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Gain the Advantage
Measure the Risk
© Risk Advantage Limited 1
“Risk in a Complex World”
Peter Campbell
FAPM MIRM MBCS MIE...
Gain the Advantage
Measure the Risk
Complex Risk Management
Reputation
Corporate
Technical
Political
Stakeholders
Supply C...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 3
Why Manage Risk?
I’m glad the
hole is at
the other
end!
Wha...
Gain the Advantage
Measure the Risk
4© Risk Advantage Limited
Hindsight Bias: we underplay
what we think we know about
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 5
He’s going
on again
about a
‘Risk
Process’
We can’t let
tha...
Gain the Advantage
Measure the Risk
6
Is the Process
Complex?
Initiate
Risk Management
Plan.
What is required
from the Ris...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 7
Project Risk Management is a simple process that, when
unde...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 8
Risk and Issue – Complex?
Risks are managed ‘Proactively’:
...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 9
Project Budget
Project Cost £100M
Mitigation Cost £2.8M
Ris...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 10
Risk Management
Reporting, is this Complex?
You need the a...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 11
Does 1 always equal 1 ?
Let: a = b
Multiply both sides by ...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited
Choice can be Complicated
Performance risk can be difficult t...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 13
Project Risk Management should deliver ‘Benefit’, and
not ...
Gain the Advantage
Measure the Risk
14© Risk Advantage Limited
Risk Advantage Limited
Risk Assessment Tool
Assessment Tool
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 15
This is NOT good
Risk Management!
Risk Management
Remember...
Gain the Advantage
Measure the Risk
“Only those who will risk
going too far can possibly
find out how far one can go”
TS E...
Gain the Advantage
Measure the Risk
© Risk Advantage Limited 17
It’s far more COMPLEX – it involves
PEOPLE!!
Peter.campbel...
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Complex risk management, Wednesday 21st January 2015

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A presentation given by Peter Campbell to the APM Planning, Monitoring and Control SIG and guests at the University of Warwick, Coventry 2015.

Peter Campbell, chair APM Risk SIG – Risk management is not complex, it should happen naturally, keep it simple.

Published in: Business
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Complex risk management, Wednesday 21st January 2015

  1. 1. Gain the Advantage Measure the Risk © Risk Advantage Limited 1 “Risk in a Complex World” Peter Campbell FAPM MIRM MBCS MIET Society for Risk Analysis Director: Risk Advantage Limited Chairman: APM Risk SIG
  2. 2. Gain the Advantage Measure the Risk Complex Risk Management Reputation Corporate Technical Political Stakeholders Supply Chain Licensing Operational Regulation People Legislation Business Health & Safety Business Continuity Socio-Economic Legal Logistics Geo-Political Delivery Environmental Funding Investment Risk Owner Risk Fund Impacts Confidence Level Controls Probability Quantitative Analysis Sensitivity Management Reserve ‘S’ Curve Issues © Risk Advantage Limited 2 Hindsight Bias Anchoring
  3. 3. Gain the Advantage Measure the Risk © Risk Advantage Limited 3 Why Manage Risk? I’m glad the hole is at the other end! What if we ignore Risk and a miracle just happens? Sometimes it’s better to ‘Manage’ than look the other way!
  4. 4. Gain the Advantage Measure the Risk 4© Risk Advantage Limited Hindsight Bias: we underplay what we think we know about
  5. 5. Gain the Advantage Measure the Risk © Risk Advantage Limited 5 He’s going on again about a ‘Risk Process’ We can’t let that get in the way. We’ve a Project to deliver Just smile and say we’re fully supportive Risk Management Process.
  6. 6. Gain the Advantage Measure the Risk 6 Is the Process Complex? Initiate Risk Management Plan. What is required from the Risk Management Process. Risk to Objectives. (Threat and Opportunity). Structure. Ownership. Estimate. Evaluate. Response. Action dates. Owners. Effect the Plan. Monitor result. Identify Assess Plan Implement Manage the Process © Risk Advantage Limited
  7. 7. Gain the Advantage Measure the Risk © Risk Advantage Limited 7 Project Risk Management is a simple process that, when understood, can be applied easily: it should be part of the ‘day job’. The process is scalable with common sense usually determining the level of management to be applied. You would not expect to see the same amount of risk management effort applied to small simple projects as you would to larger complex ones. Risk Management
  8. 8. Gain the Advantage Measure the Risk © Risk Advantage Limited 8 Risk and Issue – Complex? Risks are managed ‘Proactively’:  Using different material will significantly reduce cost.  The basement may flood next week. Plan Panic! Issues are managed ‘Reactively’:  The basement is flooding.
  9. 9. Gain the Advantage Measure the Risk © Risk Advantage Limited 9 Project Budget Project Cost £100M Mitigation Cost £2.8M Risk Likelihood Impact (£) Mitigation (£) EV Risk 1 70% £1.0M £300K £0.7M Risk 2 50% £6.5M £230K £3.3M Risk 3 70% £2.8M £240K £1.9M Risk 4 50% £3.2M £1.9M £1.6M Risk 5 90% £0.9M £130K £800K Total = £14.4M £2.8M £8.3M Management Reserve Specific £8.3M Non-Specific £2M Project Budget = £102.8M Risk Allocation = £10.3M Total Budget = £I13.1M
  10. 10. Gain the Advantage Measure the Risk © Risk Advantage Limited 10 Risk Management Reporting, is this Complex? You need the ability to ‘interpret’ and understand the output of any risk analysis. You should challenge the results and not simply accept them. Outputs can be based on statistics: can we always believe them?
  11. 11. Gain the Advantage Measure the Risk © Risk Advantage Limited 11 Does 1 always equal 1 ? Let: a = b Multiply both sides by a a2 = ab Add (a2 – 2ab) to both sides a2 + (a2 – 2ab) = ab + (a2 - 2ab) Simplify 2(a2 – ab) = (a2 – ab) Divide both sides by (a2 – ab) Can we rely on Maths ? 2 (a2 – ab) = a2 – ab a2 – ab a2 – ab = 1 2 = 1
  12. 12. Gain the Advantage Measure the Risk © Risk Advantage Limited Choice can be Complicated Performance risk can be difficult to define. For example; is the risk that we have the design wrong? Which of these is the ‘right’ product ? OR OR 12
  13. 13. Gain the Advantage Measure the Risk © Risk Advantage Limited 13 Project Risk Management should deliver ‘Benefit’, and not be an ineffective overhead. Benefits are:  Selection of option/method to deliver the project.  Understanding the risk exposure level.  Identifying and managing mitigation/exploitation actions.  Early warning of things going wrong. Can this be simplified? Risk Management
  14. 14. Gain the Advantage Measure the Risk 14© Risk Advantage Limited Risk Advantage Limited Risk Assessment Tool Assessment Tool
  15. 15. Gain the Advantage Measure the Risk © Risk Advantage Limited 15 This is NOT good Risk Management! Risk Management Remember, Risk Management is a positive activity designed to support the Client, Supplier and Delivery staff.
  16. 16. Gain the Advantage Measure the Risk “Only those who will risk going too far can possibly find out how far one can go” TS Elliot © Risk Advantage Limited 16
  17. 17. Gain the Advantage Measure the Risk © Risk Advantage Limited 17 It’s far more COMPLEX – it involves PEOPLE!! Peter.campbell@riskadvantage.co.uk

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