Going Beyond S&OP: Hedging Exogenous Business Risk

While S&OP/IBP are effective in managing operational uncertainty and risk, there are some risk factors that are not captured in these processes. Exogenous risk takes the form of technological, environmental, competitive, political, financial, demographic, economic, and other factors. These are the bigger picture, long-term forces that can present serious risk to a business, whether it be risk of falling market share or risk to the very existence of the business itself. In this article, I discuss how strategic and long-term planning leaders can better understand exogenous risk, and develop a practical cross-functional framework to actively mitigate it. I reveal how to develop risk hedging strategies with real-life examples taken from a software company replacing an established software solution and a restaurant chain embarking on an aggressive growth ...