RISK MANAGEMENTA Journey

From life skill to organisation necessity

Risk management

So what is it according to you

Let’s open some envelopes

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

Think about this as a business

Spider’s Web 1

Spider’s web 2

Spider’s web 3

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

In the end

Risk management means: Continuously

Implementation (Action)

Measurement of results (data gathering)

Interpretation of results (Analysis)

Learning

Planning of change

(reaction)