ICSAN Strategic Operations flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Risk appetite

The amount and type of risk an organisation is willing to accept in pursuit of its objectives, expressed in qualitative or quantitative terms and approved at board level.

Residual risk

The level of risk remaining after existing controls have been applied and assessed for effectiveness. It is compared with risk tolerance to decide whether further action is needed.

Three lines model

A governance structure where operations own and manage risk, a risk and compliance function provides oversight and challenge, and internal audit gives independent assurance to the board.

Segregation of duties

A preventive control that separates authorisation, custody of assets, and record-keeping so no single person can both initiate and conceal an error or fraud.

Net present value

The sum of future cash flows discounted at the cost of capital, minus the initial investment. A positive NPV indicates the project adds value.

Weighted average cost of capital

The blended required return on a firm's equity and after-tax debt, weighted by market values. It serves as the minimum hurdle rate for average-risk investment.

Profitability index

NPV divided by initial investment. Used to rank projects when capital is rationed, because it measures value created per unit of scarce capital.

Break-even volume

Fixed costs divided by contribution per unit, where contribution equals selling price minus variable cost per unit. It is the output at which total revenue equals total cost.

Cash conversion cycle

Days inventory outstanding plus days sales outstanding minus days payable outstanding. It measures how long cash is tied up in operations before returning from customers.

Zero-based budgeting

A budgeting method starting from nil each period, requiring every cost to be justified afresh rather than rolled forward from the prior year's approved budget.

Balanced Scorecard

A performance framework measuring financial, customer, internal process, and learning and growth perspectives, linked by cause-and-effect assumptions to translate strategy into measurable objectives.

Leading versus lagging indicators

Leading indicators predict future performance and enable corrective action; lagging indicators confirm results already achieved. A balanced scorecard uses both types.

Goodhart's law

The principle that once a measure becomes a target, people optimise the measure rather than the underlying objective, so paired or counter-balancing metrics are needed.

Little's Law

Average work-in-process equals throughput rate multiplied by average flow time. It links inventory, processing speed, and waiting time in any stable process.

Capacity utilisation

Actual output divided by maximum possible output. Effective capacity further adjusts design capacity for planned maintenance, changeovers, and scheduled downtime.

Porter's five forces

An industry attractiveness framework covering rivalry among existing firms, buyer power, supplier power, threat of new entrants, and threat of substitutes.

Ansoff matrix

A growth framework with four options: market penetration, product development, market development, and diversification, the last carrying the highest risk because both product and market are new.

Comply or explain

A governance approach where a code sets principles; companies must either comply or publicly explain and justify any departure, allowing flexibility for different circumstances.

Board independence

The proportion of directors free from material relationships with the company or management, enabling objective challenge of executive proposals and oversight of performance.

Mendelow's matrix

A stakeholder mapping tool using power and interest: manage closely, keep satisfied, keep informed, or monitor, depending on each group's combination of the two attributes.

Stakeholder salience

A model ranking stakeholders by power, legitimacy, and urgency. Those holding all three attributes are definitive; two make expectant stakeholders; one makes latent stakeholders.

Materiality assessment

A process identifying which environmental, social, and governance issues are significant to the business and to stakeholders, shaping the content of sustainability and integrated reports.

Crisis communication protocol

Pre-agreed rules for rapid response: acknowledge quickly, state only verified facts, designate one spokesperson, avoid speculation, and commit to scheduled updates.

Lewin's change model

A three-stage model of unfreezing existing behaviour, implementing the change, and refreezing new norms so the change becomes embedded rather than reverting.

Kotter's eight steps

A change sequence: urgency, coalition, vision, communication, empowerment, short-term wins, consolidation, and anchoring in culture. Skipping early steps undermines later ones.

ADKAR model

An individual change model requiring Awareness, Desire, Knowledge, Ability, and Reinforcement in sequence. Organisational change fails where individuals stall at any stage.

Force-field analysis

A technique weighing driving forces for change against restraining forces. Reducing restraining forces typically generates less resistance than increasing driving pressure.

Neutral zone

The middle stage of Bridges' transition model between letting go of the old and embracing the new, where ambiguity, lowered productivity, and heightened anxiety are typical.

Conflict of interest

A situation where personal, financial, or other interests could improperly influence professional judgement. Managed by identifying, disclosing, and recusing or mitigating.

Whistleblowing channel

A confidential, independently operated route for reporting suspected misconduct, backed by explicit anti-retaliation protection to encourage disclosure without fear of reprisal.

Objectivity threat types

Self-interest, self-review, advocacy, familiarity, and intimidation. Safeguards include rotation, independent review, and disclosure of relationships that could impair judgement.

Code of ethics versus conduct

A code of ethics states broad principles and values; a code of conduct specifies required and prohibited behaviours. Both need enforcement mechanisms to influence behaviour.