APICS Leadership Institute

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APICSLeadership Institute

• Risk Management and
• Decision Making

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Session Objectives

• Define risk and risk management
• Identify risk scenarios
• Investigate effects of risk
• Determine consequences of actions
• Selecting decision-making models
• Evaluating outcomes

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Definitions of Risk

• 1 possibility of loss or injury  peril
• 2 someone or something that creates or suggests
  a hazard
• 3 a person or thing that is a specified hazard
  to an insurer lta poor risk for insurancegt
• 4 the chance that an investment (as a stock or
  commodity) will lose value

Source www.m-w.com
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Risk Management

• To identify and analyze the factors created in a
  given activity or event and determine the
  benefits and costs derived by providing said
  activity or event.
• Judicious use of means to accomplish an end

• Only those who do nothing make no mistakes.
• Author Unknown

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Identifying Risks

• Plan for risk by establishing long-term goals
• Establish short-term plans that support long-term
  goals
• Define the consequences and rewards of the
  short-term plans.
• Measure for desired outcome

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Group Exercise

• Break into groups of 4 individuals.
• Identify 8 activities that provide opportunity
  for risks.
• Who do these risky activities affect?
• What effects can the outcomes have on your
  chapter? Your customers?

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Risk Affects

• Chapter and Board of Director (BoD) Image
• Chapter Finances
• Chapter Activities
• Chapter Continuity
• If you don't risk anything, you risk even more.
  
• Erica Jong

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Risk Opportunities

• Educational offerings
• PDMs and plant tours
• Publicity
• Recruitment and retention
• Joint ventures

Everything has a benefit and a cost.
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Long-Term Goals

• Provide opportunity
• for implementing change
• to look at the big picture
• to perform risk assessments
• Provide continuity and direction for the BoD
• Are a living, changing plan that can adapt to
  outcomes of current activities
• Utilize tools that we are very familiar with in
  our professional lives

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Short-Term Plans

• Support and help achieve long-term goals
• Identify where we are and how we plan to get to
  the next level
• Trigger activities or events that create risks

• Never mistake activity for achievement.
• John Wooden

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RISK2WN

• All chapter activities provide opportunity for
  risks
• Proper planning and timeliness identify risks
• Responsible board member updates BoD of benefits
  or consequences

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Risk Assessments

• Use the 5 ws who, what, where, when, why
• How does the action affect
• Customer service
• Chapter image
• Chapter finances
• Chapter continuity

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What to Ask?

• Ask yourself, Do the rewards of the action
  offset the risks of the activity? (Y/N)
• Do short-term negative risks create long-term
  positive risks? (Y/N) (What are they?)

If you want to achieve a high goal, you're going
to have to take some chances. Alberto
Salazar
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The Rubber Meets the Road

• Can / should chapter assume the risks and
  consequences? (Y/N)
• Update BoD on plan(s) and projected likelihood of
  pros and cons.

We will either find a way or make
one. Hannibal
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Decision-Making Models

• Rational Model
• Utilizes an economic view of decision-making
• Goals and/or objectives
• Alternatives
• Consequences
• Optimality

Example Commissions to local chapters for
selling registrations to the APICS International
Conference
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Decision-Making Models (continued)

• Political Model
• An individual acts on own needs and perceptions
• Sway the powerful decision-makers
• Bargain with some decision-makers
• Says what may or may not be the truth
• Withholds important information

Example Individual running for local chapter
presidency, District office, or APICS president.
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Decision-Making Models (continued)

• Process Model
• Decision-making based on Standard Operating
  Procedures (SOP)
• Use pre-established guidelines
• Past, present and future events are considered
  part of the process

Example Holding a Fundamentals, CPIM, or CIRM
course using breakeven or least loss alternatives.
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Decision-Making Models (continued)

• Garbage Can Model
• Used when
• Technology is vague or non-existent
• Choices are inconsistent or not clearly defined
• Decision-makers time commitments fluctuate
• Decision-makers efforts fluctuate

Examples Unexpected loss of a board member,
joint sponsorship of a local event, starting up
CSCP
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In Summary

• Activity will always win over inactivity
• Planning is good, but long- and short-term
  planning is even better
• Consider the risks but always be aware of the
  benefits (results).
• Determine the effects (/-) on all involved
• Make a well-informed decision and learn from the
  results

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Acknowledgments

• Presentation Author (2005)
• Daniel W. Braun, CPIM, CIRM, Corporate Materials
  Manager, National Nail Corporation (Grand Rapids,
  MI)
• Team 2005 members
• Michael D. Ford, CFPIM, CQA, CRE, EI, QI
• Chet Frame, CPIM
• Pam Somers, CPIM
• Joni White, CFPIM, CIRM
• Enhancements and updates by David Vandegrift,
  CPIM
• APICS Orange County CA
• July 2008