This document discusses innovation metrics for managing risk. It notes that while traditional measures of success rely on past performance, innovation requires leading without knowing the outcome. The article continues on page 3 discussing how defining innovation metrics can help manage risk and provide direction. Upcoming events from the FACT network in 2011 are also listed.
“There is opportunity. These are not esoteric risks. The future of this business is going to the innovators.” Patrick Ryan, Founder Aon (Sep 2012)
With wildfire losses reaching an all time high in 2012 and $136 billion of total property value being constantly under high threat, tornadoes causing $26 billion losses in 2011 and severe windstorms causing massive flooding damage, the gap in understanding non-modeled perils clearly must be addressed.
In order to sustain the profitability of extreme weather insurance, it will be crucial to find better ways to model and aggregate risk, critically evaluate the best approaches to risk management and understand the science behind the increase in frequency and intensity of weather events.
What are the ‘new norms’ and how can insurers respond effectively? While writing long-term premiums, is it safe to assume that extreme and moderate years will balance each other out in the course of time? How can insurers provide an innovative response to balance opportunities and risks?
Bringing together over 20 senior insurance representatives, the Extreme Weather Insurance Risk Management Congress will provide in-depth peril-by-peril analysis of non-modeled and less well-understood weather events, to address and solve the challenges of more accurate risk quantification, aggregation and loss management.
Through a business-strategic lens, this uniquely tailored forum will deliver evaluation of tornado-hail, flood, wildfire and winter storm, alongside critical industry analysis on the reliability of current models for hurricanes to support insurers in developing a more individual view of risk, securing a more robust, accurate and sustainable natural catastrophe portfolio.
In 17th century Europe all observable swans were white and by extension all swans were therefore assumed to be white. No non-white swan had ever been observed. In the 18th century, however, black swans were discovered in Western Australia and that discovery undermined the statistics of swans to that date. Previously, the “risk” of a Black Swan was essentially nil, but upon recognition that the improbable was not the same as the impossible the possibility of Black Swans became more likely.
What had changed that made Black Swans more probable? Simply put our perceptions were broadened. In this article we will look at large programs, what creates the possibility of Black Swans and what are some of the new risks we must pay attention to.
Possibility of Black Swans
Program Management is very much about meeting the challenges of scale and complexity. These challenges largely focus on the management of known knowns and known unknowns. But large programs by their very nature move into a new neighborhood where previously rare unknown unknowns are more prevalent. In effect large program risks grow in new non linear ways. What causes this growth? Simply put:
- Scale and complexity move you into a new neighborhood where black swans may be more common
- Scaling drives non linear and non correlated growth in risks
- Complexity masks existing risks
- Complexity creates new risks
So what are Black Swans?
My paper in this month\'s issue of PM World Today tries to provide some guidance for those responsible for large engineering & construction programs.
The Truth About Fat Tails And Black Swansmarc_gross
This document discusses how FinAnalytica can help hedge fund investors in the current market crisis by analyzing tail risk and black swan events. It argues that normal distributions do not accurately capture risk and that downside risk measures like expected tail loss are more informative for investors than traditional measures like value at risk. FinAnalytica uses statistical modeling techniques on manager returns to provide meaningful insights into risk drivers and anticipate how different market scenarios could impact performance.
“Challenges of Dealing with Uncertainty”, published in this month’s edition of PM World Journal, takes a look at uncertainty as it relates to the economics of investments in community resilience. I have chosen to focus on how one deals with uncertainty in this area since it presents several characteristics which I find relevant in a broader array of programs and projects. These characteristics include:
• The long term nature of both initial investments but also utility and “return on investment”
o Increasingly we find extended timeframes in large scale programs
• The need to meet the long term needs of multiple, interlocking stakeholder groups, with potentially differing views of risk, investment horizons and potential futures
• Consequences of getting it materially wrong.
o These consequences can include loss of life, economic impacts at scale and even lost generations.
• The programmatic nature at scale, dealing with whole communities, broader than even many of today’s giga-programs
• Complexity, that only allows insights into how to prepare for tomorrow through almost unweighted consideration of scenarios
• The emerging nature of the problem and its likely relationship to many future projects
I consider this paper as exploratory and actively solicit your feedback and thoughts as I will co-chair a panel on this subject shortly and believe the subject would benefit from broader thoughts and insights.
How Can We See It Coming - Kylie Mills - 440565732Kylie Mills
The document discusses the challenges of risk-based regulation and lessons that can be learned from the global financial crisis. It argues that regulators were not well-positioned to identify the risk factors leading up to the crisis because warning signs were ambiguous and interpreted differently due to the prevailing context and ideology at the time. Understanding risk is difficult as risk perception is subjective and influenced by many contextual factors. The best regulators can do is deepen their understanding of the contextual nature of risk analysis and interpretation.
Risk Management In Todays Uncertain Environment 3 2009Jason Jones
The document discusses the paradigm shift from risk management to uncertainty management in today's environment. It outlines the risk management agenda for 2009, including reassessing investment risk, fixing broken risk models, managing higher capital requirements, proactive cycle management, and focusing on counterparty risk. The document was written by Jason A. Jones of Jones Strategy Consulting.
1) Risk plays an inherent role in companies and effective risk management is important, especially given increased globalization and lean supply chains.
2) Companies should analyze their risk profiles by considering the probability and potential cost of events to determine how to mitigate high probability/high cost risks or communicate low probability/high cost risks to investors.
3) Identifying all potential risks, no matter how unlikely, and understanding their consequences is important, as unlikely but high impact events can significantly affect companies, as examples like the BP oil spill show.
Bijan Yavar is a research fellow, PhD student, and founder and CEO of MEPCO. The document discusses definitions of risk, emergency, crisis, and disaster from perspectives of both certainty and uncertainty. It provides details on definitions of disaster risk and crisis from various sources. Crisis is defined as a point of change that can have both negative and positive outcomes, while disaster refers to events beyond a community's capacity to respond on its own.
“There is opportunity. These are not esoteric risks. The future of this business is going to the innovators.” Patrick Ryan, Founder Aon (Sep 2012)
With wildfire losses reaching an all time high in 2012 and $136 billion of total property value being constantly under high threat, tornadoes causing $26 billion losses in 2011 and severe windstorms causing massive flooding damage, the gap in understanding non-modeled perils clearly must be addressed.
In order to sustain the profitability of extreme weather insurance, it will be crucial to find better ways to model and aggregate risk, critically evaluate the best approaches to risk management and understand the science behind the increase in frequency and intensity of weather events.
What are the ‘new norms’ and how can insurers respond effectively? While writing long-term premiums, is it safe to assume that extreme and moderate years will balance each other out in the course of time? How can insurers provide an innovative response to balance opportunities and risks?
Bringing together over 20 senior insurance representatives, the Extreme Weather Insurance Risk Management Congress will provide in-depth peril-by-peril analysis of non-modeled and less well-understood weather events, to address and solve the challenges of more accurate risk quantification, aggregation and loss management.
Through a business-strategic lens, this uniquely tailored forum will deliver evaluation of tornado-hail, flood, wildfire and winter storm, alongside critical industry analysis on the reliability of current models for hurricanes to support insurers in developing a more individual view of risk, securing a more robust, accurate and sustainable natural catastrophe portfolio.
In 17th century Europe all observable swans were white and by extension all swans were therefore assumed to be white. No non-white swan had ever been observed. In the 18th century, however, black swans were discovered in Western Australia and that discovery undermined the statistics of swans to that date. Previously, the “risk” of a Black Swan was essentially nil, but upon recognition that the improbable was not the same as the impossible the possibility of Black Swans became more likely.
What had changed that made Black Swans more probable? Simply put our perceptions were broadened. In this article we will look at large programs, what creates the possibility of Black Swans and what are some of the new risks we must pay attention to.
Possibility of Black Swans
Program Management is very much about meeting the challenges of scale and complexity. These challenges largely focus on the management of known knowns and known unknowns. But large programs by their very nature move into a new neighborhood where previously rare unknown unknowns are more prevalent. In effect large program risks grow in new non linear ways. What causes this growth? Simply put:
- Scale and complexity move you into a new neighborhood where black swans may be more common
- Scaling drives non linear and non correlated growth in risks
- Complexity masks existing risks
- Complexity creates new risks
So what are Black Swans?
My paper in this month\'s issue of PM World Today tries to provide some guidance for those responsible for large engineering & construction programs.
The Truth About Fat Tails And Black Swansmarc_gross
This document discusses how FinAnalytica can help hedge fund investors in the current market crisis by analyzing tail risk and black swan events. It argues that normal distributions do not accurately capture risk and that downside risk measures like expected tail loss are more informative for investors than traditional measures like value at risk. FinAnalytica uses statistical modeling techniques on manager returns to provide meaningful insights into risk drivers and anticipate how different market scenarios could impact performance.
“Challenges of Dealing with Uncertainty”, published in this month’s edition of PM World Journal, takes a look at uncertainty as it relates to the economics of investments in community resilience. I have chosen to focus on how one deals with uncertainty in this area since it presents several characteristics which I find relevant in a broader array of programs and projects. These characteristics include:
• The long term nature of both initial investments but also utility and “return on investment”
o Increasingly we find extended timeframes in large scale programs
• The need to meet the long term needs of multiple, interlocking stakeholder groups, with potentially differing views of risk, investment horizons and potential futures
• Consequences of getting it materially wrong.
o These consequences can include loss of life, economic impacts at scale and even lost generations.
• The programmatic nature at scale, dealing with whole communities, broader than even many of today’s giga-programs
• Complexity, that only allows insights into how to prepare for tomorrow through almost unweighted consideration of scenarios
• The emerging nature of the problem and its likely relationship to many future projects
I consider this paper as exploratory and actively solicit your feedback and thoughts as I will co-chair a panel on this subject shortly and believe the subject would benefit from broader thoughts and insights.
How Can We See It Coming - Kylie Mills - 440565732Kylie Mills
The document discusses the challenges of risk-based regulation and lessons that can be learned from the global financial crisis. It argues that regulators were not well-positioned to identify the risk factors leading up to the crisis because warning signs were ambiguous and interpreted differently due to the prevailing context and ideology at the time. Understanding risk is difficult as risk perception is subjective and influenced by many contextual factors. The best regulators can do is deepen their understanding of the contextual nature of risk analysis and interpretation.
Risk Management In Todays Uncertain Environment 3 2009Jason Jones
The document discusses the paradigm shift from risk management to uncertainty management in today's environment. It outlines the risk management agenda for 2009, including reassessing investment risk, fixing broken risk models, managing higher capital requirements, proactive cycle management, and focusing on counterparty risk. The document was written by Jason A. Jones of Jones Strategy Consulting.
1) Risk plays an inherent role in companies and effective risk management is important, especially given increased globalization and lean supply chains.
2) Companies should analyze their risk profiles by considering the probability and potential cost of events to determine how to mitigate high probability/high cost risks or communicate low probability/high cost risks to investors.
3) Identifying all potential risks, no matter how unlikely, and understanding their consequences is important, as unlikely but high impact events can significantly affect companies, as examples like the BP oil spill show.
Bijan Yavar is a research fellow, PhD student, and founder and CEO of MEPCO. The document discusses definitions of risk, emergency, crisis, and disaster from perspectives of both certainty and uncertainty. It provides details on definitions of disaster risk and crisis from various sources. Crisis is defined as a point of change that can have both negative and positive outcomes, while disaster refers to events beyond a community's capacity to respond on its own.
This document provides a summary of a report on managing risk in the global supply chain. It finds that while supply chain risk is a major issue, many companies do little to formally manage it. Key findings include that no companies surveyed use outside expertise to assess risk, 90% do not quantify risk when outsourcing production, and only 25% of supply chains are assessed for risk. It also finds that insurance is an underutilized tool for mitigating risk. The report provides recommendations for developing a three-step process to identify, prioritize and mitigate supply chain risks.
This is the presentation on brand strategy in turbulent socio-economic conditions that I gave at the 2011 Branding Conference in South Africa. A key part of the presentation was the use of scenario planning. I also spoke about Sagacite's work on rapid adaptive strategies. I have added a couple of notes to several of the more obscure slides to help viewers understand what I talking about.
1) The document discusses major global risks facing businesses today that are more interconnected and volatile than in the past. These risks can disrupt markets worldwide and are difficult to anticipate.
2) It identifies 36 global risks classified into economic, geopolitical, societal and environmental categories. The ten risks seen as most likely to greatly impact business are listed.
3) The summary explains that global risks present new opportunities for businesses that can react quickly to anticipate changes. However, most businesses only prepare for past events and fail to consider future risks, despite evidence that exogenous risks increasingly affect companies.
Underinsurance of property risks1 is a global challenge. Much of the protection gap is due to uninsured global natural catastrophe risk, which has been rising steadily over the past 40 years
The document discusses how complexity, volatility, uncertainty, and ambiguity are challenging executives and companies. It presents scenario planning as a strategic mindset that can help organizations embrace uncertainty and see beyond short-term predictions by developing realistic alternative futures. Scenario planning works by starting with a question, gathering information, identifying key drivers of change, and composing different plots or scenarios to explore implications. This allows companies to connect dots between current decisions and uncertain future events. The document also advocates for more agile and adaptive strategies that embrace change, take incremental steps, acknowledge risk, continually immerse in markets, and maintain organizational alignment.
Nouriel Roubini is an economist who advises hedge funds on macroeconomic risks and opportunities. Through his company RGE, Roubini provides top-down economic analysis and asset allocation strategies to hedge funds. Roubini believes understanding macroeconomic forces is essential for asset management, and his analysis of issues like tail risks is exactly what sophisticated hedge funds need. However, Roubini has a bearish outlook, expecting continued deleveraging and below-trend growth globally for years due to high private and public debts. He is pessimistic about solutions to the eurozone crisis and warns social and political instability will rise with continued economic uncertainty.
Economic disparity and global governance failures emerged as two of the most interconnected and impactful global risks. Economic disparity, both within and between countries, threatens social stability and economic development, and is tightly linked to other risks like corruption and fragile states. Rising inequality is seen both in advanced and emerging economies. Global governance failures inhibit effective responses to risks due to divergent interests and conflicting incentives between countries. Both of these cross-cutting risks influence and are influenced by many other global risks, exacerbating impacts and challenges for risk management.
Jonathon Simon, a senior manager at Ernst & Young, presented on risk management. He discussed (1) defining risk management and the risk management lifecycle, (2) examples of good and bad risk management practices, and (3) critical success factors for effective risk management including being proactive and conducting regular risk assessments and scenario planning. The presentation also included an EY case study about implementing robust risk management processes for a government health project.
م.13
الزملاء الأفاضل
نرحب بحضراتكم مع
مبادرة #تواصل_تطوير
المحاضرة الثالثة عشرة من المبادرة مع
الأستاذ الدكتور/ أكرم حسن
استاذ إدارة المشاريع
بعنوان
" إدارة الأزمات الطارئة"
التاسعة مساء بتوقيت مكة المكرمة السبت 30مايو2020
وذلك عبر تطبيق زووم وقناة اليوتيوب الخاصة بالجمعية
https://us02web.zoom.us/meeting/register/tZcucOGqqzMjHNUySFv0juRs7-rGOY5SZh_E
علما ان هناك بث مباشر للمحاضرة على القنوات الخاصة بجمعية المهندسين المصريين
ونأمل أن نوفق في تقديم ما ينفع المهندس ومهمة الهندسة في عالمنا العربي
والله الموفق
للتواصل مع إدارة المبادرة عبر قناة تيليجرام
الرابط
https://t.me/EEAKSA
ومتابعة المبادرة والبث المباشر عبر نوافذنا المختلفة
رابط اللينكدان والمكتبة الالكترونية
https://www.linkedin.com/company/eeaksa-egyptian-engineers-association/
رابط قناة الفيسبوك
https://www.facebook.com/EEAKSA
رابط قناة اليوتيوب
https://www.youtube.com/user/EEAchannal
رابط التسجيل العام للمحاضرات
https://forms.gle/vVmw7L187tiATRPw9
The document provides highlights and updates on the Joseph Bonnell Project from 2010-2011. In 2010, the project held several events to honor Joseph Bonnell and his role in the Texas War for Independence. They restored views from Mount Bonnell, created videos about Bonnell, and were awarded grants to support their work. Planned activities for 2011 include completing fundraising, presenting an award in Bonnell's name, and installing informational kiosks at Mount Bonnell. The project aims to preserve the history of Joseph Bonnell and his contributions through historical markers, exhibits, and restoration efforts.
The document announces an upcoming event called FACT2010 that will feature a panel discussion on the many facets of innovation. It previews the panel discussion by noting innovation can take many forms from new products and services to process improvements. The panelists discuss what innovation means to them, the best aspects of current business practices and areas for improvement, and changes they foresee in how business will be conducted in the future focused on the role of technology.
The document summarizes the key points of a clinical trial on a new drug for treating counterfeit erectile dysfunction. The trial involved over 7,000 men across 12 countries and found the drug was effective in treating the condition with minimal side effects. It is expected to be approved for use by major regulatory agencies and will provide an affordable alternative treatment for many men.
WebCampKL 9 - 30-second tips to happiness. 16 apps in 8 minutesArzumy MD
This document provides recommendations for 30 productivity apps for Mac, along with brief descriptions and download links for each. It suggests apps for tasks like searching, bookmarks, code editing, email, passwords, source control, audio recording, cleaning files, faking caller ID, project tracking, time tracking, and accounting. Cheap tricks are also mentioned like using AppTrash to recover after app upgrades or storing projects in a single vault for source code apps.
This document discusses the need for a new approach to risk management in uncertain times. It argues that past failures show that risk management tools and processes are not sufficient on their own and that a focus on people, behaviors, values and decision-making is needed. It advocates capturing stories and narratives from key employees to better understand risk drivers and contexts. A new strategic perspective is required that embraces uncertainty and transforms workforce views on risk management.
This document discusses uncertainty and risk in projects. It defines risk as "uncertainty that, if it occurs, will affect achievement of objectives." It distinguishes between uncertainty and risk, with risk being the subset of uncertainty that matters because it could impact objectives. The document notes that risks include both threats and opportunities. It also discusses how risk management is important for projects, which aim to achieve specific objectives and deliver value.
THE UNITED STATES NAVAL WAR COLLEGE
U.S. Navy Senior Enlisted Academy
RISK MITIGATION: DIVERSE CHALLENGES
FOR THE RISK PRACTITIONER
By
Prof. Ronald E. Ratcliff (Jan 2006)
Edited by Prof. Bud Baker (Nov 2017)
RISK MITIGATION: DIVERSE CHALLENGES
FOR THE RISK PRACTITIONER
It's tough to make predictions, especially about the future.
─ Yogi Berra
INTRODUCTION
Risk and risk management are concepts that leaders and their staffs have come to appreciate in
increasing levels of sophistication. Operational Risk Management (ORM) is a process taught at
all levels in the Department of Defense. Yet, and somewhat ironically, senior civilian Defense
Department leadership has often been quite critical of the military services for their limited
understanding of, and general aversion to, risk. While one can build a defensible case for the
military’s penchant to avoid risk, the purpose of this paper is to examine more fully the
challenges that make astute risk management so difficult. As part of that discussion, we will
briefly examine the difficulties inherent in determining risk for low-probability but catastrophic
events. We will also examine briefly the processes used in risk management and the challenges
leaders face in making risk management decisions. Finally, we will address the challenges all
organizations face when communicating the rationale for their choices given the risks involved.
RISK
In a July 2004 study commissioned by the British government entitled Public Perception of Risk,
J. Richard Eiser noted that: “Risk is a feature of all human activity that results in some probable
benefit but also includes a potential cost or harm.”1 He further noted:
[E]verything that is important about risk arises from actual or perceived uncertainty ...
it is only because we need to act under conditions of uncertainty that the concept of risk
is of interest. If we felt there was nothing we could ever do to affect what might
happen to us, we would have no decisions to take and there would be no point in
worrying about the likelihood or value of future events. ... It is because these
consequences are uncertain, and may leave us better or worse off, that we talk about
risk.2
Risk is typically defined as “the combination of the probability of an event occurring and its
consequences.”3 Usually, organizations perceive those consequences in a negative context.
Within the Department of Defense, the term risk clearly has a negative implication defined as
“the probability and severity of a potential loss that may result from hazards...”4 Similarly, the
Naval War College characterizes risk as “the likelihood of failure and the consequence of
failure…”5 These definitions equate risk to the probability that an organization’s vulnerabilities
or weaknesses will permit an unwanted and/or harmful event to occur that will limit its ability to
achieve a.
The document discusses findings from a study on whistleblower incentives and protection in finance departments. Three key themes emerged: 1) lack of ethical leadership discourages whistleblowing due to fear of retaliation, 2) mutual mistrust between leaders and staff prevents reporting of unethical behaviors, and 3) without whistleblower protections, corruption continues harming social welfare. The findings validate anticipated themes from literature and suggest finance departments should implement stronger incentives and protections to curb unethical practices through whistleblowing.
Effective Crisis CommunicationChapter 5 – 10 Lessons on ManagiEvonCanales257
Effective Crisis Communication
Chapter 5 – 10 Lessons on Managing Crisis Uncertainty Effectively
Ulmer, R., Sellnow, T., and Seeger, M. (2019). Effective crisis communication: Moving from crisis to opportunity. Sage Publications. Thousand Oaks, CA.
Defining Uncertainty
Uncertainty – The inability to predict the future.
Lack of Information
Complexity of Information
Quality of Information
Crises create EPISTEMOLOGICAL and ONTOLOGICAL uncertainty.
Epistemological – Uncertainty from lack of knowledge.
Ontological – Uncertainty from a new future created by crisis – The future has little to no relationship with the past.
Lessons 1 - 3
Crises Can Start Quickly and Unexpectedly
Shouldn’t respond with routine solutions
The threat is perceptual
Lesson 4
Communicate Early and Often Regardless of Having Information or Not!
Because of uncertainty, accurate info is not there for stakeholders.
Effective strategies include making a list of potential questions.
What happened?
Who is responsible?
Why did it happen?
Who is affected?
What should we do?
Who can we trust?
What should we say?
How should we say it?
Lesson 5
Ethical Ambiguity During Crises
Organizations should not purposely heighten the ambiguity of a crisis to deceive or distract the public
Ambiguity is “an ongoing stream that supports several different interpretations at the same time”, Weick (1995)
Ethical when – uses unbiased data to inform and contribute to the complete understanding
Unethical when – using biased or incomplete information to deceive
Lesson 6
Be prepared to defend your interpretation of the evidence surrounding a crisis
Lesson 7
Without good intentions prior to a crisis, recovery is difficult or impossible
Questions of Evidence
Questions of Intent
Questions of Responsibility
Lesson 8
If you believe you are not responsible, you need to build a case for who is
Lesson 9
Organizations need to prepare through simulations and training
Crises thrust people into unfamiliar roles.
Crisis demands can bring structures to their knees.
Organizations should train and prepare for crises.
Lesson 10
Crises challenge the way organizations think about and conduct their business
Crises create “Cosmology Episodes” – disorienting experiences in which beliefs and sensemaking structures are hampered. Weick (1993)
They can change how we think about the world.
Organizations and Stakeholders need information to reduce uncertainty.
Organizations in crisis often stonewall
Stakeholders are left wondering if they will get information needed to protect themselves
Media speculates
Effective Crisis Communication
Chapter 1 The Conceptual Foundation
Ulmer, R., Sellnow, T., and Seeger, M. (2019). Effective crisis communication: Moving from crisis to opportunity. Sage Publications. Thousand Oaks, CA.
Importance of Crisis Communication Skills
No community, organization, public or private is immune from crises.
The need for understanding effective crisis communication has increased in demand.
Cyb ...
Effective Crisis CommunicationChapter 1 The Conceptual FoundatEvonCanales257
Effective Crisis Communication
Chapter 1 The Conceptual Foundation
Ulmer, R., Sellnow, T., and Seeger, M. (2019). Effective crisis communication: Moving from crisis to opportunity. Sage Publications. Thousand Oaks, CA.
Importance of Crisis Communication Skills
No community, organization, public or private is immune from crises.
The need for understanding effective crisis communication has increased in demand.
Cyber attacks, public relations disasters, natural disasters, corporate, government, and private mistakes.
Because of the prevalence of crises, crisis communication skills are some of the most sought after.
Subsequent slides offer examples of crisis situations
Sports example requiring crisis communication skills
3
Business example requiring crisis communication skills
4
Government example requiring crisis communication skills
5
Political example requiring crisis communication skills
6
Natural disaster example requiring crisis communication skills
7
Defining Crisis Communication
Bad experiences are not crises
Hermann (1963) identified 3 characteristics
Surprise
Threat
Short Response Time
Traditional Definition of Crisis
Surprise
Even natural disasters such as flooding and fires do not count unless they come with an intensity that was unpredicted or beyond expectations of government officials.
Threat
Crises involve threats beyond the normal problems faced.
Can affect an organization’s financial security, customers, residents nearby, and others.
Short Response Time
Organizations must provide effective communication immediately after the initial crisis.
Difficult because in the immediate aftermath little is often known about the cause of the crisis.
Only a short window to take control and set the tone for response and recovery.
Expanding the definition of Crisis Communication
Unexpected – Could not have anticipated or planned for.
Nonroutine – Events that cannot be managed by normal procedures and often require unique or extreme measures.
Produces Uncertainty – Cannot be aware of all causes and effects and investigations and efforts to reduce uncertainty may have to continue for months or years.
Creates Opportunities – To learn, make strategic changes, grow, or develop new competitive advantages.
Threat to image, reputation, or high-priority goals – Can be intense enough to permanently damage or destroy the organization.
Types of Crises
Intentional
Terrorism
Sabotage
Workplace violence
Poor employee relationships
Poor risk management
Unethical leadership
Unintentional
Natural disasters
Disease outbreaks
Unforeseeable technical interactions
Product failure
Downturns in the economy
Types of Crises
Intentional
Terrorism
Sabotage
Workplace violence
Poor employee relationships
Poor risk management
Unethical leadership
https://www.theguardian.com/business/2015/dec/10/volkswagen-emissions-scandal-systematic-failures-hans-dieter-potsch
https://www.nytimes.com/2019/10/31/us/chicago-cps-teachers-strik ...
This document provides a summary of a report on managing risk in the global supply chain. It finds that while supply chain risk is a major issue, many companies do little to formally manage it. Key findings include that no companies surveyed use outside expertise to assess risk, 90% do not quantify risk when outsourcing production, and only 25% of supply chains are assessed for risk. It also finds that insurance is an underutilized tool for mitigating risk. The report provides recommendations for developing a three-step process to identify, prioritize and mitigate supply chain risks.
This is the presentation on brand strategy in turbulent socio-economic conditions that I gave at the 2011 Branding Conference in South Africa. A key part of the presentation was the use of scenario planning. I also spoke about Sagacite's work on rapid adaptive strategies. I have added a couple of notes to several of the more obscure slides to help viewers understand what I talking about.
1) The document discusses major global risks facing businesses today that are more interconnected and volatile than in the past. These risks can disrupt markets worldwide and are difficult to anticipate.
2) It identifies 36 global risks classified into economic, geopolitical, societal and environmental categories. The ten risks seen as most likely to greatly impact business are listed.
3) The summary explains that global risks present new opportunities for businesses that can react quickly to anticipate changes. However, most businesses only prepare for past events and fail to consider future risks, despite evidence that exogenous risks increasingly affect companies.
Underinsurance of property risks1 is a global challenge. Much of the protection gap is due to uninsured global natural catastrophe risk, which has been rising steadily over the past 40 years
The document discusses how complexity, volatility, uncertainty, and ambiguity are challenging executives and companies. It presents scenario planning as a strategic mindset that can help organizations embrace uncertainty and see beyond short-term predictions by developing realistic alternative futures. Scenario planning works by starting with a question, gathering information, identifying key drivers of change, and composing different plots or scenarios to explore implications. This allows companies to connect dots between current decisions and uncertain future events. The document also advocates for more agile and adaptive strategies that embrace change, take incremental steps, acknowledge risk, continually immerse in markets, and maintain organizational alignment.
Nouriel Roubini is an economist who advises hedge funds on macroeconomic risks and opportunities. Through his company RGE, Roubini provides top-down economic analysis and asset allocation strategies to hedge funds. Roubini believes understanding macroeconomic forces is essential for asset management, and his analysis of issues like tail risks is exactly what sophisticated hedge funds need. However, Roubini has a bearish outlook, expecting continued deleveraging and below-trend growth globally for years due to high private and public debts. He is pessimistic about solutions to the eurozone crisis and warns social and political instability will rise with continued economic uncertainty.
Economic disparity and global governance failures emerged as two of the most interconnected and impactful global risks. Economic disparity, both within and between countries, threatens social stability and economic development, and is tightly linked to other risks like corruption and fragile states. Rising inequality is seen both in advanced and emerging economies. Global governance failures inhibit effective responses to risks due to divergent interests and conflicting incentives between countries. Both of these cross-cutting risks influence and are influenced by many other global risks, exacerbating impacts and challenges for risk management.
Jonathon Simon, a senior manager at Ernst & Young, presented on risk management. He discussed (1) defining risk management and the risk management lifecycle, (2) examples of good and bad risk management practices, and (3) critical success factors for effective risk management including being proactive and conducting regular risk assessments and scenario planning. The presentation also included an EY case study about implementing robust risk management processes for a government health project.
م.13
الزملاء الأفاضل
نرحب بحضراتكم مع
مبادرة #تواصل_تطوير
المحاضرة الثالثة عشرة من المبادرة مع
الأستاذ الدكتور/ أكرم حسن
استاذ إدارة المشاريع
بعنوان
" إدارة الأزمات الطارئة"
التاسعة مساء بتوقيت مكة المكرمة السبت 30مايو2020
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The document provides highlights and updates on the Joseph Bonnell Project from 2010-2011. In 2010, the project held several events to honor Joseph Bonnell and his role in the Texas War for Independence. They restored views from Mount Bonnell, created videos about Bonnell, and were awarded grants to support their work. Planned activities for 2011 include completing fundraising, presenting an award in Bonnell's name, and installing informational kiosks at Mount Bonnell. The project aims to preserve the history of Joseph Bonnell and his contributions through historical markers, exhibits, and restoration efforts.
The document announces an upcoming event called FACT2010 that will feature a panel discussion on the many facets of innovation. It previews the panel discussion by noting innovation can take many forms from new products and services to process improvements. The panelists discuss what innovation means to them, the best aspects of current business practices and areas for improvement, and changes they foresee in how business will be conducted in the future focused on the role of technology.
The document summarizes the key points of a clinical trial on a new drug for treating counterfeit erectile dysfunction. The trial involved over 7,000 men across 12 countries and found the drug was effective in treating the condition with minimal side effects. It is expected to be approved for use by major regulatory agencies and will provide an affordable alternative treatment for many men.
WebCampKL 9 - 30-second tips to happiness. 16 apps in 8 minutesArzumy MD
This document provides recommendations for 30 productivity apps for Mac, along with brief descriptions and download links for each. It suggests apps for tasks like searching, bookmarks, code editing, email, passwords, source control, audio recording, cleaning files, faking caller ID, project tracking, time tracking, and accounting. Cheap tricks are also mentioned like using AppTrash to recover after app upgrades or storing projects in a single vault for source code apps.
This document discusses the need for a new approach to risk management in uncertain times. It argues that past failures show that risk management tools and processes are not sufficient on their own and that a focus on people, behaviors, values and decision-making is needed. It advocates capturing stories and narratives from key employees to better understand risk drivers and contexts. A new strategic perspective is required that embraces uncertainty and transforms workforce views on risk management.
This document discusses uncertainty and risk in projects. It defines risk as "uncertainty that, if it occurs, will affect achievement of objectives." It distinguishes between uncertainty and risk, with risk being the subset of uncertainty that matters because it could impact objectives. The document notes that risks include both threats and opportunities. It also discusses how risk management is important for projects, which aim to achieve specific objectives and deliver value.
THE UNITED STATES NAVAL WAR COLLEGE
U.S. Navy Senior Enlisted Academy
RISK MITIGATION: DIVERSE CHALLENGES
FOR THE RISK PRACTITIONER
By
Prof. Ronald E. Ratcliff (Jan 2006)
Edited by Prof. Bud Baker (Nov 2017)
RISK MITIGATION: DIVERSE CHALLENGES
FOR THE RISK PRACTITIONER
It's tough to make predictions, especially about the future.
─ Yogi Berra
INTRODUCTION
Risk and risk management are concepts that leaders and their staffs have come to appreciate in
increasing levels of sophistication. Operational Risk Management (ORM) is a process taught at
all levels in the Department of Defense. Yet, and somewhat ironically, senior civilian Defense
Department leadership has often been quite critical of the military services for their limited
understanding of, and general aversion to, risk. While one can build a defensible case for the
military’s penchant to avoid risk, the purpose of this paper is to examine more fully the
challenges that make astute risk management so difficult. As part of that discussion, we will
briefly examine the difficulties inherent in determining risk for low-probability but catastrophic
events. We will also examine briefly the processes used in risk management and the challenges
leaders face in making risk management decisions. Finally, we will address the challenges all
organizations face when communicating the rationale for their choices given the risks involved.
RISK
In a July 2004 study commissioned by the British government entitled Public Perception of Risk,
J. Richard Eiser noted that: “Risk is a feature of all human activity that results in some probable
benefit but also includes a potential cost or harm.”1 He further noted:
[E]verything that is important about risk arises from actual or perceived uncertainty ...
it is only because we need to act under conditions of uncertainty that the concept of risk
is of interest. If we felt there was nothing we could ever do to affect what might
happen to us, we would have no decisions to take and there would be no point in
worrying about the likelihood or value of future events. ... It is because these
consequences are uncertain, and may leave us better or worse off, that we talk about
risk.2
Risk is typically defined as “the combination of the probability of an event occurring and its
consequences.”3 Usually, organizations perceive those consequences in a negative context.
Within the Department of Defense, the term risk clearly has a negative implication defined as
“the probability and severity of a potential loss that may result from hazards...”4 Similarly, the
Naval War College characterizes risk as “the likelihood of failure and the consequence of
failure…”5 These definitions equate risk to the probability that an organization’s vulnerabilities
or weaknesses will permit an unwanted and/or harmful event to occur that will limit its ability to
achieve a.
The document discusses findings from a study on whistleblower incentives and protection in finance departments. Three key themes emerged: 1) lack of ethical leadership discourages whistleblowing due to fear of retaliation, 2) mutual mistrust between leaders and staff prevents reporting of unethical behaviors, and 3) without whistleblower protections, corruption continues harming social welfare. The findings validate anticipated themes from literature and suggest finance departments should implement stronger incentives and protections to curb unethical practices through whistleblowing.
Effective Crisis CommunicationChapter 5 – 10 Lessons on ManagiEvonCanales257
Effective Crisis Communication
Chapter 5 – 10 Lessons on Managing Crisis Uncertainty Effectively
Ulmer, R., Sellnow, T., and Seeger, M. (2019). Effective crisis communication: Moving from crisis to opportunity. Sage Publications. Thousand Oaks, CA.
Defining Uncertainty
Uncertainty – The inability to predict the future.
Lack of Information
Complexity of Information
Quality of Information
Crises create EPISTEMOLOGICAL and ONTOLOGICAL uncertainty.
Epistemological – Uncertainty from lack of knowledge.
Ontological – Uncertainty from a new future created by crisis – The future has little to no relationship with the past.
Lessons 1 - 3
Crises Can Start Quickly and Unexpectedly
Shouldn’t respond with routine solutions
The threat is perceptual
Lesson 4
Communicate Early and Often Regardless of Having Information or Not!
Because of uncertainty, accurate info is not there for stakeholders.
Effective strategies include making a list of potential questions.
What happened?
Who is responsible?
Why did it happen?
Who is affected?
What should we do?
Who can we trust?
What should we say?
How should we say it?
Lesson 5
Ethical Ambiguity During Crises
Organizations should not purposely heighten the ambiguity of a crisis to deceive or distract the public
Ambiguity is “an ongoing stream that supports several different interpretations at the same time”, Weick (1995)
Ethical when – uses unbiased data to inform and contribute to the complete understanding
Unethical when – using biased or incomplete information to deceive
Lesson 6
Be prepared to defend your interpretation of the evidence surrounding a crisis
Lesson 7
Without good intentions prior to a crisis, recovery is difficult or impossible
Questions of Evidence
Questions of Intent
Questions of Responsibility
Lesson 8
If you believe you are not responsible, you need to build a case for who is
Lesson 9
Organizations need to prepare through simulations and training
Crises thrust people into unfamiliar roles.
Crisis demands can bring structures to their knees.
Organizations should train and prepare for crises.
Lesson 10
Crises challenge the way organizations think about and conduct their business
Crises create “Cosmology Episodes” – disorienting experiences in which beliefs and sensemaking structures are hampered. Weick (1993)
They can change how we think about the world.
Organizations and Stakeholders need information to reduce uncertainty.
Organizations in crisis often stonewall
Stakeholders are left wondering if they will get information needed to protect themselves
Media speculates
Effective Crisis Communication
Chapter 1 The Conceptual Foundation
Ulmer, R., Sellnow, T., and Seeger, M. (2019). Effective crisis communication: Moving from crisis to opportunity. Sage Publications. Thousand Oaks, CA.
Importance of Crisis Communication Skills
No community, organization, public or private is immune from crises.
The need for understanding effective crisis communication has increased in demand.
Cyb ...
Effective Crisis CommunicationChapter 1 The Conceptual FoundatEvonCanales257
Effective Crisis Communication
Chapter 1 The Conceptual Foundation
Ulmer, R., Sellnow, T., and Seeger, M. (2019). Effective crisis communication: Moving from crisis to opportunity. Sage Publications. Thousand Oaks, CA.
Importance of Crisis Communication Skills
No community, organization, public or private is immune from crises.
The need for understanding effective crisis communication has increased in demand.
Cyber attacks, public relations disasters, natural disasters, corporate, government, and private mistakes.
Because of the prevalence of crises, crisis communication skills are some of the most sought after.
Subsequent slides offer examples of crisis situations
Sports example requiring crisis communication skills
3
Business example requiring crisis communication skills
4
Government example requiring crisis communication skills
5
Political example requiring crisis communication skills
6
Natural disaster example requiring crisis communication skills
7
Defining Crisis Communication
Bad experiences are not crises
Hermann (1963) identified 3 characteristics
Surprise
Threat
Short Response Time
Traditional Definition of Crisis
Surprise
Even natural disasters such as flooding and fires do not count unless they come with an intensity that was unpredicted or beyond expectations of government officials.
Threat
Crises involve threats beyond the normal problems faced.
Can affect an organization’s financial security, customers, residents nearby, and others.
Short Response Time
Organizations must provide effective communication immediately after the initial crisis.
Difficult because in the immediate aftermath little is often known about the cause of the crisis.
Only a short window to take control and set the tone for response and recovery.
Expanding the definition of Crisis Communication
Unexpected – Could not have anticipated or planned for.
Nonroutine – Events that cannot be managed by normal procedures and often require unique or extreme measures.
Produces Uncertainty – Cannot be aware of all causes and effects and investigations and efforts to reduce uncertainty may have to continue for months or years.
Creates Opportunities – To learn, make strategic changes, grow, or develop new competitive advantages.
Threat to image, reputation, or high-priority goals – Can be intense enough to permanently damage or destroy the organization.
Types of Crises
Intentional
Terrorism
Sabotage
Workplace violence
Poor employee relationships
Poor risk management
Unethical leadership
Unintentional
Natural disasters
Disease outbreaks
Unforeseeable technical interactions
Product failure
Downturns in the economy
Types of Crises
Intentional
Terrorism
Sabotage
Workplace violence
Poor employee relationships
Poor risk management
Unethical leadership
https://www.theguardian.com/business/2015/dec/10/volkswagen-emissions-scandal-systematic-failures-hans-dieter-potsch
https://www.nytimes.com/2019/10/31/us/chicago-cps-teachers-strik ...
Effective crisis communication chapter 1 the conceptual foundatANIL247048
- Effective crisis communication is important and involves unexpected, non-routine events that create uncertainty and opportunities while representing a threat.
- There are various crisis communication theories and types of crises that can occur, both intentional and unintentional.
- Ten key lessons on managing crisis uncertainty effectively include communicating early and often, addressing ethical ambiguity, being prepared to defend interpretations of evidence, and providing practical information to help stakeholders protect themselves.
The document discusses risk management in organizations. It defines risk management as an organized process to identify, analyze, and control risks. It notes that success of businesses today depends on their ability to handle risks well. The paper will discuss the definition of risks and risk management, risks associated with businesses, and risks related to using information technology. It aims to explain why risk management is important for organizations.
American Bankers Association Risk Management Forum April 29, 2010 Tyler D. ...tnunnally
American Bankers Association Risk Management Forum, April 29, 2010. Best Practices: Managing Judgment Risk. Presented by Tyler D. Nunnally, Founder & CEO, Upside Risk
Measurement, Quantitative vs. Qualitative and Other Cool StuffJody Keyser
InfoSec Measurement and Quantitative vs Qualitative Methods
Recorded Webinar Here:
https://www3.gotomeeting.com/register/604059902
Aliado and Risk Centric Security would like to introduce you to the world of quantitative risk and decision analysis.
Our webinars will provide you with a glimpse of the power and credibility that quantitative methods can bring to the problems that Information Security Professionals face every day
Topics covered include:
What is risk?
Possibility and Probability
What is a measurement and what is it for?
Qualitative vs. Quantitative methods
Static modeling vs. Monte Carlo simulation
Calibration and the power of a calibrated estimate
Modeling Expert Opinion and the RCS BetaPERT calculator
A. Definitions
1. Risk
2. Risk and Opportunity
3. Possibility vs. probability
4. Measurement
5. Precision vs. accuracy
6. Qualitative vs. quantitative methods
1. The document discusses security risk management and outlines maturity levels of organizations in their approach to security risk management. It describes four levels - from initial/ad hoc implementation to optimizing where security risk management is fully integrated.
2. Key barriers to effective security risk management implementation are identified as unrealistic expectations, lack of clear vision and not treating implementation as a dedicated project. Guiding principles of direction, systems and execution are outlined to help integration.
3. Different industry sectors have varying needs for security investments depending on risk levels. Most organizations take on more risk than realized, over-engineer risks, or are too risk averse due to human cognitive limitations unless a structured risk management process is followed.
This document discusses risk management strategies. It begins by defining risk and its importance in projects and organizations. It then discusses different risk management strategies used by healthcare companies to control costs and ensure sustainability. It also discusses using a risk matrix to help assess and estimate different risk levels and the appropriate handling strategies. Finally, it discusses identifying risks in the critical path of a project as the first step in the risk management process in order to determine what specific risks may affect the project and help mitigate delays.
A new category of risk exposure to which large organisations are particularly prone, especially in these times of escalating levels of volatility, uncertainty, complexity and ambiguity in global markets.
20
PART I
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EBSCO : eBook Collection (EBSCOhost) - printed on 9/25/2019 2:02 AM via STRAYER UNIVERSITY
AN: 1672297 ; Hillson, David, Simon, Peter.; Practical Project Risk Management : The ATOM Methodology
Account: strayer.main.ehost
21
F
CHAPTER 1
The Challenge of Managing Risk
ew would disagree that life is risky. Indeed, for many people it is precisely the element of risk that
makes life interesting. However, unmanaged risk is dangerous because it can lead to unforeseen
outcomes. This fact has led to the recognition that risk management is essential, whether in
business, projects, or everyday life. But somehow risks just keep happening. Risk management
apparently does not work, at least not in the way it should. This book addresses this problem by
providing a simple method for effective risk management. The target is management of risks on
projects, although many of the techniques outlined here are equally applicable to managing other forms
of risk, including business risk, strategic risk, and even personal risk.
The book is divided into three parts, starting with defining the problem in an effort to understand the
underlying reasons for the apparent failure of project risk management to deliver the promised or
expected benefits. The main body of the book describes a generic risk management process applicable to
most projects, focusing on simple guidelines to make risk management work in practice. Finally, the
book considers implementation issues, applying the risk management process to different types of
projects, and addressing the steps necessary to use risk management effectively.
But before considering the details of the risk management process, there are some essential ideas that
must be understood and clarified. For example, what exactly is meant by the word risk?
Risk—The Definition Debate
Some may be surprised that there is any question to be answered here. After all, the word can berisk
found in any English dictionary, and surely everyone knows what it means. But in recent years risk
practitioners and professionals have been engaged in an active and controversial debate about the
precise scope of the word.
Everyone agrees that risk arises from uncertainty, and that risk is about the impact that uncertain events
or circumstances could have on the achievement of goals. This agreement has led to definitions
combining two elements of uncertainty and objectives, such as, “A risk is any uncertainty that, if it
occurs, would have an effect on achievement of one or more objectives.” Traditionally risk has been
perceived as bad; the emphasis has been on the potential effects of risk as harmful, adverse, negat ...
Tim Lister defines risk management as the process of uncovering uncertainty and risk in projects. It involves understanding the potential unwanted consequences of events or decisions, and deciding whether to address problems before they emerge or wait until they become clear problems. A key component is having conversations with stakeholders like technical staff, sponsors, and users to determine the best time to make decisions, such as whether to spend money up front to lower the probability of problems or how to lower costs if problems do occur. Effective risk management is about fighting early problems rather than late ones through proactive decision making.
Global risks pose unprecedented challenges for businesses today. As risks become more interconnected and volatile, they can disrupt markets worldwide nearly instantly. This report identifies 36 global risks across economic, geopolitical, societal and environmental categories. The 10 risks most likely to greatly impact business are: instability in Iraq, terrorism, emerging fiscal crises, disruption in oil supplies, radical Islam, a sudden decline in China's growth, pandemics, climate change, weapons of mass destruction, and unrestrained migration. Addressing global risks requires understanding interconnected systems and considering long-term impacts, rather than just reacting to short-term events. However, global risks also provide new opportunities for businesses that can anticipate changes and position themselves advantageously.
Behavioral Economics At Work Nunnally, Steadman, Baxter Las Vegas Finalksteadman
The document summarizes a presentation on behavioral economics and judgment risk given by Tyler Nunnally, the founder and CEO of Upside Risk. The presentation discusses concepts from behavioral economics like heuristics and biases that can lead to judgment errors, and examines how risk appetite can impact decision making and business performance. Best practices for managing judgment risk and reducing biases are also covered.
The incorporation of sustainability risks into the risk culture | Albert Vila...Albert Vilariño
Post published on Medium on 3/3/17.
https://medium.com/@albert.vilarino/the-incorporation-of-sustainability-risks-into-the-risk-culture-b18aa1e39add#.cd2l4nh2x
There are three main benefits to adopting a converged approach to security risk:
1. It provides a single point of ownership for all aspects of an organization's security through appointing a chief security officer responsible for physical, intangible, and compliance risks.
2. It recognizes the interdependence of business functions and overlapping risks, integrating processes and assets to assess actual and potential blended risks across physical, personnel, and operational areas.
3. It identifies risks that involve multiple processes, systems, or cut across departments, providing a complete picture of threats to present to leadership and ensure coordinated responses.
Some of our most challenging conversations center on the topic of risk. How do we communicate, clearly, accurately, fully, without misleading? We explore the topic of \'risk talk\' here.
1. FACT Update Sept emb er 2 01 1
Vo lu me 3 Issue 1
Contact us at:
factnetwork@gmail.com
INSIDE THIS ISSUE
Innovation Metrics for Risk Managers
1 Demystifying the Concept of Risk By Leslie Riley
1 Innovation Metrics for Risk Innovation is risky business and managing risk requires measurement. Someone
Managers
once said that you can‟t manage what you can‟t measure. Perhaps we can
1 Upcoming Events in 2011 manage for a while, but how will we know when we get there or even if we are
headed in the right direction? Innovation requires leadership and most of us
2 Demystifying Risk (cont‟d)
hate following a leader who doesn‟t know where he or she is headed.
3 Innovation Metrics (cont‟d)
Traditional measures of corporate success and even compensation for individual
achievement depend on lagging indicators, but that assumes prior success to be
a good predictor of future success. This too seems like risky business.
Continued page 3 – Innovation Metrics
Demystifying the Concept of Risk
By Shira Yoskovitch
Our Upcoming
When you consider the variety and complexity of changes that the typical C-suite must
Events in 2011:
contend with, they all ultimately wrap around the idea of the risk/reward payoff.
Rewards are easiest for most to understand, as they‟re generally a direct tie to the P&L.
FACT Calgary
It‟s the „risk‟ part of the discussion that will most commonly strike fear into leaders, and inaugural event:
perhaps more significantly impacting, the employee base. Why? Because for most October 21st, 2011
people, there‟s no clear-cut definition of risk to anchor to. For traditionalists, discussions Calgary, AB
of risk focus on the pure finance. However, in an economy where the service-based or
Globe and Mail’s
social media company has as much pull (and dare we say it, valuation) as physical
Small Business
goods-based organizations, there‟s a rapid ascent of real-time communications
Summit:
technology, and geographic borders are blurring ever-more, risk doesn‟t simply exist in
November 8th, 2011
the end finances. To successfully lead, we need to look for risk sources and solutions in Toronto, ON
the systems, processes and people that comprise the business itself.
Defining the concept of “Risk” For more info go to
www.factnetwork.org
The Oxford English Dictionary cites the earliest definition of risk in English, from 1621:
or email us.
“(Exposure to) the possibility of loss, injury, or other adverse or unwelcome
circumstance; a chance or situation involving such a possibility”
Continued page 2 – Demystifying risk
2. FACT Update Page 2
Demystifying Risk (continued from page 1)
Taking this definition one step further, modern descriptions of risk may look like:
Regardless of industry or
function, common threads exist ISO31000 (2009) /ISO Guide 73: the 'effect of uncertainty on objectives'
in defining risk: Factor Analysis of Information Risk1: “the probable frequency and probable
Magnitude of impact magnitude of future loss.
Likelihood of occurrence Occupational Health & Safety Advisory Services:” the product of the probability
of a hazard resulting in an adverse event times the severity of the event”.
Positive and negative impacts
Financial risk: “the unexpected variability or volatility of returns”.
need to be considered
So what? While no doubt an industry or function may highlight a different aspect of
Risks aren’t just financial,
what is considered to be risky, there are common threads in every definition of risk.
although they’re the most visible
The difference between “Uncertainty” and “Risk”
Even once a definition of risk is established, organization teams are challenged by the
use of “risk” and “uncertainty” as interchangeable terms. The difference?
“Uncertainty” represents the likelihood that something positive or negative will occur.
There‟s no true formulaic measure, most times sounding like “X-% probability that this
will happen in Y years”, and there‟s a potential for more than one outcome. 2 It is
experiential, informed by history and its interpretation, and is made current by
considering current environmental factors (people, process, systems). A discussion of
Risk and uncertainty are not „uncertainty‟ tends to veer to the subjective, and alone does not allow leaders to make
interchangeable terms. decisions, nor does it inspire confidence by teams to continue to create and innovate.
Uncertainty is a component of
risk. Risk is not a part of “Risk” is more objective and considers the combination of the likelihood of an
uncertainty. The key- risk can occurrence of a hazardous event or exposure(s) and the severity of injury, ill health or
be objectively measured. loss that can be caused by the event or exposure(s). Most importantly, it can be
measured3. Importantly, any risk formula or definition measurement is a moment-in-
time worst case scenario, presuming that no further action is taken.
Distinguishing risk and uncertainty is critical. A concept that can‟t be measured will,
by its very existence, cause stress on an organization, affecting its ability to focus and
align on promoting innovations. By interchanging these terms, organizations diminish
their power to influence, shape and insulate their innovations and teams.
As we know as leaders, if it can be measured, it can be managed, leading us to the
concept of risk management. As organization responds to a risk, the measure can be
recalculated to understand success or ongoing change required.
The Creativity-Invention-Innovation cycle and risk management
Consider the Creativity-Invention-Innovation cycle4, and that an innovation
exists only once it has yielded market benefit. The very nature of creativity says the
idea has never been sought out, and that subjective, unfulfilled, needs and wants of
customers and suppliers inform the designers.
Continued page 3 – Demystifying Risk
www.factnetwork.org factnetwork@gmail.com
3. FACT Update Page 3
Demystifying Risk (continued from page 2)
Moving towards invention and innovation, the practicality of resource management
kicks in, coupled with its requirement to measure in order to progress. You can argue,
therefore, what defines a change of state from creativity -> invention -> innovation is the
organization‟s ability to morph the uncertainty into risk, and consequently be able to
more concretely manage its impact.
So what exactly is „risk management’? Like many terms that get floated around the
business environment, it‟s a phrase that many leaders say they know and understand,
but can‟t necessarily put their finger on its definition. Simply saying „it‟s the managing
of risk‟ doesn‟t really capture its intent... it also moves leaders into a more passive
approach because just like metrics if you can‟t define it, you can‟t action it. And, more
critically, you can‟t affect it.
The concept of risk management relies on the existence of two critical processes once
the risk is identified.
1. The risk is prioritized in context of other risks and requirements in the organization,
particularly in relation to its impact on key performance indicators, and
2. The prioritized risk is acted upon to mitigate or resolve.
Note that there‟s no discussion here about „avoidance‟. Risk is, by its nature, ever-
present. Organizations that successfully navigate their way through innovations aren‟t
doing so because they‟ve avoided risk. Rather, they have acknowledged it, planned for
it, and harnessed it into a series of ongoing activities and philosophies.
Innovation Metrics (continued from page 1)
Arthur D. Little5 suggests adding real-time indicators and learning indicators to the
leading and lagging indicators, in order to keep your innovation priorities on track
and to ensure long term sustainability. Each of the indicators in this model has a
specific purpose.
Lagging indicators help us to understand how well we did in the past.
Real-time indicators shed light about how well we are doing right now.
Leading indicators indicate how successful we are likely to be in the future.
Learning indicators provide information on the agility of a company - the ability
to learn from the past, to adapt, and to improve future long term performance.
As a leading indicator, employee satisfaction has been proven to be a reliable
indicator of future success and profitability. Therefore, the Innovation Culture of an
organization should also a reliable indicator of commitment to innovation and future
innovation success; it‟s certainly a good place to start. Employee surveys often
Continued page 4 – Innovation Metrics
www.factnetwork.org factnetwork@gmail.com
4. FACT Update Page 4
Innovation Metrics (continued from page 3)
contain many questions related to Innovation Culture and many companies already
Strategy is generally driven have data from prior surveys that can serve as a benchmark to help gauge
from the top down in an improvements in the short and long term. The chart below [Exhibit 1: Employee
organization while innovation Survey Questions] provides sample questions that probably already appear on your
is generally a bottom up employee surveys and what they tell you about Innovation Culture at your
process – this makes Innovation organization. Employees look to their leaders for cues on what is important in the
Culture an important leading organization and it sets the tone for how they respond to new opportunities and
indicator of sustainability. challenges.
Exhibit 1: Employee Survey Questions
Relevance
Does your department place a HIGH Do employee responses match what executives believe are the
importance on: important drivers?
Do employees in the same business unit share the same insight
Faster new product development? about priorities?
Faster payback from innovation? If not, then both the message and its communication need to be
Increasing the number of new clarified so teams are working together and departments don‟t
products developed? waste time by acting in opposition to one another. A competitive
Reducing costs/investment related spirit is fine, but you don‟t need open hostility or even sabotage at
to innovation? work.
Ask the most senior person you can find about the organization‟s
I have a clear sense of the
vision and future direction. If it‟s not the same as what you hear
organization's vision & direction for
from the front line, your company‟s ability to respond and to learn is
the future.
at stake. It‟s a tremendous impediment to corporate success but
quite easy to fix.
Since most creativity and innovation starts at the bottom, then the
My views & participation are valued
perception of being valued is important; if responses to this question
by the organization.
are not good, your innovation goals are at risk.
Managing innovation risk is all about leadership. If you think it‟s
risky business, how do you think everyone in your business unit
I have confidence in my company‟s
feels? Employees take their cues from senior and executive
leadership.
leadership when deciding on priorities. They won‟t offer new (risky)
ideas or suggestions if they don‟t trust their leaders.
Sometimes we send out mixed signals. We say that we value
creativity and an innovative spirit but what happens when someone
My organization's culture encourages
1
"An Introduction to Factor Analysis of Information Risk (FAIR)", Risk Management Insight LLC, November 2006 act of risk-taking valued or does
tries something new? Is the mere
me to work in innovative ways.
2
How to Measure Anything: Finding the Value of Intangibles in Business, Doug Hubbard (2007) their breath waiting to see what punishment awaits
everyone suck in
3
Risk, Uncertainty, and Profit, Frank Knight (1921) he who dares to stray from the tried and true? Be aware of how
you define failure and its consequences.
4
FACT 2010- Many Facets of Innovation, Shira Yoskovitch and Leslie Riley (2010)
5
Innovation Metrics Framework and Representative Metrics model
Shira Yoskovitch- Co-founder, The FACT Network | Shira is a global supply chain expert with over sixteen years of experience in developing, implementing
and improving procedures and controls that drive superior operational performance. She has worked globally for such leading brands as Arrow Electronics, Virgin Mobile
and XM Satellite Radio. In 2008 Shira founded Supply Chain (R)Evolution, a boutique consulting firm focused on enabling organizations to successfully implement business
transformation strategies in a “total value chain” approach. | Shira has an MSc in International Accounting and Finance from the London School of Economics and Political
Science, a B.Comm. from McGill University and is a certified Project Management Professional (PMP).
Leslie Riley- Co-founder, The FACT Network | Leslie is a strategic planning & corporate communications professional with over 20 years experience in both
corporate and not-for-profit sectors. An experienced relationship manager, she employs a collaborative approach to obtain commitment on tactical objectives and
implementation from internal and external stakeholders at all levels in an organization. Her corporate experience includes marketing and selling services to Canadian &
multinational companies. | Leslie earned an MBA from University of Toronto’s Rotman School and a B.Sc. in Industrial Management from Purdue University.
www.factnetwork.org factnetwork@gmail.com