Strategic Planning and Risk Management Flashcards

A competitive advantage is considered 'sustainable' when it is:

Answer: Difficult for competitors to imitate, substitute, or replicate over time

A sustainable competitive advantage persists because it is rooted in capabilities or resources that are valuable, rare, costly to imitate, and not substitutable (the VRIN framework).

Scenario planning in strategic management involves:

Answer: Developing multiple plausible future situations and strategies for each

Scenario planning creates several distinct but plausible future scenarios (e.g., optimistic, pessimistic, most likely) and develops strategic responses for each, improving organizational resilience.

The COSO ERM framework identifies which of the following as a core component?

Answer: Risk appetite and strategy alignment

The COSO ERM framework centers on aligning risk appetite with strategy, ensuring that the level of risk an organization is willing to accept informs its strategic decisions.

A company's mission statement typically describes:

Answer: The organization's fundamental purpose and reason for existence

A mission statement articulates an organization's core purpose — why it exists, what it does, and for whom — providing direction and a foundation for strategic planning.

Benchmarking as a strategic tool involves:

Answer: Comparing performance metrics against best-in-class organizations to identify improvement opportunities

Benchmarking systematically compares an organization's processes and performance metrics to industry leaders or best practices to identify performance gaps and improvement opportunities.

A company's residual risk is the risk that remains after:

Answer: Implementing internal controls and other risk mitigation measures

Residual risk is the level of risk remaining after management has applied controls and other mitigation strategies — it represents the risk the organization has chosen to accept.