IDENTIFY RISK AND
APPLY RISK
MANAGEMENT
PROCESSES

h"p://www.flickr.com/photos/cswc/6552142213/	
  
Unit Competencies
BSBRSK401A

Identify risk and apply risk management
processes

Identify risks
Analyse and evaluate risks...
Learning Objectives
At the conclusion of this module,
you will be better able to:
Identify risks in a diverse range of
org...
It can be a Risky
Business Sometimes

h"p://www.flickr.com/photos/geoliv/11313734716/	
  
RISK
is the possibility of events
that may impact
organisational objectives
h"p://www.flickr.com/photos/elvire-­‐r/2451784799/	
  

You cannot live your life without risks
Some pay off – big time!!!!

h"p://www.flickr.com/photos/geishaboy500/3994803605/	
  
Whilst others – not so well!!!!!

h"p://www.flickr.com/photos/darrenkw/7728088440/	
  
LIFE

cannot be lived
without risk
h"p://www.flickr.com/photos/foshydog/4780493128/	
  

We are all Risk Managers
h"p://www.flickr.com/photos/ejazasi/253032421/	
  

Sometimes we understand and accept risk
h"p://www.flickr.com/photos/dvids/2881216357/	
  

At other times we take large precautions
Despite our efforts
it remains impossible to

ELIMINATE
EVERY RISK
RISKS
are everywhere
Health and wellbeing
Job security and payments
Financial arrangements
Relationships
Natural disasters...
Identifying Risks

h"p://www.flickr.com/photos/geoliv/11313734716/	
  
h"p://www.flickr.com/photos/12023825@N04/2898021822/	
  

You need to look for risks
Look for risks to your

STRATEGIC
PLANS
Look for risks to your

OPERATIONAL
PLANS
Organisational risks
generally relate to

FINANCIAL
OPERATIONAL &
ENVIRONMENTAL

External risks such as
interest rates,
co...
Organisational risks
generally relate to

FINANCIAL
OPERATIONAL &
ENVIRONMENTAL
LEGAL
STRATEGIC
PRIVACY &
INFORMATION

Ris...
Organisational risks
generally relate to

FINANCIAL
OPERATIONAL &
ENVIRONMENTAL
LEGAL
STRATEGIC
PRIVACY &
INFORMATION

Ris...
Organisational risks
generally relate to

FINANCIAL
OPERATIONAL &
ENVIRONMENTAL
LEGAL
STRATEGIC
PRIVACY &
INFORMATION

Ris...
Organisational risks
generally relate to

FINANCIAL
OPERATIONAL &
ENVIRONMENTAL
LEGAL
STRATEGIC
PRIVACY &
INFORMATION

Ris...
h"p://www.flickr.com/photos/sonson/422595428/	
  

Brainstorming sessions
review your business plan
and ask as many

WHAT IF?

questions as you can
Flow charting to remove gaps and overlaps

h"p://www.flickr.com/photos/jpaxonreyes/6284836564/	
  
Analyse a wide range of
possible future events
and their outcomes

SCENARIO ANALYSIS
economic, political,
legislative and ...
h"p://www.flickr.com/photos/betobaibich/206960384/	
  

Get out of the office and observe
Ask questions and
listen to peopl...
When, where, why, and how
are risks likely to occur
in this organisation?
Are the risks internal,
external or random?
Who ...
ISSUES ARE
NOT RISKS
…but failing to address
them may be

VERY RISKY
Analysing Risks

h"p://www.flickr.com/photos/geoliv/11313734716/	
  
What is the likelihood?

What is the predicted outcome?
1

VERY LIKELY

2

LIKELY

3

UNLIKELY

4

HIGHLY UNLIKELY

(could happen frequently)
(could happen, but not frequently)
(...
1

CATASTROPHIC

2

MAJOR

3

MODERATE

4

MINOR

(may ruin the organisation)
(business plans may fail)
(plans may need to...
1

ENORMOUS

2

MAJOR

3

MODERATE

4

MINOR

(may transform the organisation)

(may transform a department)

(may exceed ...
Risk
Number

Very Likely
(4)

Likely
(3)

Unlikely
(2)

Very Unlikely
(1)

Catastrophic
(4)

High
(16)

High
(12)

Medium
...
h"p://www.flickr.com/photos/dtpancio/7443265772/	
  

We all have our own biases – but you must
deal with the facts and rem...
h"p://www.flickr.com/photos/bilfinger/8271241613/	
  

Who needs to to be involved?
Who needs to be consulted?
Who needs to ...
What stakeholders need to be
involved in assessing the risk
Interest levels
Subject matter expertise
Those involved in the...
Your team
Other departments
Customers
Suppliers
Consultants
Statutory bodies
Industry groups
Consultative risk analysis
Delivers far more
predictable outcomes
h"p://www.flickr.com/photos/eirikso/2217301198/	
  

I hadn’t been paid for two years
of work in starting Flickr, and
we we...
Less than six months
after mortgaging their home
Caterina Fake and her
husband Stewart Butterfield
(Flickr co-founders)

S...
h"p-­‐//www.flickr.com/photos/osde-­‐info/5598738692/	
  

Apple have sold more than 84 million in 3 years
h"p://www.flickr.com/photos/newtown_grafiO/4843514662/	
  

Tablets have become
a huge market
People have often queued for h...
Many industry analysts predict
tablets to “take over” from
desktop and laptop computers

Microsoft was so confident
about ...
h"p://www.flickr.com/photos/13815526@N02/7796228354/	
  

In July 2013, Microsoft announced a $900M
write-down for unsold s...
h"p://www.flickr.com/photos/g_jewels/4465732486/	
  

Historical information can provide great
insights into “What might go...
Managing Risks

h"p://www.flickr.com/photos/geoliv/11313734716/	
  
Risk
Number

Very Likely
(4)

Likely
(3)

Unlikely
(2)

Very Unlikely
(1)

Catastrophic
(4)

High
(16)

High
(12)

Medium
...
Organisations take steps to

MANAGE RISKS
that they assess as
requiring attention
They establish

CONTINGENCIES
for instances that the
risk may occur
They conduct regular

AUDITS
To ensure they are complying
with proper standards
FINANCIAL RISK
is often managed with
insurances or guarantees
many organisations look
to assign to or share
risk with othe...
WORKPLACE SAFETY
has a very strong
process following
“Hierarchy of Controls”
Adopting processes and
training & development
to ensure team members
are competent and informed
Governance processes to ensure
issues dealt with at the right level
Procurement processes that include
“rise and fall”, al...
RISK REGISTERS
are designed to maintain a list of
all known risks and their
respective treatments
CONTROL MEASURES
are the measures that need to be
designed or established to validate the
effectiveness of the treatment
h"p://www.flickr.com/photos/zengei/6957553864/	
  

Hard measures are the most reliable
h"p://www.flickr.com/photos/jansco"nelson/3364705313/	
  

Soft measures need to be interpreted
h"p://www.flickr.com/photos/look_ma_im_flying_pictures/3714888958/	
  

Without effective measures

How will you know
what t...
We need to set
measures for the

COST OF RISK
TREATMENTS
and

PREDICTED
BENEFIT
In 2010, volcanic ash from Iceland
cost the airline industry $3.6b
How could they have better managed the risk
Monitor Risk
Management

h"p://www.flickr.com/photos/geoliv/11313734716/	
  
Are the risk
treatments working?
are they having the
desired effect?
are there impacts that
were not considered?
are there...
h"p://www.flickr.com/photos/cuckove/3307152002/	
  

Things can change
VERY RAPIDLY
h"p://www.flickr.com/photos/theaterculture/3789545290/	
  

The butterfly effect
h"p://www.flickr.com/photos/theaterculture/3789545290/	
  

What impacts
may occur?
There may be downstream impacts
that yo...
Review all risks regularly
Risks not considered to be
serious enough to manage can
become high priority
when circumstances...
How are we
tracking on the
cost of the
risk controls?

Are the agreed
controls providing
the predicted result?

Do we need...
h"p://www.flickr.com/photos/jugrote/2296138797/	
  

WHEN THINGS ARE NOT
GOING AS PLANNED

DON’T PANIC!!!
STAY OBJECTIVE & ...
Reviewing Effectiveness
and Learning Outcomes

h"p://www.flickr.com/photos/geoliv/11313734716/	
  
DEAL WITH FACTUAL
INFORMATION FIRST
Only when you have all the facts
do you commence interpreting
Did we execute
what we planned?
What changed and why?
What did the risk treatments cost?
Did the treatment deliver the
ant...
Did we identify the correct risks?
Did we analyse them properly?
Did we get the right stakeholders
involved?
Were the risk...
Identification
Analysis
Treatment
Management
What have we learned?
What do we need to
do differently next time?
Upcoming SlideShare
Loading in …5
×

BSBRSK401A Identify risk and apply risk management processes vers 0.1.pptx

573 views

Published on

Presentation I put together from Diploma of Building and Construction (ManagemenT) program

Published in: Education
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
573
On SlideShare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
4
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

BSBRSK401A Identify risk and apply risk management processes vers 0.1.pptx

  1. 1. IDENTIFY RISK AND APPLY RISK MANAGEMENT PROCESSES h"p://www.flickr.com/photos/cswc/6552142213/  
  2. 2. Unit Competencies BSBRSK401A Identify risk and apply risk management processes Identify risks Analyse and evaluate risks Treat risks Monitor and review effectiveness of risk treatment/s h"p://www.flickr.com/photos/sportrait/3393579769/  
  3. 3. Learning Objectives At the conclusion of this module, you will be better able to: Identify risks in a diverse range of organisational activities Develop collaborative strategies to evaluate and mitigate risks Implement continuous improvement processes to deal more effectively with identification, analysis and mitigation strategies for organisational risks h"p-­‐//www.flickr.com/photos/ter-­‐burg/8127175006/   h"p://www.flickr.com/photos/leehaywood/4215672566/  
  4. 4. It can be a Risky Business Sometimes h"p://www.flickr.com/photos/geoliv/11313734716/  
  5. 5. RISK is the possibility of events that may impact organisational objectives
  6. 6. h"p://www.flickr.com/photos/elvire-­‐r/2451784799/   You cannot live your life without risks
  7. 7. Some pay off – big time!!!! h"p://www.flickr.com/photos/geishaboy500/3994803605/  
  8. 8. Whilst others – not so well!!!!! h"p://www.flickr.com/photos/darrenkw/7728088440/  
  9. 9. LIFE cannot be lived without risk
  10. 10. h"p://www.flickr.com/photos/foshydog/4780493128/   We are all Risk Managers
  11. 11. h"p://www.flickr.com/photos/ejazasi/253032421/   Sometimes we understand and accept risk
  12. 12. h"p://www.flickr.com/photos/dvids/2881216357/   At other times we take large precautions
  13. 13. Despite our efforts it remains impossible to ELIMINATE EVERY RISK
  14. 14. RISKS are everywhere Health and wellbeing Job security and payments Financial arrangements Relationships Natural disasters Rules and regulations Deliveries and traffic Disease and accidents Misadventure and crime Infrastructure failure ………………… ………………… …………………
  15. 15. Identifying Risks h"p://www.flickr.com/photos/geoliv/11313734716/  
  16. 16. h"p://www.flickr.com/photos/12023825@N04/2898021822/   You need to look for risks
  17. 17. Look for risks to your STRATEGIC PLANS
  18. 18. Look for risks to your OPERATIONAL PLANS
  19. 19. Organisational risks generally relate to FINANCIAL OPERATIONAL & ENVIRONMENTAL External risks such as interest rates, commodity prices LEGAL Internal risks such as customer payments, cash flow, asset depreciation STRATEGIC PRIVACY & INFORMATION
  20. 20. Organisational risks generally relate to FINANCIAL OPERATIONAL & ENVIRONMENTAL LEGAL STRATEGIC PRIVACY & INFORMATION Risks such as illness, retirement, staff turnover, equipment breakdowns, systems failures, natural disasters
  21. 21. Organisational risks generally relate to FINANCIAL OPERATIONAL & ENVIRONMENTAL LEGAL STRATEGIC PRIVACY & INFORMATION Risks such contract disputes, non compliance with legal requirements (WHS standards, FairWork Aust, etc)
  22. 22. Organisational risks generally relate to FINANCIAL OPERATIONAL & ENVIRONMENTAL LEGAL STRATEGIC PRIVACY & INFORMATION Risks such as changes in customer demand, increased competition, new technologies and business development opportunities
  23. 23. Organisational risks generally relate to FINANCIAL OPERATIONAL & ENVIRONMENTAL LEGAL STRATEGIC PRIVACY & INFORMATION Risks such as noncompliance with state and national privacy laws on recording, storing and disposing of customer information
  24. 24. h"p://www.flickr.com/photos/sonson/422595428/   Brainstorming sessions
  25. 25. review your business plan and ask as many WHAT IF? questions as you can
  26. 26. Flow charting to remove gaps and overlaps h"p://www.flickr.com/photos/jpaxonreyes/6284836564/  
  27. 27. Analyse a wide range of possible future events and their outcomes SCENARIO ANALYSIS economic, political, legislative and operating scenarios
  28. 28. h"p://www.flickr.com/photos/betobaibich/206960384/   Get out of the office and observe Ask questions and listen to people What are they thinking? YOUR TEAM CUSTOMERS SUPPLIERS COMPETITORS NETWORK
  29. 29. When, where, why, and how are risks likely to occur in this organisation? Are the risks internal, external or random? Who might be involved or affected if this occurs?
  30. 30. ISSUES ARE NOT RISKS …but failing to address them may be VERY RISKY
  31. 31. Analysing Risks h"p://www.flickr.com/photos/geoliv/11313734716/  
  32. 32. What is the likelihood? What is the predicted outcome?
  33. 33. 1 VERY LIKELY 2 LIKELY 3 UNLIKELY 4 HIGHLY UNLIKELY (could happen frequently) (could happen, but not frequently) (could happen, but only rarely) (could happen, but probably never will)
  34. 34. 1 CATASTROPHIC 2 MAJOR 3 MODERATE 4 MINOR (may ruin the organisation) (business plans may fail) (plans may need to be modified ) (can be absorbed - inconvenient)
  35. 35. 1 ENORMOUS 2 MAJOR 3 MODERATE 4 MINOR (may transform the organisation) (may transform a department) (may exceed business planning) (swings and roundabouts)
  36. 36. Risk Number Very Likely (4) Likely (3) Unlikely (2) Very Unlikely (1) Catastrophic (4) High (16) High (12) Medium (8) Low (4) 11+ Urgent Remedy Major (3) High (12) Medium (9) Medium (6) Low (3) 6 – 10 Needs Action Moderate (2) Medium (8) Medium (6) Low (4) Low (2) 1–5 No Action Minor (1) Low (4) Low (3) Low (2) Low (1)
  37. 37. h"p://www.flickr.com/photos/dtpancio/7443265772/   We all have our own biases – but you must deal with the facts and remain objective
  38. 38. h"p://www.flickr.com/photos/bilfinger/8271241613/   Who needs to to be involved? Who needs to be consulted? Who needs to be informed?
  39. 39. What stakeholders need to be involved in assessing the risk Interest levels Subject matter expertise Those involved in the activity Those that may be impacted downstream Those that are upstream that may need to adjust
  40. 40. Your team Other departments Customers Suppliers Consultants Statutory bodies Industry groups
  41. 41. Consultative risk analysis Delivers far more predictable outcomes
  42. 42. h"p://www.flickr.com/photos/eirikso/2217301198/   I hadn’t been paid for two years of work in starting Flickr, and we were running out of money. The only guy getting paid on a consistent basis was the guy with three kids. We mortgaged our house to put money back into the company. So it was both a personal and professional risk. It could have gone either way.
  43. 43. Less than six months after mortgaging their home Caterina Fake and her husband Stewart Butterfield (Flickr co-founders) SOLD FOR $50M Happily – they were able to repay their mortgage
  44. 44. h"p-­‐//www.flickr.com/photos/osde-­‐info/5598738692/   Apple have sold more than 84 million in 3 years
  45. 45. h"p://www.flickr.com/photos/newtown_grafiO/4843514662/   Tablets have become a huge market People have often queued for hours Demand has, at times, outstripped supply
  46. 46. Many industry analysts predict tablets to “take over” from desktop and laptop computers Microsoft was so confident about the market sector that it developed the “Surface” tablet Risking significant damage to relationships with it’s traditional hardware partners
  47. 47. h"p://www.flickr.com/photos/13815526@N02/7796228354/   In July 2013, Microsoft announced a $900M write-down for unsold stocks
  48. 48. h"p://www.flickr.com/photos/g_jewels/4465732486/   Historical information can provide great insights into “What might go wrong”
  49. 49. Managing Risks h"p://www.flickr.com/photos/geoliv/11313734716/  
  50. 50. Risk Number Very Likely (4) Likely (3) Unlikely (2) Very Unlikely (1) Catastrophic (4) High (16) High (12) Medium (8) Low (4) 11+ Urgent Remedy Major (3) High (12) Medium (9) Medium (6) Low (3) 6 – 10 Needs Action Moderate (2) Medium (8) Medium (6) Low (4) Low (2) 1–5 No Action Minor (1) Low (4) Low (3) Low (2) Low (1)
  51. 51. Organisations take steps to MANAGE RISKS that they assess as requiring attention
  52. 52. They establish CONTINGENCIES for instances that the risk may occur
  53. 53. They conduct regular AUDITS To ensure they are complying with proper standards
  54. 54. FINANCIAL RISK is often managed with insurances or guarantees many organisations look to assign to or share risk with others
  55. 55. WORKPLACE SAFETY has a very strong process following “Hierarchy of Controls”
  56. 56. Adopting processes and training & development to ensure team members are competent and informed
  57. 57. Governance processes to ensure issues dealt with at the right level Procurement processes that include “rise and fall”, alternative suppliers enforceable terms and conditions Marketing resources keep connected with customer needs and trends Relationships that focus on innovations and technology Business systems that protect and back-up valuable data Disaster recovery plans
  58. 58. RISK REGISTERS are designed to maintain a list of all known risks and their respective treatments
  59. 59. CONTROL MEASURES are the measures that need to be designed or established to validate the effectiveness of the treatment
  60. 60. h"p://www.flickr.com/photos/zengei/6957553864/   Hard measures are the most reliable
  61. 61. h"p://www.flickr.com/photos/jansco"nelson/3364705313/   Soft measures need to be interpreted
  62. 62. h"p://www.flickr.com/photos/look_ma_im_flying_pictures/3714888958/   Without effective measures How will you know what to look for? How things are progressing? When to make adjustments
  63. 63. We need to set measures for the COST OF RISK TREATMENTS and PREDICTED BENEFIT
  64. 64. In 2010, volcanic ash from Iceland cost the airline industry $3.6b How could they have better managed the risk
  65. 65. Monitor Risk Management h"p://www.flickr.com/photos/geoliv/11313734716/  
  66. 66. Are the risk treatments working? are they having the desired effect? are there impacts that were not considered? are there adjustments that are required?
  67. 67. h"p://www.flickr.com/photos/cuckove/3307152002/   Things can change VERY RAPIDLY
  68. 68. h"p://www.flickr.com/photos/theaterculture/3789545290/   The butterfly effect
  69. 69. h"p://www.flickr.com/photos/theaterculture/3789545290/   What impacts may occur? There may be downstream impacts that you didn’t consider   THE BUTTERFLY EFFECT
  70. 70. Review all risks regularly Risks not considered to be serious enough to manage can become high priority when circumstances change
  71. 71. How are we tracking on the cost of the risk controls? Are the agreed controls providing the predicted result? Do we need to make adjustments?
  72. 72. h"p://www.flickr.com/photos/jugrote/2296138797/   WHEN THINGS ARE NOT GOING AS PLANNED DON’T PANIC!!! STAY OBJECTIVE & WORK THROUGH THE PROBLEMS – DON’T MAKE THEM WORSE
  73. 73. Reviewing Effectiveness and Learning Outcomes h"p://www.flickr.com/photos/geoliv/11313734716/  
  74. 74. DEAL WITH FACTUAL INFORMATION FIRST Only when you have all the facts do you commence interpreting
  75. 75. Did we execute what we planned? What changed and why? What did the risk treatments cost? Did the treatment deliver the anticipated result? What were the unintended impacts?
  76. 76. Did we identify the correct risks? Did we analyse them properly? Did we get the right stakeholders involved? Were the risk treatments appropriate? Did we manage the process effectively?
  77. 77. Identification Analysis Treatment Management
  78. 78. What have we learned? What do we need to do differently next time?

×