Horizon scanning is an intelligence technique on the rise. In the second of our series of articles examining four key methods used in strategic intelligence, Gabrielle Reid and Markus Korhonen provide an overview of the fundamentals of horizon scanning and take a look at its use in the FMCG sector.
Horizon scanning is an essential tool for businesses to anticipate future challenges or opportunities and take action where needed. This systematic analysis of diverse, reliable and sophisticated intelligence to detect emerging changes in your operating environment(s) across political, regulatory, security and other factors offers a competitive advantage. Yet, while some businesses may find horizon scanning most useful in the initial years of a venture or in response to specific events, employing horizon scanning as a permanent feature in a company’s risk management posture can prove even more effective.
Most change is incremental. As the majority of companies focus on the day-to-day priorities of business, the subtle but important shifts around them can go undetected. Dedicated horizon scanning resources – premised on the robust application of open-source intelligence (OSINT) techniques to uncover and critically process information – can provide the much needed ‘eyes on the road ahead’ and help businesses to anticipate change before a major development unfolds. Having a robust system of identifying early warning signs of change in your operating environment will allow you to make decisions with greater foresight, bolstering your business’s readiness to deal with potential threats or to seize opportunities.
The fundamentals of horizon scanning
In the world of intelligence and risk management, all horizon scanning processes involve some iteration of scanning, analysing, and synthesising information, and communicating findings on a particular issue or manifold exposures. The key is to focus on the outlook and ensure your assessment is relevant to your business’s needs and objectives. Much like scenario mapping, this is not a matter of prediction, but instead serves as a means to critically consider the sources of emergent risk(s). Various analytical tools may be utilised in the process, and while horizon scanning is a flexible exercise, it should be centred on five fundamental questions (see Figure 1).
Figure 1 Getting started: Asking the right questions
Horizon scanning in practice: A look at the FMCG sector
For all international companies, including those operating in the fast-moving consumer goods (FMCG) sector for example, horizon scanning is essential for understanding both the risks and opportunities that exist within their global footprint. Like many businesses, over the past five years the FMCG industry has faced several challenges, including unexpected supply chain disruptions stemming from the Covid-19 pandemic, the Russia-Ukraine conflict or, at times, political instability in single source markets. Similarly, they have faced unprecedented rises in commodity prices; fluctuating consumer demand and spending power, increasing environmental and sustainability regulations, and labour-related grievances. All of these factors point to a changing operating environment in which to be forewarned is to be forearmed. An FMCG company reliant on a complex supply chain that expands commodity sourcing markets to points-of-sale across the globe needs to stay abreast of a wide range of issues across a wide range of countries that could impact them. Tracking key geopolitical, political, security, commercial and regulatory developments, as well as existing or emerging trends, relative to your exposure can help you in anticipating change. Similarly, a company wholly exposed in a single jurisdiction – be it for their manufacturing sites or their primary consumer market – will need to ensure they remain aware of the potential and emergent shifts in a country they may feel they know well.
Symbiotic risk management
Whether you are considering entering a new jurisdiction, managing existing operations, or expanding your commercial footprint, horizon scanning can help you achieve your goals. The appropriate use of these tools is often the difference between an organisation that struggles in response to unforeseen threats, and one that can adapt to a changing environment.
Next week Gabrielle and Markus look at geopolitical analysis. You can read their new article now, just use the link below to download the full series.