gain senior management interest and support before deciding which tools and techniques are most appropriate, how and how often to scan and how to evaluate and apply the results of scanning activity, what scanning sources to adopt and subscribe to and how to build a ‘scanning network’, inside as well as outside the organisation.

This sounds complex but it does not need to be. Each sector has its own specific easily established sources. For example, within the food sector, sources for the data can range from news databases, food safety inspectorates, food hygiene and food science bodies, regulatory bodies to pressure groups, food processing and ingredients media, as well as the ‘blogosphere’.

In its basics, the implementation of a successful horizon scanning system boils down to the following:

- Identify specific issues of concern and general categories of potential future issues;

- Tap into the information sources that are most likely to record the emerging stages of an issue’s development. Issues generally originate from one of the following sources: special interest groups; scientific research bodies; regulatory bodies; specialist (or trade) media reporting; journalistic investigation. As the issue develops, it will (more than likely) receive attention from others of these bodies, creating the ‘snowball effect’.

Various technology tools can be used to scour the Internet (through specialist news feeds and news databases), but technology alone is not enough; a manual review of electronic newsletters, print magazines and websites will be necessary for effective horizon scanning.

- The information gathered must be interpreted into a form that is easily digested by the final users of the data.

The only prerequisites for such a programme to work are thoroughness and flexibility – for instance, not sticking to certain criteria for longer than they are useful and making sure you review and adapt the scanning targets as often as your business takes on a new product or shifts its strategy in any significant area. Ideally, this should link to the timing of risk and opportunity reviews in the organisation and be integrated into the annual risk management process and the production and updating of the risk register.

Horizon scanning used to be on the margins of good business practice. Increasingly, and justifiably, it is coming into the centre ground. For the food and drink industry, and the public sector organisations who support, advise and regulate them, this is especially true and the experiences they are encountering and the advantages they are finding are a good bell-weather of what is to come for other markets.

Kees van der Heijden, Professor of General and Strategic Management at the Graduate Business School of Strathclyde University, Glasgow, summarised the principle well: “Uncertainty creates winners and losers. Organisations that want to survive have to adapt”.

Horizon scanning, properly conceived and well executed, turns survival from an instinct into an art.

Chris Woodcock is managing director of Razor who specialise in both building and protecting reputation and who have a focus on working with clients in the international food and drink industry and in manufacturing, on both communications and risk management programmes. Razor offer a horizon scanning service for the food and drink sector and runs the DARE risk, issues and crisis service with Campden & Chorleywood Food RA.

Contact Razor at: +44 (0)1869 353801.

Date: 13th July 2007• Region: UK/World •Type: Article •Topic: Operational risk
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