Risk Management (RM) A NEW FRONTIER FOR SAFETY MANAGEMENT

OVERVIEW What is RM? RM & Safety – The Connection RM - The Essentials The Integration Imperative Growing an RM Initiative How Leaders Can Lead

What is RM?

RM & Safety – The Connection

RM - The Essentials

The Integration Imperative

Growing an RM Initiative

How Leaders Can Lead

What is Risk Management? Systematic decision-making process Focused on opportunity With the objective of optimizing organization performance Minimize unnecessary risks Take mission supportive risks All dimensions of risk considered

Systematic decision-making process

Focused on opportunity

With the objective of optimizing organization performance

Minimize unnecessary risks

Take mission supportive risks

All dimensions of risk considered

THE OPPORTUNITY-RISK RELATIONSHIP A goal of agencies is to enhance mission performance Involves finding opportunities to excel Risk management is the process used to enable opportunities by managing risks

A goal of agencies is to enhance mission performance

Involves finding opportunities to excel

Risk management is the process used to enable opportunities by managing risks

RISK – THE TWO EDGED SWORD Source of all progress Must change to improve Change involves risk Contingencies demand risk taking Source of all loss Risks can lead to losses Many risks are unnecessary Risks must be detected and managed Take all the good risks, none of the bad

Source of all progress

Must change to improve

Change involves risk

Contingencies demand risk taking

Source of all loss

Risks can lead to losses

Many risks are unnecessary

Risks must be detected and managed

WHY RISK MANAGEMENT NOW? Scope of risks Speed of risks Scrutiny of risks Costs of risks Overall significance of risks

Scope of risks

Speed of risks

Scrutiny of risks

Costs of risks

Overall significance of risks

THE SAFETY-RISK MANAGEMENT CONNECTION Agencies need to dramatically improve RM Agencies need a source of RM expertise Agencies need an organization to coordinate and integrate diverse risk issues WHY THE SAFETY FUNCTION?

Agencies need to dramatically improve RM

Agencies need a source of RM expertise

Agencies need an organization to coordinate and integrate diverse risk issues

WHY THE SAFETY FUNCTION?

WHY SAFETY TAKES THE LEAD The safety process is closely linked to the RM process Safety managers are experienced as consultants Safety has the scope & background Safety can (and should) adopt the RM process as its own

The safety process is closely linked to the RM process

Safety managers are experienced as consultants

Safety has the scope & background

Safety can (and should) adopt the RM process as its own

WHAT SAFETY CAN DO Recommend a policy and management framework Provide RM process expertise Provide RM training Assist top management in prioritization of risk issues Advise on risk communication

Recommend a policy and management framework

Provide RM process expertise

Provide RM training

Assist top management in prioritization of risk issues

Advise on risk communication

TIME TO EMULATE THE CORPORATE WORLD ? VP RISK MANAGEMENT Safety * security * fire * health * liability * product *disaster planning/control * AGENCY RISK MANAGEMENT COORDINATOR Safety * security * fire * health * liability * product *disaster planning/control *

THE ARMY’S EVOLUTION 1980 - The Army Safety Center explores RM as a means to enhance effectiveness 1985 - Chief of Staff, Army approves Army wide application of RM – Safety coordinates 1993 - Director of Army Safety adopts RM as the safety management process 2005 – Army Safety Center name changed to Combat Readiness Center. Charter is all sources of loss

1980 - The Army Safety Center explores RM as a means to enhance effectiveness

1985 - Chief of Staff, Army approves Army wide application of RM – Safety coordinates

1993 - Director of Army Safety adopts RM as the safety management process

2005 – Army Safety Center name changed to Combat Readiness Center. Charter is all sources of loss

RISK MANAGEMENT - THE ESSENTIALS

VISION Macro: Every Leader & Employee Manages Risk in All They Do... On- & Off-Duty Micro: On-Duty - Every Organization Manages Normal Risk Profile to Enhance Mission Performance - Unique Operations Identified & Assessed Off-Duty - Every Individual Applies Risk Management Process to Activities

Macro: Every Leader & Employee Manages Risk in All They Do... On- & Off-Duty

Micro:

On-Duty - Every Organization Manages Normal Risk Profile to Enhance Mission Performance

- Unique Operations Identified & Assessed

Off-Duty - Every Individual Applies Risk Management Process to Activities

TRANSITION FROM COMPLIANCE TO PERFORMANCE MINDSET Compliance mindset Follow the rules Performance mindset Follow the rules Add new rules as needed Deviate from rules when the mission dictates

Compliance mindset

Follow the rules

Performance mindset

Follow the rules

Add new rules as needed

Deviate from rules when the mission dictates

4 KEY RM PRINCIPLES 1. Accept no unnecessary risks. 2. Make risk decisions at the appropriate level. 3. Accept risks when benefits outweigh costs. 4. Integrate RM into doctrine and planning at all levels.

1. Accept no unnecessary risks.

2. Make risk decisions at the appropriate level.

3. Accept risks when benefits outweigh costs.

4. Integrate RM into doctrine and planning at all levels.

BUT.... NOBODY TAKES “UNNECESSARY” RISKS? If all the hazards that could have been detected have not been detected then unnecessary risks are being accepted. The single greatest advantage of RM over traditional risk management is the consistent detection of 50%+ more hazards. 1. Accept No Unnecessary Risks

If all the hazards that could have been detected have not been detected then unnecessary risks are being accepted.

2. Make Risk Decisions at the Appropriate Level Factors below become basis of a decision- making system to guide leaders Who will answer in the event of a mishap? Who is the senior person at the scene? Who possesses best insight into the full benefits and costs of a risk? Who has the resources to mitigate the risk? What level makes the most operational sense? What level makes these types of decisions in other activities? Who will have to make this decision in combat operations?

Factors below become basis of a decision- making system to guide leaders

Who will answer in the event of a mishap?

Who is the senior person at the scene?

Who possesses best insight into the full benefits and costs of a risk?

Who has the resources to mitigate the risk?

What level makes the most operational sense?

What level makes these types of decisions in other activities?

Who will have to make this decision in combat operations?

WHAT HAPPENS WHEN AN ORGANIZATION STOPS TAKING RISKS? WEBSTER: “ BUREAUCRACY : A system of administration characterized by lack of initiative and flexibility, by indifference to human needs or public opinion, and by a tendency to defer decisions to superiors or to impede action with red tape.” MAINTAINING A BOLD, RISK-TAKING ORGANIZATION IS ALWAYS A CHALLENGE IN NORMAL TIMES. RM HELPS. 3. Accept Risks When Benefits Outweigh Costs.

4. Integrate RM Into Processes and Planning At All Levels. Operational Process Operational Process Operational Process Loss Control Staff Injects Operational Leaders Add-On Loss Control Occurs Within The Process This is the one we want!!

THE RM 6-STEP PROCESS 1. Identify the Hazards 2. Assess the Risks 3. Analyze Risk Control Measures 4. Make Control Decisions 5. Implement Risk Controls 6. Supervise and Review

Step 1 - Identify the Hazards Process: Emphasizes hazard analysis tools. Adds rigor and early detection. Output : Significant improvement in the detection of hazards (50%+) . Preventive, not reactive 1. Identify the Hazards 2. Assess the Risks 3. Analyze Risk Control Measures 4. Make Control Decisions 5. Implement Risk Controls 6. Supervise and Review

Step 2 - Assess the Risks Process: All hazards evaluated for mission or activity impact. Root causes determined and risk levels assigned. Output: Personnel know the priority risk issues of the organization and of their function. 1. Identify the Hazards 4. Make Control Decisions 3. Analyze Risk Control Measures 5. Implement Risk Controls 6. Supervise and Review 2. Assess the Risks

Step 3 - Analyze Risk Control Measures Process: Comprehensive risk control options developed on a worst-first basis. Output: A full range of cost effective, mission supportive, risk controls for the decision-maker. 1. Identify the Hazards 2. Assess the Risks 3. Analyze Risk Control Measures 4. Make Control Decisions 5. Implement Risk Controls 6. Supervise and Review

Process: Comprehensive risk control options developed on a worst-first basis.

Output: A full range of cost effective, mission supportive, risk controls for the decision-maker.

Step 4 - Make Control Decisions Process: Gets risk decisions to the right person, at the right time, with the right support. Output: Personnel know their decision-making authority and limitations. Accountability is established 1. Identify the Hazards 2. Assess the Risks 3. Analyze Risk Control Measures 4. Make Control Decisions 5. Implement Risk Controls 6. Supervise and Review

Process: Gets risk decisions to the right person, at the right time, with the right support.

Output: Personnel know their decision-making authority and limitations. Accountability is established

Step 5 - Implement Risk Controls Process: Leaders lead, operators involved, accountability known. Output: Controls approved by decision-maker are implemented. 1. Identify the Hazards 2. Assess the Risks 3. Analyze Risk Control Measures 4. Make Control Decisions 6. Supervise and Review 5. Implement Risk Controls

Process: Leaders lead, operators involved, accountability known.

Output: Controls approved by decision-maker are implemented.

Step 6 - Supervise and Review Process: Measures mission effectiveness and direct indicators of risk. Output: Near real time status established. Proactive, not reactive. 1. Identify the Hazards 2. Assess the Risks 3. Analyze Risk Control Measures 4. Make Control Decisions 5. Implement Risk Controls 6. Supervise and Review

Process: Measures mission effectiveness and direct indicators of risk.

Output: Near real time status established. Proactive, not reactive.

USING THE 6-STEP PROCESS THE RISK MANAGEMENT CONTINUUM PLANNING OPERATIONS AFTER-ACTION -Deliberate RM -Detailed Hazard ID -Integrated -Largely Time-Critical -Inspections -Interviews -Highly Decentralized -Assess Indicators -After action reviews -Failure reports -Feedback to Planning We try to get most RM done here But continue the process here and here

USING THE 6-STEP PROCESS LEVELS OF EFFORT Little: - Time - Complexity - Risk Lot of: - Time - Complexity - Risk “ TIME CRITICAL” “DELIBERATE” “STRATEGIC” RM is applied proportionate to operational complexity, criticality, and risk!

Why integration is critical? 12 Strategies for RM integration. The importance of pace. Integrating the RM Process Overview

Why integration is critical?

12 Strategies for RM integration.

The importance of pace.

WHY INTEGRATION IS CRITICAL? Integration: Forces balancing of loss control and other mission needs Captures more of the knowledge and experience of large numbers of operators Reduces the number and diversity of references needed to do the job right Eliminates redundancy and gaps between loss control functions Strengthens accountability Reduces costs and workloads (in plans, materiel development cycles, etc.)

Integration:

Forces balancing of loss control and other mission needs

Captures more of the knowledge and experience of large numbers of operators

Reduces the number and diversity of references needed to do the job right

Eliminates redundancy and gaps between loss control functions

Strengthens accountability

Reduces costs and workloads (in plans, materiel development cycles, etc.)

THE TWELVE STRATEGIES FOR PROGRAM INTEGRATION Accountability Teaming Partnership Integrate in Training Risk Decision Points Organization & Policy Structure Employee Activities Process Integration Direct Change Gain a Champion Integrate in Strategic Planning Integrate into Measurement

Accountability

Teaming

Partnership

Integrate in Training

Risk Decision Points

Organization & Policy Structure

Employee Activities

Process Integration

Direct Change

Gain a Champion

Integrate in Strategic Planning

Integrate into Measurement

THE IMPORTANCE OF PACE Don’t use the shotgun Don’t get out in front of the organization - too far Don’t “inspect-in” RM Do focus on “targets” Do expect crawl, walk, run Patience, patience, patience

Don’t use the shotgun

Don’t get out in front of the organization - too far

Don’t “inspect-in” RM

Do focus on “targets”

Do expect crawl, walk, run

Patience, patience, patience

RM MATURATION Approach Strategy Available Tools Overview

Approach

Strategy

Available Tools

APPROACH Top-Down Strong Senior Leader Backing Decentralized Implementation Moderate Implementation Tempo Safety Lead Role for Cross-Functional Implementation

Top-Down

Strong Senior Leader Backing

Decentralized Implementation

Moderate Implementation Tempo

Safety Lead Role for Cross-Functional Implementation

RM Strategy Elements Education and Training Tools and Information Continuously improve RM support Integrate into loss control functions Integrate into all operations - - on- and off-duty Provide Oversight and Sustainment

Education and Training

Tools and Information

Continuously improve RM support

Integrate into loss control functions

Integrate into all operations - -

on- and off-duty

Provide Oversight and Sustainment

Short Term Executive Level - Senior Leaders Applications & Integration - Focal Points/Planners Essentials - Mid-level Managers/Supervisors Fundamentals - “Working” Level Introduction - All Long Term - Institutionalized into all Training & Education RM Strategy Education and Training Options

Short Term

Executive Level - Senior Leaders

Applications & Integration - Focal Points/Planners

Essentials - Mid-level Managers/Supervisors

Fundamentals - “Working” Level

Introduction - All

Long Term - Institutionalized into all Training & Education

Intended to serve as single source for RM and related information Linked to other agency RMIS/RM sites Provides crosstell capability If you have something to share—Share it! RM STRATEGY A RISK MANAGEMENT INFORMATION SYSTEM (RMIS)

Intended to serve as single source for RM and related information

Linked to other agency RMIS/RM sites

Provides crosstell capability

If you have something to share—Share it!

What is it? Automated risk assessment tool Walks user through six-step RM assessment Particularly useful for assessing new initiatives Can do static/situational assessments too RM STRATEGY TOTAL RISK ASSESSMENT & CONTROL SYSTEM (TRACS)

What is it?

Automated risk assessment tool

Walks user through six-step RM assessment

Particularly useful for assessing new initiatives

Can do static/situational assessments too

The leader’s role will be a decisive factor in the success or failure of RM

The leader’s role will be a decisive factor in the success or failure of RM

RM Leadership Opportunities 1. Commit to Breakthrough Improvement Objectives: Put improvement of risk performance (control-opportunity) on a competitive level with other important mission concerns. 2. Set Goals & Objectives Objectives: Establish periodic RM performance and programmatic goals.

1. Commit to Breakthrough Improvement

Objectives: Put improvement of risk performance (control-opportunity) on a competitive level with other important mission concerns.

2. Set Goals & Objectives

Objectives: Establish periodic RM performance and programmatic goals.

RM Leadership Opportunities 3. Set a Personal Example Objectives: To assure credibility of the RM process through personal behavior. 4. Build an Aggressive Opportunity Mindset in the Organization Objectives: Create an organization as conscious of the opportunity aspects of RM as it is the risk reduction.

3. Set a Personal Example

Objectives: To assure credibility of the RM process through personal behavior.

4. Build an Aggressive Opportunity Mindset in the Organization

Objectives: Create an organization as conscious of the opportunity aspects of RM as it is the risk reduction.

RM Leadership Opportunities 5. Induce Loss Control Community Functional Integration Objectives: Build increasing cooperation and integration of the loss control community. 6. Establish an RM Management Structure Objectives: Provide the necessary leadership and staff resources to adequately guide the RM process.

5. Induce Loss Control Community Functional Integration

Objectives: Build increasing cooperation and integration of the loss control community.

6. Establish an RM Management Structure

Objectives: Provide the necessary leadership and staff resources to adequately guide the RM process.

RM Leadership Opportunities 7. Resource RM Activities Objectives: Allocate resources to RM (control-opportunity) at a level it can competitively justify. 8. Heat Shield Subordinates Objectives: Protect subordinates who have taken prudent, mission supportive risks, but experienced severe losses, from negative consequences.

7. Resource RM Activities

Objectives: Allocate resources to RM (control-opportunity) at a level it can competitively justify.

8. Heat Shield Subordinates

Objectives: Protect subordinates who have taken prudent, mission supportive risks, but experienced severe losses, from negative consequences.

RM Leadership Opportunities 9. Detect & Correct Gambling Objectives: Develop an organization in which risk “gambling” is deterred even when the gambler “wins”. 10. Use the Power of Question Objectives: Use pointed RM questions to induce RM activity and culture change.

9. Detect & Correct Gambling

Objectives: Develop an organization in which risk “gambling” is deterred even when the gambler “wins”.

10. Use the Power of Question

Objectives: Use pointed RM questions to induce RM activity and culture change.

RM Leadership Opportunities 11. Regularly Monitor RM Progress Objectives: Periodically assess a set of data that effectively monitors organization RM status. 12. Exploit the RM Value of Major Mishap Reviews Objectives: Consistently induce consideration of the RM implications of mishaps.

11. Regularly Monitor RM Progress

Objectives: Periodically assess a set of data that effectively monitors organization RM status.

12. Exploit the RM Value of Major Mishap Reviews

Objectives: Consistently induce consideration of the RM implications of mishaps.

HOW TSI CAN HELP Consult on agency RM integration Recommend and draft RM policy guidance Conduct large scale training programs Conduct train-the-trainer programs Develop and/or recommend sources of RM job aids and tools Facilitate RM applications A PROVEN RM TRACK RECORD

Consult on agency RM integration

Recommend and draft RM policy guidance

Conduct large scale training programs

Conduct train-the-trainer programs

Develop and/or recommend sources of RM job aids and tools

Facilitate RM applications

COMMENTS AND QUESTIONS?