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Risk management: The journey begins
Distribute questions
When you cross the road what do you do?
When you teach a child to cross the road
what do you say?
Risk management
Distribute questions
When you learn to drive what are you
taught?
When you drive do you do all these things?
Risk management
Sports are among the best analogies for
coming to grips with risk management
So today let’s take a look at soccer
After all the rest of the world is also just
beginning the analysis
Soccer
What do we know about it? 11 men per side (+ substitutes, coach etc:) Defined rules of behaviour Referee & linesmen Most goals wins Complex strategies Simple concept (kick the ball in the other
team’s goal)
Soccer, what do we know
How you play makes a difference A goal = A sale Full team needed to score (usually) Structure affects how you play Structure reflects (enables) strategy Nonetheless players must react to moves
of the other team (Flexibility) Communication is criticalSee next slide
Soccer, what do we know
Training is critical Practice is critical Oversight is important (Coach) Motivation makes a difference Substitutions can make a difference Penalties for doing things wrong
Risk management, what is it then?
Strategy Structure
Form People relationships Internal control Oversight
Governance Crisis prevention Disaster management
Internal Control
Principles applicable in all organisations Application is relative to size Hierarchy of action
Separate management of Cash Separation of incompatible functions Reconciliation processes Oversight activities Regular information Learning and response activities
Governance
What is it? Total responsibility (all eventualities) Answerability (all constituencies) Liability Representation (all who have no direct
say) Decision making (Choice & authority) Preparation Thoughtfulness
Crisis Prevention
Risks are identifiable as: Probable or Improbable More Likely or Less Likely More serious or Less Serious
The objective is to move the risk: For the lowest cost The least action The most reliable result
H1N1
Was this a crisis waiting to happen? Who started washing their hands more
often or carrying cleanser? If half the drivers for trucks bringing food
to supermarkets had caught the flu at the same time what would have happened?
What would you have done?
Disaster Management
Planning - Training – Testing (practising) Stop loss Reaction Responsibility Process Communication What happens now?
Oil spill in gulf
Hindsight gives perfect vision Did BP have enough crisis prevention and
disaster planning in place? Looking back was the possibility of any
spill in the Gulf a tolerable outcome? Think about the ecology of the gulf Think about the economy of those local states
Lawsuit against Obama Administration
Article Is the reaction reasonable? Why invest money in a lawsuit rather
than simply move or adapt to the change Why would a politician support this?
My questions
Just what part of the concept of a disaster do these business and political leaders not understand?
What part of the concept of risk management do these people not understand?
Is it to be jobs now or jobs in the future in an environment where future generations can live?
Is it to be short term profits now with the potential cost of further destruction of the environment, because of another disaster, or move on and come back when technology can better protect the local environment?
In the end
Risk Management is: How you play the game How the game is won How you run the business How the business survives