Global Risk Management : Global Risk Management Presentation Plan : Presentation Plan 1 Risk Defined Risk Management Process Risk Management pertaining to the Business Environment Risk Management in New Product Development 1.2 2 3 Risk Management pertaining to Data Quality 4 1.1 Drivers of Key Risks Risk Analysis Methods and Techniques 1.3 Drivers of Key Risks : Drivers of Key Risks Financial Risks
Operational Risks Contracts
Hazard Risks Strategic Risks
Customer Demand M & A Integration Recruitment
Supply Chain Liquidity & Cash Flow Products & Services
Properties R & D
Intellectual Capital Accounting Controls Information System Internally Driven Externally Driven Externally Driven Some risks can have both external and internal drivers. Hence, those risks overlap in two areas.
To combat these risks, Risk Management has become a core business process. Risk is the probable damage, which may happen for any ongoing process or some future event. Risk Management Process : Risk Management Process The Organization's Strategic Objectives Risk Assessment Risk Reporting
Threats and Opportunities Decision Risk Treatment Residual Risk Reporting Monitoring Data
Research Risk Analysis Risk Identification Risk Description Risk Estimation Risk Evaluation Risk Analysis Methods and Techniques : Risk Analysis Methods and Techniques Data
(Hazard & operability Studies) Asset Management Scenario Analysis Risk Analysis Methods and Techniques : Risk Analysis Methods and Techniques PESTLE
(Political Economical Social
Technical Legal Environmental) Secondary
Opportunities Threat) Market Survey Presentation Plan : Presentation Plan 1 Risk Defined Risk Management Process Risk Management pertaining to the Business Environment Risk Management in New Product Development 1.2 2 3 Risk Management pertaining to Data Quality 4 1.1 Drivers of Key Risks Risk Analysis Methods and Techniques 1.3 Risk Management in New Product Development : Risk Management in New Product Development Why research and analysis before new product development New product development is linked with very limited historical or preliminary data. Hence, risky Risk can be in form of market, technical, or organizational issues. Risk analysis solves the problem through flexible modeling, primary and secondary research. A good strategy is a must for evaluating and dealing with the associated and unavoidable risks. Research conducted to understand customer needs and develop a new product is different from research required to launch a new product. Product development research is focused on needs of customers while launch research focuses on understanding the motivation and attitudes of early adopters. Successful targeting of early adopters builds the fountain for new product success. New product have a very high failure rates.
Products fail, not because of technical shortcomings, but due to absence of market.
Over 60% of new product fail before entering the market, and out of the remaining 40% that do see the ray of light, 40% fail to yield profit and are withdrawn from the market.
Timely and reliable knowledge about customer preferences is most important. Such data is obtained from business research. Business Research at Kellogg’s : Business Research at Kellogg’s Kellogg’s investment in new product development resulted in strengthening its global brand. Kellogg’s carried out business/market research to understand the market
1000 consumers were questioned about the Kellogg's brands Effect of the market changes on the product
Effect of new technology on the business
Future market trends
New categories appealing to the target market
Consumers’ view on stretching the brand into new categories Kellogg's launched Special K Red Berries in the UK followed by Special K Peach & Apricot
Good performance with very little damage to the core brand.
Quantitative tests of product ideas across a range of products was conducted to tap further opportunities to develop “Special K” as a healthy snack.
Hence, business/market research helped the company to develop variants of Special K, resulting in a low risk project offering prospect of a good rate of return. Understanding how ‘Special K’ could be extended into different variants to grow the brand, keeping the core product strong. Presentation Plan : Presentation Plan 1 Risk Defined Risk Management Process Risk Management pertaining to the Business Environment Risk Management in New Product Development 1.2 2 3 Risk Management pertaining to Data Quality 4 1.1 Drivers of Key Risks Risk Analysis Methods and Techniques 1.3 Risk Management pertaining to the Business Environment : Risk Management pertaining to the Business Environment Environment External Internal Socio-
Economic Regulations Technology Competition Structure Processes Culture Constituents of the Business Environment Companies operate in a dynamic business environment which forces them to adopt risk management measures.
The business environment is both external and internal to a company and an adverse change in any of the above mentioned constituents can increase the risk levels for the company. Scenario Analysis at Shell : Scenario Analysis at Shell Shell makes use of a strategic planning process in which a series of “what if “ scenarios are created
The management at all levels is made to think strategically about the company’s business environment Strategy Shell’s scenario analysis Testimonial In early 1986, the price of oil fell to USD 10 per barrel and Shell’s scenario analysis proved successful as it was in a better position than its competitors to face the situation Shell has deployed processes and systems to anticipate future scenarios by analyzing the interplay of environmental factors and its impact on Shell’s business
Scenario analysis presents complex interactions of future in a simplified, easy to understandable form
By picking the more probable scenarios, the company can brace or prepare itself for exploiting future opportunities and challenges
It helps the company in formulating strategy and decide the trade-offs required Identify trends and their drivers Develop contingent strategies to tackle each scenario Develop the what, why and how of different scenarios Identify parameters to monitor the environment Presentation Plan : Presentation Plan 1 Risk Defined Risk Management Process Risk Management pertaining to the Business Environment Risk Management in New Product Development 1.2 2 3 Risk Management pertaining to Data Quality 4 1.1 Drivers of Key Risks Risk Analysis Methods and Techniques 1.3 Poor Data Quality - Concerns : Poor Data Quality - Concerns One third of the data in the enterprise level databases are corrupted within a year
Over time wastage of resources and money on the CRM initiatives exceeds the initial investment
CRM spending has been increasing annually by 15%, but nearly half of all CRM initiatives have been unsuccessful
Every 100 Euro spent in marketing/CRM initiatives is worth only 66 to start with when working with poor quality data CRM Initiatives – Spending** Data Decay - Typical CRM Database* Poor Data Quality – Causes and Impacts : Poor Data Quality – Causes and Impacts Causes
Careless data entry
Changes to source systems
Data migration/conversion projects
Data entry by customers Impacts
Time wasted in reconciling data
Loss of System Credibility
Delay in deploying new systems
Compliance Problems Efficient Solution – Data Cleansing Data Corruption is
Unavoidable Impacts your ROI Inefficiency in Customer Relationship Management Initiatives – Example : Inefficiency in Customer Relationship Management Initiatives – Example Sending promotional offers through mails to incorrect addresses of customers and prospects. (58% wrong mailings) Challenges Fallouts Change in location
Updating or change in contact addresses and telephone numbers
Job related changes
Change in designation
Switching of jobs or departments
Change in the name of the Organisation
Change in titles, names or surnames
Change in social status Mail either reaches the wrong person or organization
The customer might receive the mail with an incorrect designation attached to his name
Targeting the wrong groups Mail might not reach the probable customer
The customer might be addressed wrongly The fallouts might lead to maintenance of huge, unwieldy databases, decrease in sales, profits and customers. Companies reputation might also be at stake. Causes Lack of routine updating of existing database
e.g. change in communication address Poor Data Quality – Cleansing as an Efficient Solution : Poor Data Quality – Cleansing as an Efficient Solution Data Profiling – Inspect data for errors, inconsistencies, redundancies and
incomplete information Data Quality – Correct, standardise and verify data Data Integration – Match, merge or link data from a variety of disparate sources DATA
&MAINTENANCE Data Monitoring – Check and control data integrity over time Data Augmentation – Enhance data using information from internal and external
data sources Evalueserve Disclaimer : Evalueserve Disclaimer The information contained herein has been obtained from sources believed to be reliable. Evalueserve disclaims all warranties as to the accuracy, completeness or adequacy of such information. Evalueserve shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.