Using the PESTLE Analysis method to help identify Risks and Opportunities

In addition to the traditional quality, safety and environmental risks which most company’s seem to understand, the latest iteration of the standards now require us to identify opportunities and the risks and these are not limited to those related to the delivery of your products and services, but extend to the business as a whole. We suggest a tool traditionally used by the marketing people, the PESTLE analysis, to prompt for deeper insights into business risks and opportunities:

PESTLE Analysis
PESTLE Analysis
  1. Political: Factors of a political nature which may present risks or opportunities. This doesn’t just relate to local or federal government and their changes which can impact a Company. It could also relate to internal or intercompany politics. In situations there are risks, opportunities and normally both. When things change new risks and opportunities may be presented and existing risks and opportunities should be reviewed.
  2. Economic: Economic factors both inside the company and external to the Company can present big risks and opportunities. External influences could be for example, a change in interest , inflation or exchange rates could impact borrowing and spending and any financial impact is likely to be felt in spending and pricing which will apply to both customers and suppliers. Internal influences could be driven by budgetary changes.
  3. Social: Social factors consider stakeholder preferences, communication preferences, cultural differences, ethical standards, perception of value and quality where risks and opportunities can be presented by all of these. For example a customer who perceives a product as being higher quality will pay more for it even if it costs no more to produce, but may not purchase at all if the product breaches their ethical standards.
  4. Technological: Factors relating to technology are things like process automation, product or service development, supplier, competitor and customer technology, industry innovation. Competitor technology can present a threat, supplier technology can present an opportunity and customer technology can present an opportunity if you are able to align yourself with it and a threat if you can’t.
  5. Legal: Legal factors include both those imposed by the governance of the jurisdictions you operate in and the internal governance your company has established. Not understanding the legal requirements of the jurisdictions you operate in is certainly a risk, but changes to requirements can present risks and opportunities.
  6. Environmental: Factors from the operational
    environment or the market which present risks and opportunities. Understanding the geographic locations you operate in,
    their climates, their populations, infrastructure constraints, sustainability, ethical sourcing, etc.

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