This document discusses 10 risk concepts that are problematic and provides alternatives that should be used instead. These concepts include heat maps, risk reports, risk tolerance statements, self-assessments, risk registers, enterprise risk management frameworks, inherent risks, risk scoring and ratings, red/yellow/green prioritizations, and key risk indicators. The document recommends using tools based on probabilistic analysis, decision trees, improved planning, embedded policies and controls, decision-maker focused assessments, integrated planning processes, proven probabilistic methods, auditing of controls, scenario analysis, and measurement of plan performance as better approaches.

1. 10 risk concepts to
throw on a bonfire
and how they can be replaced
Prof. Hernan Huwyler, MBA CPA

2. Heat maps
Use scientific probabilistic analysis
such as Monte Carlo Simulations
and decision trees
instead
1Proven mathematical flaws make
them useless and misleading

3. Risk reports
Improve the planning tools
developed by the business and
add follow-ups on performance
instead
2 Unnecessary reporting layers
disconnected from decision-making

4. Risk tolerance
Implement standard controls
embedded in policies and
contracts for future activities
instead
3 Wishful thinking about risk
expressed in generic statements

5. Self-assessments
Focus the assessment and the
support on decision-makers with
specific tools for each plan
instead
4 Generic questions to ask a
generic audience about their
general risk perceptions

6. Risk registers
Add reserves, insurance and
control costs into the planning
processes
instead
5 Siloed document not leading to
the management of risks

7. EMR
Use simple probabilistic tools
developed from the 40s
instead
6Jargon-based nonsenses used to
sell services by 1-day trained
consultants and auditors

8. Inherent risks
Assess the efficiency of current
controls by auditing
instead
7 Unrealistic scenarios which are
impossible to assess

9. Scoring and rating
Use tools to assess multiple
scenarios triggered by the volatility
of planning assumptions
instead
8 Arbitrary links between biased
adjectives and risks

10. Red, Yellow, Green
Use analytic techniques to assess
the full spectrum of risk scenarios
instead
9Colorblind-unsafe prioritization of
already made opinion-based
decisions

11. KRIs
Measure the performance of
plans, budgets and projects
instead
10Ratios expected to monitor how
risk factors evolve, depending on who you ask