What Is Risk Analysis and How Is It Related To Strategic Planning?
Risk analysis involves identifying where a company might be vulnerable to various outside (usually) factors. Risk analysis may be conducted either within the structure of strategic planning, or, on its own. These days companies need to buffer the effects of a number of things "out there" so they ensure that they don't become the victims of forseeable events.
Of course, you can never be sure that you've covered off all risks -- you can only identify, and plan for risks you can forsee.
Here are some examples of the kind of thinking involved in risk analysis:
The company's head office is in an area where hurricanes and flooding occur, severe enough to, once every decade, result in potential shutdowns. Plan for it.
The company relies on low or stable gasoline prices. The risk is that prices will fluctuate (instability), or they will rise making the business unprofitable either for a period of time, or permanently. Plan for it. A company that identifies this risk can then plan strategically and have some contingency plans, or, reduce their dependence on oil prices and cheap gasoline through various forms of diversification.
A company that relies on low cost labor (or highly skilled labor) can be put at risk if minimum wage legislation changes, OR, the pool of skilled labor shrinks in the areas within which it hires. It's a possible risk. A company that recognizes this can undertake more effective human resources planning to reduce the risks.
See Also: What Is SWOT Analysis?