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Risk Management


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Paul Ticher @ 2009 Lasa Circuit Rider Conference
We take risks all the time because we judge that the reward is worth it. But in our professional lives we have to be professional about how we make that judgement – for ourselves and our clients. This session will look at how to do risk management properly without getting hung up on it, as well as presenting practical tools.

Published in: Business, Economy & Finance
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Risk Management

  1. 1. Risk Management Paul Ticher [email_address]
  2. 2. What are we talking about? <ul><li>“ Unwanted and unintentional events” </li></ul><ul><li>Hazard </li></ul><ul><li>Likelihood </li></ul><ul><li>Severity </li></ul>
  3. 3. How people approach risk <ul><li>Life cannot be lived without risk </li></ul><ul><li>Everyone is a risk manager </li></ul><ul><li>We consciously take risks in order to obtain rewards </li></ul>
  4. 4. Risk versus reward RISK
  5. 5. The ‘risk thermostat’ <ul><li>Everyone has a level of risk they are comfortable with </li></ul><ul><li>We compensate for perceived risk </li></ul><ul><li>If we don’t alter people’s propensity to take risks we may redistribute the burden of risk, not reduce it </li></ul><ul><li>Potential safety benefits tend to get consumed as performance benefits </li></ul>
  6. 6. We’re not very good at judging risk <ul><li>We find it hard to judge relative risk </li></ul><ul><li>We are strongly influenced by: </li></ul><ul><ul><li>our beliefs </li></ul></ul><ul><ul><li>our experience </li></ul></ul><ul><ul><li>risks we can easily imagine </li></ul></ul><ul><ul><li>risks that are well-reported </li></ul></ul>
  7. 7. Risk management cannot be exact <ul><li>People will not necessarily behave the way we want them to </li></ul><ul><li>Nature is always unpredictable </li></ul><ul><li>Science (and other changes) bring new risks </li></ul>
  8. 8. The risks we face <ul><li>Human </li></ul><ul><li>Financial </li></ul><ul><li>Operational </li></ul><ul><li>Technical </li></ul><ul><li>Management & governance </li></ul><ul><li>Intangible </li></ul><ul><li>Catastrophic </li></ul>
  9. 9. Options for dealing with risk <ul><li>Avoid </li></ul><ul><li>Reduce the likelihood </li></ul><ul><li>Reduce the severity </li></ul><ul><li>Transfer </li></ul><ul><li>Ignore </li></ul>
  10. 10. Managing risk <ul><li>Allocate responsibility </li></ul><ul><li>Carry out a risk assessment </li></ul><ul><li>Document the findings </li></ul><ul><li>Decide where action is needed </li></ul><ul><li>Communicate with staff and others </li></ul><ul><li>Review regularly </li></ul>
  11. 11. Risk assessment <ul><li>Take expert advice if necessary </li></ul><ul><li>Consult people on the ground </li></ul><ul><li>Don’t just rely on your own past experience </li></ul>
  12. 12. Risk assessment  SEVERITY   LIKELIHOOD   High severity Low likelihood  High severity Medium likelihood  High severity High likelihood  Medium severity Low likelihood  Medium severity Medium likelihood  Medium severity High likelihood  Low severity Low likelihood  Low severity Medium likelihood  Low severity High likelihood