The Exploration of the Combined Application of Risk Management and Scenario Planning: Taking Chinese Electric Vehicle Manufacturers as an Example

Abstract

Electric vehicles (EV) are promising in addressing global warming issues, with China being the manufacturing hub. However, various risks exist for Chinese EV manufactures, and it is necessary to identify main risks that pose threats to the entire industry. The aim of this study is to identify the main risks for Chinese EV manufacturers by 2035 and corresponding strategies through the integration of two frameworks, which are risk management and scenario planning.

The research follows processes of one standard - ISO 31000 risks management. First, the horizon scanning through the PESTEL (Political, Economic, Social, Technological, Environmental, Legal) method is applied for the risk identification; then two high-level risks are selected based on risk analysis results for the scenario planning process. Four distinctive scenarios are constructed based on two risks with one additional wild card scenario. The results show that two main risks for Chinese EV manufacturers are ‘disruptions in supply chains of battery critical minerals’ and ‘mismatches between technology breakthroughs in batteries and charging infrastructure’, then risk management strategies are developed for all scenarios.

The conclusion in this study is that the risk management practice can be well integrated with scenario planning process for the development of Chinese EV manufacturers thorough strategic flexibility, and scenarios extend traditional risk management beyond the operational level into strategic planning.