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Pharma Brand Planners' Blog (Part 7)

How do you manage risk and uncertainty in your brand plan?

Brand planners

Part 7: How do you manage risk and uncertainty in your brand plan?

This month we are going to explore the best techniques for identifying, managing and monitoring risks within your brand or franchise plan. 

In our industry we often acknowledge the changing external healthcare system environment, pricing/access, competitive and corporate environments and yet build plans with only one set of assumptions and one scenario for the future articulated and quantified.

A few statistics feel useful here to support our theme:

  • Across all major industries, 72% of all product launches fail to meet their revenue targets
  • Across the globe, 83% of companies are suffering from strong price pressure.

So what do we mean by a risk? A risk is defined as a future uncertain outcome, usually with a negative impact on the brand/organisation, that can be quantified. This should be distinguished from an uncertainty which is more difficult to quantify and can be positive or negative in its impact on the brand/organisation.

Risks can be characterised in different ways: known and unknown, internal and external – a 2x2 box could help you plot and present your risks in this way.

So what’s the best approach for identifying, assessing and quantifying risks?

1. Evaluate the risks you identified in last year’s brand plan – how well did you identify, articulate, assess and manage these risks? What are the biggest learnings to take into this year’s plan?

2. Brainstorm the risks – internal and external – for this year’s brand plan as a cross-functional brand team. Top tips are to set some dedicated time aside for this, away from the day-to-day job, and to think as broadly as possible.

3. Assess the risks – the classical approach to prioritising risks is to evaluate their likelihood of occuring (probability) and their potential business impact across high, medium and low ratings, and then to plot them in a 3x3 grid with the ‘hottest’ risks top right.

4. Prioritisation – as a team, you will then need to decide how many and which risks to  prioritise. A good question to ask is: what is the relative risk profile of this therapy area, this brand and this healthcare market? The answer to this question is an important commentary to add to your brand plan executive summary to inform senior management of the risks, volatility and uncertainty in your plan.

5. Mitigation – the next step is to create risk mitigation plans; the project managers among you will be very familiar with this entire process. The classical approach to risk mitigation is to define as a team who is the ‘owner’ of each risk and what would be the plan of action and decisions needed to manage that risk appropriately. Again, a nice structured template works well here to include in the later sections of your brand plan.

6. Quantification – the next task is to create a compilation of your risks and combine them into a few key scenarios that you can quantify in your (ideally) patient-based forecasting model. But don’t stop there, do create mini P&Ls for each scenario so that you can graphically present the impact on sales and profit/contribution in your brand plan.

The benefits of this approach are numerous, with the principle benefit being a sense of confidence in managing the future from your cross-functional brand team. Secondly, senior management really does need a realistic appraisal of the overall risk profile of its brands and therapeutic markets to (ideally) inform the way it operates, makes decisions and reviews information.

While it might feel like a slightly negative exercise to brainstorm every risk associated with your brand plan, ultimately it can generate important actions and a sense of proactivity across the team when managed correctly.

So what about ongoing management of risks? I’d recommend having a nominated ‘risk leader’ who can regularly review the risks including the leading indicators of change that might tell us that a risk is becoming more likely to materialise. Do you have a regular item on your cross-functional brand team agenda on risks? If not, put it on the agenda now!

And what happens if one of these major risks happens? It’s worth defining what you would do, who will be in charge, how you will manage this potential crisis/change and who you need to engage with. It’s worth talking this through, so that on the rare occasion that one of your major risks comes to fruition you are practically and emotionally ready to tackle it.

A small word of caution: in your risk management approach, it’s worth tuning in to your organisational culture – what’s your organisation’s appetite for risk? How open is your senior management to a realistic and aggressive approach to risk management? This is an added layer of sophistication in your approach that I strongly recommend. Happy risk managing!

Next time, we’ll be looking at the art and science of creating a robust brand plan forecast. Stay tuned – as a former finance analyst, I will make this fun!

Pharma Brand Planners' Blog (Part 6): Setting the right metrics and KPIs in your brand plan

Stephanie Hall is MD of brand planning healthcare consultancy Uptake Strategies

Stephanie Hall is MD of brand planning healthcare consultancy Uptake Strategies

11th December 2019

From: Marketing

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