![• Early resolution of key issues [prior to initiation or part of formal initiation] - you may have a stronger hand at this point
• Initiate Change Management. There may be culture clashes between partner organisations
• Regularity of meetings / risk management formally on the agenda between partners (impartial facilitation helps)
• Facilitating some ground rules between partners including information requirements and level of engagement /
formulating key processes such as risk management
• Share your Risk Management practices/resources. Your standards and resources may be far superior. Include Risk Training
by your Risk Team as part of the Partnership initiation?
• Team building events! (You are a team - behave as a team)
Practical Solutions
Specific Partnerships - Inside looking out
Engagement & Communication](https://image.slidesharecdn.com/masterclasspartnershipriskmanagementcomplete1-161221181335/85/Partnership-Risk-Management-Sample-Slides-from-Masterclass-35-320.jpg)
![Risk
Number
Current
Risk Score
Target Risk
Score
Description
[no.] [matrix
position]
[improved
position]
[short name]
Action/controls
already in place
Adequacy of
action/control to
address risk
Required management
action/control
Responsibility
for action
Critical
success factors
& KPI’s
Review
frequency
Key
dates
[actions/controls
already being done
that relate to this
risk/cluster]
[how effective are the
actions/controls
already in place?]
[new actions/controls required to
manage the risk down to its
target score]
[the person
responsible for this
action plan being
carried out]
[what will success
look like?
How will
performance
indicators have
improved]
[frequency of
reviewing this
action plan]
[Milestones/deadlines]
]
A
B
C
D
E
F
IV III II I
Likelihood
Impact
Owned by: Date:
Example Action Plan
Specific Partnerships - Inside looking out
Risk Management](https://image.slidesharecdn.com/masterclasspartnershipriskmanagementcomplete1-161221181335/85/Partnership-Risk-Management-Sample-Slides-from-Masterclass-39-320.jpg)
![• There needs to be clarity at the outset of any arrangement not only what the key risks are but
who is allocated the key risk.
• There are three options when faced with a risk
• Retain responsibility / ownership of the risk [Our Organisation]
• Share responsibility / ownership of the risk [Shared]
• Pass responsibility / ownership of the risk [Partner]
• Risks are generally transferred through
• Use of wording within any agreement
• Agreement of particular elements within the payment mechanism
• Seeking of particular implements such as bonds
Does sometimes depend on the partner involved and their attitude / your position?
Specific Partnerships - Inside looking out
Risk Allocation](https://image.slidesharecdn.com/masterclasspartnershipriskmanagementcomplete1-161221181335/85/Partnership-Risk-Management-Sample-Slides-from-Masterclass-40-320.jpg)
Uploaded byAlexander Larsen
Partnership Risk Management Sample Slides from Masterclass
The document outlines the agenda and key points for a masterclass on partnership risk management held on April 20, 2011, including various discussion topics such as risk governance, partnership grading, and engaging with partners. It emphasizes the importance of understanding and managing partnerships in corporate settings to reduce risk exposure while maintaining operational efficiency. Key components include defining partnerships, conducting due diligence, risk analysis, and developing strategic exit strategies.
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Partnership Risk Management Sample Slides from Masterclass
- 1.
- 2. 8.30 – 9.00- Brief Introductions / Share experiences / Masterclass Approach 9.00 – 10.00 - Partnership Risk Management Awareness at a Corporate Level Break 10.15 –10.40 Partnership Risk Management Awareness at Specific Partnership level. 10.40 - 12.00 - Case Study Part 1 Prayers 12.30 – 14.00 - Case Study Part 2 14.00 – 14.30 - Wrap up
- 3. 1. During presentationI will be stopping frequently to take questions. 2. Open Discussion is encouraged 3. Interrupting / respect others 4. Confidentially 5. Telephone silence 6. Frequent breaks 7. Report Back over the coming months.
- 4. Team upin pairs Name Company/Position Worst Deal your partner has ever been involved with Best Deal your partner has ever been involved with
- 5. Alexander Larsen President, BaldwinGlobal Risk Services Fellow of Institute of Risk Management
- 6. Partnership Risk Management Agenda •Background • Understanding Existing Partnerships & Creating a framework (At a Corporate Level) – Robust Foundations • Step 1 : Definition • Step 2 : Partnership Grading • Step 3 : Risk Governance • Step 4 : Validation • Specific Partnerships – Outside Looking in – Due Diligence – Qualitative Risk Analysis – Quantative Risk Analysis • Specific Partnerships – Inside Looking Out – Partnership Engagement & Communication – Risk Management – Exit Strategies
- 7. Large number oforganisations have entered into numerous partnerships: • Many organisation (Oil & Gas, Maritime, Banks, etc.) entered into many Partnerships and investments during the ”good years”. – Sometimes too quickly? • Reducing risk exposure whilst increasing economies of scale. – Is it really reducing risk exposures? • Now that times are harder, Partnerships are being increasingly scrutinised and are often found to be not fit for purpose. – Does this have to be the case? Background
- 8. Increased reliance onpartnerships in the future due to : • Global organisations seeking partnerships in order to increase efficiencies, streamline operations and/or enter new regions. • A different business model including new business processes or markets (diversification) will require new expertise. Partnerships are an ideal alternative to outright aqcuisitions. • During financially difficult times, organisations need to team up and leverage each other’s strenghths in order to provide added value and competitive advantage Business Case
- 10. Background Types of Partnerships Typesof Partnerships : • Question : What types of partnerships can you think of? – JV – Supplier/Customer – Outsourcing or co-sourcing – Offshoring – Special Projects – Any others......?
- 11. Step 3 –Risk Governance Step 4 - Validation - Partnership Engagement & Communication - Risk Management - Exit Strategies • Corporate Strategic Partnerships ENTERING PARTNERSHIPS Step 1 - Definition Step 2 - Partnership grading MANAGING PARTNERSHIPS - Partner Due Diligence - Qualitative Risk Analysis - Quantitative Risk Analysis Background Getting it right on two levels – Elements of Partnership Risk Management Robust Foundations
- 12. Step 3 –Risk Governance Step 4 - Validation - Partnership Engagement & Communication - Risk Management - Exit Strategies • Corporate Strategic Partnerships ENTERING PARTNERSHIPS Step 1 - Definition Step 2 - Partnership grading MANAGING PARTNERSHIPS - Partner Due Diligence - Qualitative Risk Analysis - Quantitative Risk Analysis Background Getting it right on two levels – Elements of Partnership Risk Management Robust Foundations
- 13. Need to considerrisk assessing corporately – Enterprise Risk Management Corporate Level Robust Foundations Is there clear guidance & buy in from the top?
- 14. Corporate Level Step 1– Definition
- 15. Audit Commission definitionis: ‘an agreement between two or more independent bodies to work collectively to achieve an objective’ Corporate Level Step 1 – Definition • What are the tolerance levels in terms of : – How important is it to : – achieve expected results – avoid extreme outcomes – determine the distriubution of results. What Key words could be added to make this more relevant to YOUR organisations?
- 16. Corporate Level Step 2– Partnership Grading
- 17. • Slide 17 A B C IIIII I Vulnerability Relativeimportance Relative importance: A Critical to delivery of Organisation Objectives B Significant to delivery of Organisation Objectives C Marginal to delivery of Organisation Objectives Vulnerability: I Has significant vulnerabilities/ not robust/ delivery uncertain II Has some vulnerabilities III Robust and sound/effective delivery 11 22 33 4455 66 7788 99 1010 Corporate Level Step 2 – Partnership Grading
- 18. Potential GradingPotential Grading GREEN Limitedgovernance principles need to be applied Expenditure of up to z million Minimal resource commitment If partnership fails then the fallout is an inconvenience Partnership does not impact in a material way on key priority services or strategic objectives Minimal reputation impact AMBER Moderate and appropriate governance principles need to be applied Expenditure between Y million and x million Moderate resource commitment If partnership fails then the fallout is an short term problems Partnership does impacts in a moderate way on key priority services or strategic objectives Moderate reputation impact (local papers) RED Robust governance principles need to be applied Expenditure greater than x million Considerable resource commitment If partnership fails then the fallout could potentially stretch beyond a couple of weeks and have longer term service implications Partnership does impacts in a serious way on key priority services or strategic objectives Serious reputation impact (national journals) Corporate Level Step 2 – Partnership Grading
- 19. Corporate Level Step 3– Risk Governance
- 20. Risk Governance StandardsRiskGovernance Standards Risk Management How Often? Qualitative or quantitative? Risk Management Dept. involvement required? Reporting ? To who, how often? Partnership level, Departmental level? Resource Management How will we share Resource? Assets, etc Are we agreed on the value of the resources? Corporate Level Step 3 – Risk Governance Exit Strategies How will we communicate failure and success? How will we sell assets? Do we have an alternative in place? Creating Partnership Protocols Based on your Partnership Grading, High Partnerships will follow certain protocols, Medium follow others, etc. The protocols will determine whether the partnership requires : Other requirements? Partnership Board People Management Due Diligence Stakeholder/Public Engagement Performance Management
- 21. Corporate Level Step 4– Validation
- 22. Corporate Level Step 4– Validation Partnerships X Y Z XY YZ ZZ Risk Exposure Overall Variance Average Return 1. Create upper and lower limits based on Risk Governance requirements and monitor these for each partnership. 2. Alerts when partnership approaches limit and exceeds. 3. Capture risks from specific partnerships on a Risk Map 4. Build the data into an overall Snapshot
- 23. Need to considerrisk assessing corporately – Enterprise Risk Management Corporate Level Robust Foundations Is there clear guidance & buy in from the top?
- 24.
- 25. Step 3 –Risk Governance Step 4 - Validation - Partnership Engagement & Communication - Risk Management - Exit Strategies • Corporate Strategic Partnerships ENTERING PARTNERSHIPS Step 1 - Definition Step 2 - Partnership grading MANAGING PARTNERSHIPS - Partner Due Diligence - Qualitative Risk Analysis - Quantitative Risk Analysis Background Getting it right on two levels – Elements of Partnership Risk Management Robust Foundations
- 26. Specific Partnerships -Outside Looking in Due Diligence • Ethics & Human Rights Record • Investment Origin • Credit Rating? • Culture? • Whats in it for them? • Their Structure / Business Model • Country of Origin – Legislative requirements / Who’s in charge? • HR Policies and Procedures • H&S Record • Environmental Record/Policy • Risk Management Processes in place •Any Other Areas?
- 27. • Assess probabilityof occurrence and resulting impact of entering into the specific partnership for each risk. HighMediumLow Low Medium High IMPACT PROBABILITY Critical (high priority) Significant (medium priority) Negligible (low priority) 2 1 3 4 Assess probability and impact 1 2 3 4 Individual risks Rank individual risks RISK CRITICALITY ACTION 1 Critical Not accept, initiate actions 4 Critical Not accept, initiate actions 3 Significant Accep and monitor 2 Negligible Accept Risk RankingRisk Matrix Our Organisation Specific Partnerships - Outside Looking in Qualitative Risk Assessment
- 28. • Concept selection –Select between different alternatives – Different costprofiles – Different income potenital • Valuation of real options – Stochastic uncertainty process – NPV assessments on real-options • Setting budgets – base estimate = deterministic value – budget managed by the project manager = p50 – budget managed by the steering group p85 – contingency = p50 ÷ base estimate – reserve = p85 ÷ p50 p(cost) p85 Base estimate p50 cost Contingency Reserve Deterministic value µ p(cost) p85 Base estimate p50 cost Contingency Reserve Deterministic value µ Specific Partnerships - Outside Looking in Quantitative Comparison of Partnerships
- 29. • Return onInvestment • Stochastic Uncertainty Process • Budgets required – Difference from initial calculations •NPV risk exposure •$ •Key risk drivers •$ Specific Partnerships - Outside Looking in Quantitative Analysis of Established Partnerships
- 30. Step 3 –Risk Governance Step 4 - Validation - Partnership Engagement & Communication - Risk Management - Exit Strategies • Corporate Strategic Partnerships ENTERING PARTNERSHIPS Step 1 - Definition Step 2 - Partnership grading MANAGING PARTNERSHIPS - Partner Due Diligence - Qualitative Risk Analysis - Quantitative Risk Analysis Background Getting it right on two levels – Elements of Partnership Risk Management Robust Foundations
- 31. Yourorganisation Partner organisation(s) Knowit Know it “openspace” Do not know it! “hidden area” “blind area”Donotknowit “unknown area” Self disclosureSelf disclosure Shared discovery Shared discovery Feedback/askFeedback/ask Johari’s Window - “a better understanding” Good relationship? Specific Partnerships - Inside looking out Engagement & Communication •A Johari window is a cognitive psychological tool created by Joseph Luft and Harry Ingham in 1955 in the United States, used to help people better understand their interpersonal communication and relationships.
- 32. Johari’s Window -“a better understanding” Good relationship? Yourorganisation Partner organisation(s) Knowit Know it “open space” Do not know it! “hidden area” “blind area” Donotknowit “unknown area” Specific Partnerships - Inside looking out Engagement & Communication •A Johari window is a cognitive psychological tool created by Joseph Luft and Harry Ingham in 1955[ in the United States, used to help people better understand their interpersonal communication and relationships.
- 33. Yourorganisation Partner organisation(s) Knowit Know it “openspace” Do not know it! “hidden area” “blind area”Donotknowit “unknown area” Johari’s Window - “a better understanding” Good relationship? Specific Partnerships - Inside looking out Engagement & Communication •A Johari window is a cognitive psychological tool created by Joseph Luft and Harry Ingham in 1955 in the United States, used to help people better understand their interpersonal communication and relationships.
- 34. The idea behindthis checklist is to ensure that our potential partners apply the same principles of robust risk management as is expected by your organisation. Some key questions to ask have been summarised below : 1. Do they have an up to date business continuity plan (so the main partnership and the key services can continue following a foreseeable event) 2. Does the organisation have simple strategy for how it identifies and manages its business risks. 3. What is the current assessment of the major business risks it faces (is it willing to share this?) 4. Does the organisation have an assessment for the main risks associated either with delivering services in this partnership (and or the partnership itself). 5. What is the plan for briefing / training staff in dealing with the main risks. Due Diligence approach to determine Partner’s Risk Management Capabilities Specific Partnerships - Inside looking out Engagement & Communication
- 35. • Early resolutionof key issues [prior to initiation or part of formal initiation] - you may have a stronger hand at this point • Initiate Change Management. There may be culture clashes between partner organisations • Regularity of meetings / risk management formally on the agenda between partners (impartial facilitation helps) • Facilitating some ground rules between partners including information requirements and level of engagement / formulating key processes such as risk management • Share your Risk Management practices/resources. Your standards and resources may be far superior. Include Risk Training by your Risk Team as part of the Partnership initiation? • Team building events! (You are a team - behave as a team) Practical Solutions Specific Partnerships - Inside looking out Engagement & Communication
- 36. True partnership approachto Risk Management Clear allocation of risks as to how the risks will be managed A clear process for managing and updating the view of risks Greater trust and buy-in Oneviewandgoodcommunicationis paramount Genuine consensus about the main risks (no hidden risks) Specific Partnerships - Inside looking out Engagement & Communication
- 37. It's not rocketscience … Risk Identification Risk Assessment Risk Response Planning RISK IDENTIFICATION RISK ANALYSIS RISK MANAGEMENT MONITORING PRIORITISATION Specific Partnerships - Inside looking out Risk Management
- 38. Qualitative risk assessment •Assess probability of occurrence and resulting impact for each risk against individual Partnership objectives based on defined scales • Rank risks using a probability-impact matrix where the position in the matrix suggest risk management strategy • Agree on how to Monitor risks – Ongoing Meetings etc. HighMediumLow Low Medium High IMPACT PROBABILITY Critical (high priority) Significant (medium priority) Negligible (low priority) 2 1 3 4 Assess probability and impact 1 2 3 4 Individual risk Rank individual risks RISK CRITICALITY ACTION 1 Critical Not accept, initiate actions 4 Critical Not accept, initiate actions 3 Significant Accep and monitor 2 Negligible Accept Risk RankingRisk Matrix Partnership Obectives Specific Partnerships - Inside looking out Risk Management
- 39. Risk Number Current Risk Score Target Risk Score Description [no.][matrix position] [improved position] [short name] Action/controls already in place Adequacy of action/control to address risk Required management action/control Responsibility for action Critical success factors & KPI’s Review frequency Key dates [actions/controls already being done that relate to this risk/cluster] [how effective are the actions/controls already in place?] [new actions/controls required to manage the risk down to its target score] [the person responsible for this action plan being carried out] [what will success look like? How will performance indicators have improved] [frequency of reviewing this action plan] [Milestones/deadlines] ] A B C D E F IV III II I Likelihood Impact Owned by: Date: Example Action Plan Specific Partnerships - Inside looking out Risk Management
- 40. • There needsto be clarity at the outset of any arrangement not only what the key risks are but who is allocated the key risk. • There are three options when faced with a risk • Retain responsibility / ownership of the risk [Our Organisation] • Share responsibility / ownership of the risk [Shared] • Pass responsibility / ownership of the risk [Partner] • Risks are generally transferred through • Use of wording within any agreement • Agreement of particular elements within the payment mechanism • Seeking of particular implements such as bonds Does sometimes depend on the partner involved and their attitude / your position? Specific Partnerships - Inside looking out Risk Allocation
- 41. RISK PARTNER YOUR ORGANISATION OTHERSHARED Political X Resources and finances available X Business case issues X Staffing issues X X Communication X Legal X Legislative and regulatory X Who suffers the pain? Specific Partnerships - Inside looking out Risk Allocation
- 42. Specific Partnerships -Inside looking out Exit Strategy
- 43. You shouldn’t gointo a partnership with the fear or expectation of failure - however you should have thought through the implications. Need for a plan B (exit strategy) Minimal disruption Smooth transition No nasty surprises E X I T Specific Partnerships - Inside looking out Exit Strategy
- 44. Agree Trigger points •Agreed end date? • Agreed Milestones? • Agreed Tolerances? Managing assets • how will assets (whether people, contracts, physical assets, data, intellectual property rights or intangibles) be managed • Identifying assets - how will parties determine assets to be transferred on exit • Valuation - how will parties determine the price to be paid for any assets on exit and the price to be paid for any transitional services • How will the assets be transferred or be made available? • How will profits (even future profits), IP, Patents be shared? Elements of a strategy Specific Partnerships - Inside looking out Exit Strategy
- 45. Communication • How willwe communicate Success or Failure? • Who are the stakeholders and media we are communicating with? • One spokesperson and agreed predefined staff response • Communicate positive messages (previous successes) and plan of action Change / recovery plan • Need to plan in broad terms the specific steps from short term to long term (moving from partnership position to the revised position). (first 24 hours, first week, first month) • Include communications, reputation management and decision making (defining key data or assets that you may well require) Elements of a strategy Specific Partnerships - Inside looking out Exit Strategy
- 46. Robust Foundations Definition PartnershipGrading Exit Strategy Engagement Due Diligence CommunicationRisk Allocation
- 47. • 47 Case Study Question1 What Due Diligence should be undertaken as part of the Investment Opportunity presented to Part Co by the Asian investor? List as many areas that need to be investigated and expand/explain… 10 minutes
- 48. • 48 Case Study Question2 A) Identify the risks to Part Co of entering into this partnership. B) Prioritise the risks and report the top 5 risks. Explain/expand why they are a risk to Part Co. C) What can be done to manage the risk? 15 minutes
- 49.
- 50. • 50 Case Study Question3 A) List Part Co’s Partnerships. B) Prioritise the Partnerships through a grading mechanism. C) What minimum risk governance standards do you want Part Co to implement for its HIGH Priority Partnerships? 25 minutes
- 51. • 51 Case Study Question4 Choose one of the High Priority partnerships to focus on. A)Identify the risks TO the Partnership. B)Prioritise the risks TO the partnership. C)How can the partnership manage the risks? - Who should manage the risks? - Who suffers the consequences? 25 minutes
- 52.
Editor's Notes
- #7 Break of 15 mins
- #10 If I was to ask you how many partnerships your organisation has, most people think they might know. however, like in this picture, it may not be as simple as you first thought. You need to take a closer look blah blah.
- #11 FONTS larger R&D
- #12 Optional. At Microsoft, we believe that processes are important. Systems are critical. But people deliver business results. It’s your people that: Develop customer relationships Drive innovation Build partner connections Improve operations Business is practiced through a never-ending cycle of discovering insights, making decisions, setting direction and goals, taking actions, and collaborating with others. And in this cycle, your people: Make the most of every relationship >> develop relationships Have ideas >> drive innovation Know what customers want >> build connections Know where the waste and inefficiencies are >> improve operations Your people want to succeed. Amplify the impact of the people in an organization and you empower the company. That is the idea behind software for the people-ready business. It is that simple.
- #13 Optional. At Microsoft, we believe that processes are important. Systems are critical. But people deliver business results. It’s your people that: Develop customer relationships Drive innovation Build partner connections Improve operations Business is practiced through a never-ending cycle of discovering insights, making decisions, setting direction and goals, taking actions, and collaborating with others. And in this cycle, your people: Make the most of every relationship >> develop relationships Have ideas >> drive innovation Know what customers want >> build connections Know where the waste and inefficiencies are >> improve operations Your people want to succeed. Amplify the impact of the people in an organization and you empower the company. That is the idea behind software for the people-ready business. It is that simple.
- #18 Step 3 Risk profile - plot the scenarios onto the matrix - the Management Team decides upon its ‘appetite’ to risk - determine priority risks to be addressed
- #26 Optional. At Microsoft, we believe that processes are important. Systems are critical. But people deliver business results. It’s your people that: Develop customer relationships Drive innovation Build partner connections Improve operations Business is practiced through a never-ending cycle of discovering insights, making decisions, setting direction and goals, taking actions, and collaborating with others. And in this cycle, your people: Make the most of every relationship >> develop relationships Have ideas >> drive innovation Know what customers want >> build connections Know where the waste and inefficiencies are >> improve operations Your people want to succeed. Amplify the impact of the people in an organization and you empower the company. That is the idea behind software for the people-ready business. It is that simple.
- #28 DELETE HIGH MEDIUM PRIORITY
- #31 Optional. At Microsoft, we believe that processes are important. Systems are critical. But people deliver business results. It’s your people that: Develop customer relationships Drive innovation Build partner connections Improve operations Business is practiced through a never-ending cycle of discovering insights, making decisions, setting direction and goals, taking actions, and collaborating with others. And in this cycle, your people: Make the most of every relationship >> develop relationships Have ideas >> drive innovation Know what customers want >> build connections Know where the waste and inefficiencies are >> improve operations Your people want to succeed. Amplify the impact of the people in an organization and you empower the company. That is the idea behind software for the people-ready business. It is that simple.