Risk analysis, priority setting team building and strategic insight
Post on 11-Jun-2015
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Creating value from uncertainty
www.Broadleaf.com.au
Getting the most out ofa risk assessment
Priority setting and understanding your risks
Getting the most out of a risk
assessment
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Project risk assessment
Risk management priority setting
Using risk assessment for other purposes
Finding strategic insights
Context
Getting the most out of a risk
assessment
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CONSEQUENCE
LIK
EL
IHO
OD
Part 1 – priority setting
Getting the most out of a risk
assessment
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Getting the most out of a risk
assessment
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Common approach
CONSEQUENCE
LIK
EL
IHO
OD
Risk
Consequencerating
Likelihoodrating
Riskrating
Existing
controls+
Getting the most out of a risk
assessment
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Attack the High and Extreme risks
There might be nothing you can do
Which ones first?
What does this tell us?
Extreme
High
Medium
Low
Getting the most out of a risk
assessment
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Augmented approach
CONSEQUENCE
LIK
EL
IHO
OD
Risk
Consequencerating
Likelihoodrating
Riskrating
Existing
controls+
Controleffectiveness
Potentialexposure
ISO 31000 Risk management and IEC 62198 Managing risk in projects
How good are
the controls
relative to how
good they could
be in practice
Getting the most out of a risk
assessment
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Sale of a small piece of unused public land
Controls
• The report is conclusive and independent
• Community consultation has been limited and reactive
• Planning rules are not universally supported
Control effectiveness MediumConsequences HighLikelihood MediumPotential exposure Catastrophic
Communityresistance
Poor communicationPerceptions ofimproper influenceCampaign by neighbours
Ministerial interferenceAdditional studiesDelay and cost
ReportConsultationPlanningscheme
DESCRIPTIONCAUSES IMPACTS CONTROLS
Risk rating High
Getting the most out of a risk
assessment
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What does this tell us?
CONSEQUENCE
LIK
EL
IHO
OD
RISK RATINGC
ON
TRO
L EF
F.RISK RATING
PO
TE
NT
IAL
EX
P
Be concernedManagement attention
Priority fortreatment“Low hanging fruit”
Priority forcontrol assuranceMonitor key controls
Getting the most out of a risk
assessment
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Priorities - summary
Add two small pieces of information
Control effectiveness
Improve flow of analysis
Clarify where to put treatment effort
Potential exposure
Same scale as consequence rating
Identify key controls
Part 2- Other purposes
Getting the most out of a risk
assessment
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Getting the most out of a risk
assessment
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An oblique approach to project challenges
Groups within project have different goals
Persistent problems are not being tackled
Key decisions not being made (paralysis)
Establishthe context
IdentifyAnalysethe risks
Evaluate Treat
Monitor and review
Consult & communicate
Getting the most out of a risk
assessment
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Unco-ordinated objectives
Establish the context
Scope
Success
Risk rating mechanism (priorities)
Structured framework
Getting the most out of a risk
assessment
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Failure to deal with problems
Risks and Control Effectiveness (CE)
We agree there is a risk
We agree on the controls
How well designed are they?
How effectively are they implemented?
Need to treat high risks with poor CE
Getting the most out of a risk
assessment
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Decision paralysis
Comparative risk assessment - Options
How many Extreme or High risks affect each option?
How hard will it be to treat each of them?
Is one all short term and the other long term?
Are some localised and others pervasive?
Would you rather live in this world or that world?
Dispassionate basis for selecting preferred option
Getting the most out of a risk
assessment
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Other uses - summary
Problems you might not want to tackle head on can be flushed out in a risk assessment
Focus on risk assessment not personal performance or disputes
Explore and choose between options
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assessment
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Part 3 – strategic insight
A lot of information we don’t use
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assessment
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Example - 28 risks
Getting the most out of a risk
assessment
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Big picture
Getting the most out of a risk
assessment
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Cluster analysis
Redraw in termsof clusters
Regulator
Departmental management & administration
Policy
Stakeholders
Industry & suppliers
Procurement policy
Program
The project
The initial focus
of attention
Internal
dysfunction
Root of most
risks
Unending cycle of
policy disagreement
Getting the most out of a risk
assessment
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Strategic insight - summary
A lot of cause-effect information
Analysis can yield insights
Clusters of related risks (themes)
Relationships between clusters (dynamics)
Getting the most out of a risk
assessment
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References
General project risk management
Project Risk Management Guidelines: Managing Risk with ISO 31000 and IEC 62198
Cluster analysis
http://www.touchgraph.com/navigator
lattix.com
(Design Structure Matrix – DSM)
Getting the most out of a risk
assessment
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ContactDr Stephen Grey
Associate Director
Grey@Broadleaf.com.au
+61 412 223 256
If you would like further information about this topic please contact us.
We will endeavour to reply promptly.
For further information visit www.Broadleaf.com.au
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