Risk Leadership Perspectives Breakfast Risk Manager of the Year Karl Davey


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Risk Leadership presentation - RMIA Risk Manager of the Year Karl Davey Leighton Contractors

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Risk Leadership Perspectives Breakfast Risk Manager of the Year Karl Davey

  1. 1. Karl Davey CEng CPRM FRMIA<br />Leighton Contractors <br />
  2. 2. Leighton Contractors<br />Leighton Contractors was established in 1949<br />We are one of Australia’s and New Zealand's largest and most diverse contractors with operations spanning construction, resources & mining, telecommunications, industrial, energy, infrastructure investment and facility management<br />In recent years, we have more than trebled in size, and grown our work in hand to over $12.5 billion<br />
  3. 3. LCPL ERM Objectives<br />Implement a robust formalised approach to risk and opportunity management<br />Breakdown silos and improve operational performance<br />Develop a proactive risk & opportunity aware culture<br />Enable the business to retain and harness knowledge <br />To use risk and opportunity management to re-enforce LCPL capabilities, creditability and provide addition value to our clients and stakeholders.<br />
  4. 4. LCPL ERM Scope<br />Organisation Wide Enterprise Risk (& Opportunity) Management<br />Business Resilience<br /> Safety Essentials<br />Catastrophic Risk<br />Operational Review<br />Project <br />Safety <br />Stakeholder<br />Business <br />Crisis <br />Quality<br />Environmental<br />& <br />& <br />&<br />&<br />Management<br />Operational<br />Health<br />Community<br />Strategic<br />
  5. 5. LCPL ERM VisionTo retain and utilise knowledge to the benefit of the business<br />Tender and <br />Tender and <br />contingency<br />contingency<br />Risk analysis<br />LHL and Board<br />Knowledge<br />Knowledge<br />Contract valuation<br />reports<br />Knowledge<br />Knowledge<br />•<br />Risks to the <br />Risks to the <br />•<br />Risks/<br />Opps<br />to the <br />Risks/<br />Opps<br />to the <br />Risks & Opportunities<br />Risks & Opportunities<br />Tender.<br />Tender.<br />renewal/disposal<br />renewal/disposal<br />to Delivery<br />requiring <br />•<br />Tender Risks<br />•<br />Tender Risks<br />•<br />Tender R&O<br />•<br />Tender R&O<br />Management<br />•<br />External Risks<br />•<br />•<br />SHE<br />•<br />•<br />D&C Risks<br />•<br />D&C Risks<br />•<br />Operational risks<br />•<br />•<br />Operational R&O<br />•<br />Operational R&O<br />•<br />D&C Risks<br />•<br />•<br />Operational risks<br />•<br />Operational risks<br />•<br />SHE<br />•<br />SHE<br />Operational R&O<br />•<br />SHE<br />•<br />SHE<br />•<br />LFE<br />•<br />LFE<br />Crisis Management<br />•<br />Opportunities<br />•<br />Opportunities<br />Closure/Renewal<br />Closure/Renewal<br />Execution/Operation<br />Tender<br />Tender<br />Business and Strategic Risk and Opportunity Management<br />Business and Strategic Risk and Opportunity Management<br />Improving business decisions and maximising return for our stake<br />holders<br />Improving business decisions and maximising return for our stake<br />holders<br />
  6. 6. Original Status (April 2008)<br />Risk and Opportunity Management Practice<br />9 Live Projects, 13 Tenders<br />Active Community 10 to 15 regular practitioners<br />General Usage<br />Inconsistency approaches<br />Lack of Analysis and Proactive Management skills<br />
  7. 7. Issues identified<br />Management system<br />Material must reflect and support actual process and requirement<br />References and templates inconsistent <br />No true process<br />Cost Risk Analysis Guidelines<br />Process clarify required<br />Inclusion of best practice<br />Risk Management<br />Lack of foundational knowledge<br />Lack of support infrastructure<br />Lack of Risk Manager/coordinators<br />
  8. 8. LCPL ERM Implementation Strategy<br />Develop common policy and process<br />Develop Maturity and Culture<br />Provide training and awareness<br />Implement Standard Product<br />Help Desk and SME network<br />Combine ‘Top Down’ with a ‘Bottom Up’ approach<br />Board Mandate <br />Operational process quality<br />
  9. 9. LCPL Risk & Opportunity Management<br />Risk Management Mandatory on tenders and projects/operations in execution.<br />Quantitative Analysis of risk and opportunity date is Mandatory on all tenders over AUD $10m.<br />SHE and Crisis & Catastrophic Risk to be managed as part of the risk management process (Prevention)<br />Use of standard system mandatory for all risk & opportunity management<br />
  10. 10. Delivering LCPL ERM<br />
  11. 11. Process: Standard Business Wide Process<br />Comprehensive identification<br />Objective &consistent assessment<br />Understand and communicate the current position<br />Effective strategies<br />Prevention<br />Control and Monitor<br />Recovery<br />To focus management attention<br />The key to risk management is ‘Management’<br />Risks will not go away just because they have been identified<br />
  12. 12. Process: Engine<br />
  13. 13. Safety EssentialsChanging the way we do Business<br />The Safety Essentials set the minimum and non-negotiable requirements that must be met to help keep our people and sites safe.<br />The Essentials are tailored to suit each Divisions requirements and type of business.<br />Essentials by identify where and how critical risk is managed in any business activity regardless of the type of operation. <br />
  14. 14. Proactive Management<br /> Proactive = Manage the Risk or Opportunity<br />Identify ownership of mitigation actions<br />The right person in the right place to pursue action<br />The person with the necessary skills to make it work<br />Schedule and review action progress<br />Action start date<br />Action deadline<br />Report on the effectiveness of actions<br />Prioritise<br />
  15. 15. Risk Recovery & Crisis mgt<br />Assume Risk may happen<br />Identify controls<br />To monitor and keep a working watch should the situation change<br />Early warning and situation control<br />Identify Contingencies Responses<br />If the risk occurs, what now<br />Damage Limitation <br />Identify Recovery Plan<br />Alternative strategies<br /> Return to business<br />
  16. 16. People: Support Infrastructure<br />Governance, Risk <br />and <br />ComplianceGroup<br />Risk <br />Management Team<br />Regional / Business <br />Unit Champions<br />Functional <br />Champions<br />Safety & Health<br />Construction<br />Governance Team<br />Operational Review<br />Team<br />Environmental<br />Resources<br />Group IT<br />Controls & Planning<br />Engineering<br />Investment & <br />Facilities Mgt<br />LCPL Service Desk<br />IT<br />Industrial, Energy & <br />Telecommunication<br />Business Planning<br />Crisis Mgt<br />Business Planning<br />Vendor <br />Service Desk<br />15<br />
  17. 17. People<br />Expand involvement (Joint Risk Management)<br />For a risk aware culture, identification should include all perspectives<br />
  18. 18. People: Training<br />Risk Management Foundations<br />Induction awareness<br />What is risk<br />Company procedures and requirements<br />Quantitative Analysis<br />Developing internal capabilities<br />Cost and Schedule Analysis<br />Understanding risk drivers<br />Risk Management Software Solution Training<br />Getting the best from the system<br />Highlighting benefits to the project/business<br />
  19. 19. Support InfrastructureOnline Knowledge and Advice<br />
  20. 20. Product<br />Risk management needs be supported like any other business critical system.<br />Common System<br />Allows common training, process and consistency<br />Distribution and reporting packs<br />Supports the full risk management process<br />Grows as the teams maturity grows<br />From Qualitative to Estimating and Quantitative Analysis<br />Reflects International Best Practice<br />But aligned to the business fit<br />Project area specify scoring, terminology criteria<br />Yet enables roll up and consolidation<br />Multi level security<br />Risk, Project, Organisational, Area<br />Role/Function Based (System Functionality)<br /> To meet the requirement Leighton Contractors selected ‘Active Risk Manager’ a web based enterprise risk management solution.<br />
  21. 21. Product: The Glue to support the Process<br />.<br />.<br />.<br />.<br />.<br />.<br />Main Risk Review<br />Understand Exposure<br />Select project/operation areas.<br /><ul><li>Interrogate data
  22. 22. Identify key risks &</li></ul> opportunities<br />Assess Risks & Opportunities<br /> identify/review controls <br /> and actions<br />Visibility, Understanding, <br />Management<br />Manage & Focus<br />Review & Repeat<br />Implement actions, <br />controls and recoveries. <br />Review effectiveness &<br />Monitor performance<br />
  23. 23. LCPL Risk and Opportunity Management & Active Risk Manager (ARM) Status<br />Current Practice<br />Standard Qualitative & Quantitative R&O approach<br />R&O Process & Software <br />284 Live Registers (115 Execution/Operation, 169 Pre-contract)<br />160+ Historical areas<br />Usage<br />Over 546 + regular unique users (last 30 days April-May)<br />Scope covers, Project, Operational, Business, Strategic, <br />Preventative Crisis & Catastrophic Risk Management <br />Safety, Health Environmental Risk Management <br />Usage for internal operations eg: Group IT, Business Continuity<br />
  24. 24. Risk Management in Action<br />
  25. 25. ARM ERM Configuration<br />System Aligned to the organisation and reporting structure.<br />All LCPL Staff see full structure<br />Allow limited access to Third Parties<br />
  26. 26. Delivery Phase Risk Management<br />Proactive preventative actions and controls<br />
  27. 27. Delivery Phase Risk Management<br />
  28. 28. Delivery Phase Risk Management<br />
  29. 29. Using Information<br />
  30. 30. Business Unit Portfolio Analysis<br />Business & <br />Strategic Risks<br />Portfolio Analysis <br />of Tenders and Operations<br />Risk Roll up: Understanding and consolidate exposure across Projects, <br />Knowledge Sharing<br />Risk Escalation of<br />common risks.<br />
  31. 31. Corporate Reporting<br />Business & <br />Strategic Risks<br />Risk Escalation of<br />Critical & Key Issues<br />
  32. 32. Where Next<br />Business Performance and Maturity Dashboards<br />Ensuring we practice what we preach<br />Early warning of issues<br />
  33. 33. Business Benefits <br />Consistency<br />Common proactive risk & opportunity built around enabling consistent support and understanding<br />Knowledge Database <br />Retained risk and opportunity intelligence available across the organisation<br />Understanding <br />Allows function to view most relevant content<br />GM can look at top critical items in their business<br />Creditability<br />Demonstrates importance of Risk and Opportunity Management to Clients, Regulators.<br />
  34. 34. Benefits to date<br />111 Eagle Street<br /><ul><li>Increased understanding of key risks
  35. 35. Enables defined accountabilities for individual risk management actions
  36. 36. Provides great resilience to the management process.
  37. 37. Prevents risks and treatment of risks from dropping off the radar.</li></ul>Road Operations<br /><ul><li>Provides great resilience and integration with Safety, BCM
  38. 38. Greater visibility of key risks.
  39. 39. Increased client understanding
  40. 40. Ability to share best practice and reduce spend
  41. 41. Use of opportunity management to support innovation and sell</li></ul>Broad<br /><ul><li>Smarter Tendering
  42. 42. Sharing best practice
  43. 43. Wider focus on potential impacts to Environment/Safety/Reputation
  44. 44. Demonstrate understanding and innovation
  45. 45. Enables understanding of the cost and time implications of risk treatment strategies</li></ul>Group<br /><ul><li>Increased visibility of common issues
  46. 46. Ability to escalate issues
  47. 47. Enables Proactive Management
  48. 48. Normalisation
  49. 49. Consistency
  50. 50. Common understanding
  51. 51. Process Application
  52. 52. Process adherence
  53. 53. Process effectiveness
  54. 54. Retained Knowledge
  55. 55. Lessons Leant
  56. 56. Knowledge base
  57. 57. Prompt lists</li></li></ul><li>Conclusion<br />Start small and grow<br />Project – Portfolio – Enterprise – Whole Endeavour<br />Include all stakeholders<br />customer, contractor, subcontractor, user<br />Develop a clear and simple process<br />Shouldn’t be seen as just for specialists<br />Don’t blind people with science - keep it simple<br />Establish a focal point/group for risk management <br />To give direction and advice<br />To provide specialist support and techniques<br />Audit the risk process<br />Culture change<br />Don’t shoot the messenger<br />Support<br />Knowledge share<br />
  58. 58. Karl Davey CEng CPRM FRIMAManager, Risk Management Governance Risk and AssuranceLEIGHTON CONTRACTORS PTY LIMITED ABN 98 000 893 667Level 8, Tower 1, 495 Victoria Avenue, Chatswood NSW 2067T +61 (0)2 8668 6896 F +61 (0)2 8668 6666 M + 61 (0) 409366868E Karl.Davey@leicon.com.auwww.leightoncontractors.com.au <br />