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Good Risk Software and Why a Spreadsheet will not DO IT!

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Short description of what to look for in good risk management software and some common pitfalls in using a spreadsheet for risk management

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Good Risk Software and Why a Spreadsheet will not DO IT!

  1. 1. Robust Risk Management is Essential in ALL Business Endeavours “Why a spreadsheet will not cut it…” Andrew Ferguson, FIE Aust, CPEng, CPL, MBA, BEng Risk Decisions Pty Ltd 4 Oct 2015 Phone: 0408 466 276 andrew.ferguson@riskdecisions.com
  2. 2. © Risk Decisions, 2015 Introduction • Risk and management • Manage risk to “create, maintain and add value” from key projects, ventures, operations, enterprises • Why Spreadsheets WILL NOT do the job required • Features of well designed risk software • What good risk software should do • Examples of good software  Representative screen shots only 2
  3. 3. © Risk Decisions, 2015 Risk Management Failures? • ALL business endeavours AND projects run into cost, schedule and performance problems (see the examples below – add your own!)  robust enterprise risk management helps! • COTS hardware obsolete before system SW delivered ~$3m • Understanding of brownfield project risks  misunderstood complexity ~ $25m x n • Changed life cycle environment risks  ~ $100m… x n • Complex IT project abandoned ~$20m  accounts still using DOS system!!! • Company insolvencies….x nn • WHS events, product failures,… • Systems fail to meet expectations... 3
  4. 4. © Risk Decisions, 2015 Proactive Risk Manager’s “Left Shift” 4LifecycleCosts LifecycleCosts Apply to all phases of Asset Life Cycle
  5. 5. © Risk Decisions, 2015 Proactive Risk Management Essentials • Establish context for “venture” and risk management; • Determine risk appetite, culture and tolerance • risk hierarchy and structure to record risks • flexible and adaptable risk management process… • applying analysis to risks, actions, processes • risk reporting: risks and actions visible across the enterprise • risk monitoring, consulting and communicating 5
  6. 6. © Risk Decisions, 2015 Why spreadsheets will NOT cut it… #1 • No version control – There will be no “single point of truth” as spreadsheets encourage independent working. • No process workflow - Without process or workflow control there is no audit trail of who changed what and when and why • No history inherently retained – no reasons for change kept, qualitative and quantitative data lost. • People Break “good” spreadsheets - invariably… 6
  7. 7. © Risk Decisions, 2015 Why spreadsheets will NOT cut it… #2 • No deadline tracking – Without tracking of deadlines for risk assessments; risk actions and mitigation achievements are seldom visible • Limited ability to roll up risks into management view of whole enterprise / venture / projects / divisions • Limited security and access control as once the spreadsheet is open all users will see all risks and actions, even sensitive ones – commercial, financial, staff in confidence etc…(single user at a time…) 7
  8. 8. © Risk Decisions, 2015 Why spreadsheets will NOT cut it… #3 • Easy to corrupt information or use out of date information • Limited ability to measure risk treatment and effectiveness • No easy link to corporate reporting tools for review by selected levels of enterprise / management • No linking of project schedule and risks to view effect of risks and uncertainty – what is CRUCIAL? 8
  9. 9. © Risk Decisions, 2015 Benefits of Good Risk Software #1 • Standardisation across organisation / divisions • User Configurable to suit level of user  Smaller projects need less functions but same power • Web Based – easy multi user access across time zones, clients, stakeholders • Multiple Simultaneous Access – no overwriting, ability to selectively lock parts of project / enterprise structure 9
  10. 10. © Risk Decisions, 2015 Benefits of Good Risk Software #2 • Data Security - visibility and access can be controlled • Integrated Schedule / Costs risk assessment  Import directly from key Project schedule tools (MS Project, Primavera…) • Enterprise Risk Management  Scalable to manage risk, opportunities and issues across enterprise functions, projects, operations, divisions, subcontractors – link to key objectives
  11. 11. © Risk Decisions, 2015 • Smaller projects gain access to world class tool through concurrent licencing – trains people for large projects – common tool / process use • Executive reporting  Wide range of flexible reports - standard, ad hoc,  Charts, tables, dashboards,  pdf, MS Office outputs…  Integration into enterprise reporting tools 11 Benefits of Good Risk Software #3
  12. 12. © Risk Decisions, 2015 • Speed and efficiency!  Excel based systems soak up time on data consolidation, manipulation, reformatting, quality and error checking (~84% have errors)  A robust and mature Risk Management SW Tool enables this time to be spent on adding value to the risk based decision making process that is essential to good management • Out of the box usability – low cost implementation and maintenance over life cycle • Good Support - Technical / Business and Training 12 Benefits of Good Risk Software #4
  13. 13. © Risk Decisions, 2015 • The Following slides show some examples of what good risk software can do  We agree that in some cases a spreadsheet can do the same or a similar function • But not without careful design and ongoing effort • And someone can break or change the settings unknowingly • Only one person can use it at a time • You will have difficulty in saving the history and trends • And so on • View and Enjoy 13 Example Graphics from Good Risk Software
  14. 14. © Risk Decisions, 2015 Cumulative Risk Burndown Reporting 14 All / Grouped RisksAll / Grouped Risks Single RiskSingle Risk
  15. 15. © Risk Decisions, 2015 Reporting Flexibility – Export to pdf, MS Office…Graphical / Tabular Geo mapping views
  16. 16. © Risk Decisions, 2015 Filter data in flexible charts / dashboards ~Key data~Key data of interestof interest 1 x Data1 x Data itemitem removedremoved Full ReportFull Report Risks by owner & statusRisks by owner & status 2 x Data2 x Data itemsitems removedremoved Create DashboardsCreate Dashboards
  17. 17. © Risk Decisions, 2015 Heat Mapping of Risks / Opportunities 17
  18. 18. © Risk Decisions, 2015 18 End date:End date: ~Apr 17~Apr 17 MS Project Gantt view – critical path
  19. 19. © Risk Decisions, 2015 19 Good SW Gantt View - Cruciality End date:End date: ~Jan 2018~Jan 2018 @ 90% confidence@ 90% confidence
  20. 20. © Risk Decisions, 2015 20 End Date Monte Carlo modelling
  21. 21. © Risk Decisions, 2015 21 WBS Cost / Risk Analysis – Monte Carlo
  22. 22. © Risk Decisions, 2015 22 Schedule, Risk, & Cost Sensitivity Analyses – tornado charts (or table % format)
  23. 23. © Risk Decisions, 2015 Visual capture of current and planned risk assessment levels 23 Configurable n x n Risk Matrices / thresholds Current Current Risk Risk Residual Residual Risk Risk
  24. 24. © Risk Decisions, 2015 Risk Structure & “Risks for Attention” prompt Plus email alerting of actions required to participants
  25. 25. © Risk Decisions, 2015 Risk Identification, Categorisation screens Risk linked to Risk linked to Key Key Objectives ObjectivesKey Risk Key Risk ID Data ID Data
  26. 26. © Risk Decisions, 2015 Standard Reports Menu
  27. 27. © Risk Decisions, 2015 Example “out of the box reports” - #1
  28. 28. © Risk Decisions, 2015 Example “out of the box reports” - #2
  29. 29. © Risk Decisions, 2015 Additional Features of Good Risk Software • Portfolio Risk Analysis / Risk Correlation • Linked parent / child risks and actions / trend analysis • Explorer style WBS structure / filters / clusters • Risk / Action Escalation and Delegation • Linking to Corporate Reporting tools / • Email prompts for overdue actions • Import / export to MS Excel - If you really must!  And can produce a tabular risk register view for Excel addicts! 29 Geo Geo Mapping Mapping
  30. 30. © Risk Decisions, 2015 Conclusions • “…if a company is using a spreadsheet for their risk management; it suggests that their risk management process is superficial and probably ineffective…”  Source: Senior Manager (with Government and Industry experience) • Sound asset management and project management NEEDS proactive risk management over the full asset life cycle • A spreadsheet will NOT do the job. • Good risk management culture and software WILL! 30
  31. 31. © Risk Decisions, 2015 MS Excel Import schedule or create structure 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% Lag before Building Regs Fit Window s All permissions in Place Cast Floor Mortgage Application Fit Doors Fit Door Frames Review and Award Contract Procure Double Glazing Tender Construction Contract Detailed Design Match & Procure Bricks Construct Roof Paint Plaster Walls and Ceilings 1st Fix Services 2nd Fix Services Build Walls to DPClevel Preliminary Design / Cost Estimate Procure Plumbing /Sanitary Ware Build Walls to Roof Level Mobilise tosite Construct Foundations Building Regulations Construction Planning Approval Design & approvals Tornado Chart for AmberGold Project 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% Lag before Building Regs Fit Window s All permissions in Place Cast Floor Mortgage Application Fit Doors Fit Door Frames Review and Aw ard Contract Procure Double Glazing Tender Construction Contract Detailed Design Match & Procure Bricks Construct Roof Paint Plaster Walls and Ceilings 1st Fix Services 2nd Fix Services Build Walls to DPC level Preliminary Design / Cost Estimate Procure Plumbing /Sanitary Ware Build Walls to Roof Level Mobilise to site Construct Foundations Building Regulations Construction Planning Approval Design & approvals Tornado Chart for AmberGold Project Predict! Risk Analyser Predict! Risk Controller Lite .XLS import export Predict! Risk Controller Cost and Schedule Risk and Uncertainty Analysis Predict! Risk Intelligence ADHOC REPORTING Predict! Connect Predict! Software Suite
  32. 32. © Risk Decisions, 2015 Predict! Risk Controller Predict! Risk Analyser Predict! Risk Intelligence Predict! Connect Predict! Risk Controller Lite 32 Predict! Software Suite
  33. 33. © Risk Decisions, 2015 QuestionsQuestions Are there rocks inAre there rocks in clouds?clouds?

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