Risk Adjusted Business Case

The Problem We Solve

Traditional business cases produce a single prediction of project outcome, e.g. an ROI of 6%, as if there is only one possible outcome for the investment.  Only one thing can be said for sure about that prediction: it will be wrong.  The only question is by how much and in which direction.  The traditional business case process does not account for investment risks which can often do affect outcome.

Traditional business cases do not include the impact of recessions, interest rates, key employee loss or more recently pandemics.  When then impact of these risks is considered,  there isn’t one possible outcome for the investment; there are many possible outcomes, each with a distinct probability.  What you really want to no is what is the most likely outcome!

 

Bar Napkin
Existing business cases are unstructured
Multiple Outcomes
Traditional business cases only identify one outcome

Risk Adjusted Business Case

Enabled Concept has a process and technology driven solution which enables you to understand the distribution of possible outcomes for an investment and probability of each.  We have developed a process to help you identify potential risks, drivers and impacts.  These risks are captured in a structured format which links the impacts to the investment metrics, e.g. revenue, costs, time, etc.  They ROI is then run through a Monte Carlo simulation which models the outcome of the investment thousands of times, producing a distribution of all possible ROIs by probability.

Monte Carlo Engine
Monte Carlo Engine
Risk Adjusted Outcome
Multiple Outcomes

Key Features

The Risk Adjusted Business Case has several key features:

  • Established structure – the structured approach to capturing information and risk provides rigor to the investment analysis process
  • Risk identification – potential risks to the investment are specified and catalogued
  • Sensitivity analysis – a sensitivity analysis is generated identifying the impact each risk had on ROI, in descending order
  • Mitigation plan – using the sensitivity analysis, we produce a mitigation plan to help reduce the likelihood or potential impact of the catalogued risks.
Risk Mitigation Planning
Mitigation Planning

Results

Using the Risk Adjusted Business Case improves your overall return on invested capital by avoiding investments which are likely to result in poor returns.  It also helps to identify and mitigate latent risk which can turn just average investments into top performers

Find out how we can contribute to your success ...