Now that the types of potential risk associated with competitors, the industry, suppliers, customers, and operations have been recognized, what is the best way to get to the bottom of the pertinent questions for each of these risks? There are a number of strong approaches, a few of which are key to conducting the right assessment. Most companies find that the quickest and easiest approaches are qualitative assessments that leverage your own knowledge and your own people.

A great way to identify strategic risks and many other core operational and financial risks is through an analysis of strengths, weaknesses, opportunities, and threats, what risk managers call a “SWOT analysis” for short. When performed by the key management team and/or operational team, a SWOT analysis can quickly highlight key risks across the business.

A SWOT analysis is conducted by asking questions related to each category, such as the following:

Go inside your company walls and start assessing! Brainstorming sessions, focus groups, and structured interviews with the top executive or operations team work well. These can be conducted with a SWOT framework or using the questions laid out earlier in this chapter.

Undertake a scenario analysis to focus on key risks as well as how they might manifest themselves. This process provides powerful insight into measuring, assessing, and managing risks down the road. This is often best conducted with your key business teams, your advisors, and your board.

Here’s an example: Suppose your company loses a key supplier or encounters a major quality control problem with that supplier. What are the possible repercussions? Identify them, then ask, “What alternatives do we have, and what are the issues with those alternatives?” Maybe you can find a supplier that delivers product faster. Perhaps another supplier provides greater quality.

Explore these possibilities, and make lists of suppliers you can actually use if this situation arises. Then ask, “What risks could be generated by making this move?” Think of what might happen if the new product or material is inferior to the current supply. Would it shut down your process? Hurt your business’s reputation?

War-gaming is similar to scenario analysis, but it is done from the perspective of both the competitor and the company. Set up competitive teams (a “competitor” and the “home team”), and work through competitive scenarios and responses. This helps bring to light key strategic risks.

Some companies seek risk assessment through outside experts and sources such as auditors, specialists, insurance claims reports, post-event reports, and other methods. Even without a formal risk assessment, standard reports provided by outside experts can provide great insight into where your business’s deepest challenges lurk.

Why call an expert? Companies will make the call if they experience more severe issues or feel they need help the first time they encounter a risk situation—especially if theirs is a specialty business. If a company is regulated in any way by industry or government, it may want an outside opinion to provide a third-party view that satisfies an inspector.