Risk Management Workshop

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Risk Management Workshop

• John Watt and Paul Popescu

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A case study
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The Challenge.

• Pre 2012 The Athletes Village, to build the
  following
• Circa 350,000m2 residential (3,600 dwellings)
• 3 storey town house, 8 - 12 storey apartments
• 1,800 Students all age Academy
• 20 hectares public realm
• Home to 16,000 athletes during the games

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From this.
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To this by2012..
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Development of 2012 Olympic Park.

• The development of London 2012 Olympic Games in
  East London is a project twice the size of
  Heathrows new Terminal 5 to be delivered in half
  the time.
• The biggest construction site in Europe creating
  thousands of new jobs with a peak site workforce
  of 9,000.
• Transforming previously contaminated land into
  110ha of new open space in a benchmark 21st
  century urban environment and 4,000 new homes.
• More than 30 new bridges, 20km of roads and
  8kmTens of kilometres of new utilities networks
  providing electricity, heat, water, sewerage and
  gas to the legacy communities

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Risk Architecture, Strategy and Protocols
A structured approach to Enterprise Risk
Management (ERM) and the requirements of ISO
31000(IRM, AIRMIC and ALARM)
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AV Governance Model Reporting Structure
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Athletes Village Definition of Risk

• A risk is an uncertain event or set of
  circumstances that, should it or they occur would
  have an effect on the achievement of one or more
  of the projects objectives
• Either positively (an opportunity)
• Or a negatively (a threat)
• Things that will or have happened are not risks,
  they are problems or issues. They are included
  in the existing statements of work and not in the
  risk register. 
•  
• At any time during a venture we take stock of our
  situation. We normally look at progress and the
  targets that we face in the future. However,
  this does not give us a complete picture of our
  future.

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Risk management framework
A structured approach to Enterprise Risk
Management (ERM) and the requirements of ISO
31000(IRM, AIRMIC and ALARM)
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Risk management process - Theory
A structured approach to Enterprise Risk
Management (ERM) and the requirements of ISO
31000 (IRM, AIRMIC and ALARM)
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The risk management process at Athletes Village

It is a process of constant discovery, hence
... this process is iterative!
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Risk Management Plan
Planning The first stage! This Risk
Management Plan is the first stage in the process
and is the guideline document for running the
process throughout the project lifecycle. It
contains, or references, everything that a
practitioner needs to know to effectively and
efficiently play a part in managing
risk. Throughout this Plan Threats and
Opportunities are considered collectively under
the title risk Each stage in the process will
address its purpose, methodology, and outputs. In
order to make the identification and management
of risk more effective, the Predict! Risk
Controller 4 risk management database together
with Predict! Risk Analyser software has been
mandated on the Athletes Village programme.
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Identification
Open your mind! Risks are all in your
imagination and as such sometimes difficult to
define. In order to identify the risks to a
project, a combination of techniques including
workshops, structured interviews and
questionnaires will be used. Team workshops are
very effective in risk identification but need to
be attended by the key personnel on the project.
The workshop will draw upon the Project Teams
expertise and experience to identify and assess
potential risks. Generic Risks As an aid to this,
the first workshops were conducted to identify
the generic risks to various levels of the
project. The generic risk registers list
scenarios that could be present on particular
project areas and are intended as an aide memoire
for all project personnel. When identifying
specific project risk, the generic risks can be
used as a basis for the specific description of a
risk.
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Generic Risks
The relationship between Generic and specific
risk can be illustrated with reference to the
project framework, or hierarchy used as the
structure for the risk database.
There are three generic risk levels Senior Risks
Business risks held and owned at upper
management level Site Wide Risks Infrastructure
and overarching risk held at Site level Area
Risks Project risks held at Area level

Senior Risks held at this level or higher
Generic Site Wide Risks held at this level

Generic Site Wide Risks developed into Specific
Area Risks held at Area level
Generic Area Risks held at this level
Generic Area Risks developed into Specific Plot
Risks held at plot level
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Risk Ownership

• Risks without owners will never be managed!
• Owners are people, NOT departments.
• Risk Owners are people have the responsibility
  for managing the risks
• Risk Owners need to have
• Understanding
• Responsibility Buy-in
• Influence and control
• Resources
• Interest in the risk
• They need to
• Be aware of the full consequences.
• Drive the actionees

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Pre-mitigation Assessment
Think it through! The first assessment is the
Pre-mitigation assessment. It is made on the
basis of the existing situation or controls only.
The pre-mitigation value of a risk used to
priorities both the risk and its subsequent
mitigation strategy. The pre- mitigation
assessment of risk will be qualitative, i.e. will
use a judgemental assessment of both Probability
and Impact.
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Probability Estimation
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Impact Estimation
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Scoring System
The scoring system in Predict! Risk Controller
takes into account the level from which the risk
is viewed. I.e. a risk that appears very high in
a small project will not be similarly rated at,
for example, the corporate level. The scoring
system adapts the magnitude of the risk to the
level from which it is viewed. The scoring system
is summarised below
The system shows the magnitude of the risk both
numerically and by traffic light colours that
are used to formulate reports.
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Prioritisation
In prioritising risks it is important not just to
consider further only the risks of high
magnitude. There are other significant
categories of risk. These are for risks that
are Poorly understood Reputational Uncontrollable
Growing in magnitude Of a management nature, not
directly connected with your day to day project
or job
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Mitigation Strategy
Plan it and do it! Mitigation strategies apply to
both threats and opportunities. The rules for
handling them are similar. Risk Management is
about taking cost-effective action To minimise
the probability and/or impact of threats to an
objective To maximise the probability and/or
impact of opportunities on an objective
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Mitigation actions
If you cant think of an adequate mitigation for
a risk, is it really more than one risk? Try
breaking it down into more than one risk and
reiterating the process
... this process is iterative!
If you still cant control or affect it should
you own it? If the answer is No get
help! Escalate it up to the Risk Leader so that
it can be allocated to someone who can control it.
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Fallback Planning
If you cant terminate or eliminate a risk, dont
forget Murphys Law! In spite of all the
mitigation the risk could still happen. There
fore it is important to plan Fallback strategy
and consider when to engage them The fallback
plans. These are plans that will be put into
effect if the risk happens. These should address
not just what the project has to do but also what
the business or organisation needs to do. The
trigger points. These are the points in the
lifecycle of the risk that preparatory action
needs implementing. The fallback plans may have
a lead-time to implement. This should be
addressed by establishing trigger points defined
by suitable characteristics or precursors of the
risk. It is not necessary to formulate fallback
plans for every risk. Risk Leaders will decide
which plans need advance consideration.
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Monitoring Reporting

• Drive the Process!
• The imaginary nature of risk means that it is not
  natural to give it the appropriate attention
  alongside all the other real happenings in a
  venture.
• If we are to avoid continuous fire fighting it
  is essential to have a planned and continuous
  process to ensure that
• Existing risks are reviewed
• New risks are identified
• Risks are communicated
• Dead risks are closed
• Actions are carried out
• Treatments are effective
• Provisions are current

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Stakeholder Involvement
Civil society
Actors
Affected stakeholders
Affected stakeholders
External Scientists/ Researchers
External Scientists/ Researchers
External Scientists/ Researchers
Regulatory bodies/industry experts
Regulatory bodies/industry experts
Regulatory bodies/industry experts
Regulatory bodies/industry experts
Maximise the scientific knowledge of the risk and
mitigation options
Involve all affected stakeholders to collectively
decide best way forward
Societal debate about the risk and its
underlying implications
Use existing routines to assess risks and
possible reduction measures
Type of participation
Complexity
Uncertainty
Ambiguity
Simple
Dominant risk characteristic
As the dominant characteristic changes, so
also will the type of stakeholder involvement
need to change
After Bunting (2007). An introduction to the IRGC
Risk Governance Framework
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Risk Perception Map What we think level of
risk is
Risk Map What actually the risk (stakeholder
engagement)
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• The Olympic Delivery Authority (ODA) and the UK
  Government recognizes that scientific analysis
  and professional judgement for traditional
  decision making strategies are insufficient for
  this unique development.
• People with local knowledge and experience within
  the delivery teams but also from wider
  communities ( if available) in decision making
  process has been acknowledged by ODA as a
  potential and partial practical solution to
  challenging social and political problems.
• This is done via public consultations with all
  interested stakeholders directly or indirectly
  related to this development by Government and
  ODA.
• Mass media has also a very important role to play
  and keeping constant contact with public and
  highest priority for ODA and Government for
  informing all stakeholders.

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Area relationship holders
ODA
Client (intrextr) Clients client
Government
CEO / DIRECTORS
Business unit heads
Construction directors
Neighbours
Government agency/NGOs
Transport, Infrastructure Utilities
HR/ LEGAL / MARKETING /CEO
Operational directors
Athletes Village Stakeholder Risk Communication
Media Sales and Marketing
Planning consent Design
Olympic Related
Strategic planners
Ceo / directors
Environment (Sustainability)
Emergency services Security
Environmental team
SECURITY TEAM
Interest groups Stakeholders in Delivery
Employment Training (Sustainability)
Project Managers
HR / DIRECTORS
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Client (internal external) clients client
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Neighbours
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Transport, Infrastructure Utilities
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Interest groups Stakeholders in Delivery
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Government NGOs
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Olympic related
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Media and Marketing Sales
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Environment (Sustainability)
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Planning consent design
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Emergency services security
B Manage Closely
A Keep satisfied
POWER
C Monitor
D Keep informed
INTEREST
Q1 Where are they on the matrix? Q2 What level
of relationship we require? 1 to 10 (1 poor - 10
excellent)
POWER .have power over the project INTEREST
.interested in the project
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Athletes Village Interfaces Development and
Delivery of the Project
Internal - External Stakeholders Information
and Participation
Interface
Management planning, finance, procurement and
commercial risks
Construction of Infrastructure, planning and
execution of works
Development Delivery
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BLL- ODA Government- N.G.O communication

• Regular Meetings -Some of questions asked
• What are the biggest threats, opportunities and
  issues?
• (to include social, commercial ,schedule,
  budget, staff).
• Opportunities must be well defined and do
  something
• with them ( be aware of risks attached to all
  those
• new opportunities) i.e. Site concrete batching
  plant,
• we secured price for concrete supply for all
  plots but
• We have created additional environmental issues
  such
• as dust, noise, logistical issues in the area.
• Early warning notice issues. What is currently
  going
• wrong on the project now or in the future?

BLL ODA Government
N.G.O
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Managing risk by exception bad stuff or
barriers in the way that stop us achieving
desired outcome

• Bad stuff risks and threats are prioritised in
  order of potential occurrence.
• Finance
• Reputation
• Planning
• Environmental / Health and Safety
• Social
• Some questions asked
• What are the things are going to stop us ?
• When it happens ?
• How big is the risk ?
• How is going to affect us ?
• What can we do to prevent it? ( early warning
  notice ?)

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IRGCS RISK GOVERNANCE FRAMEWORK
Risk assessment PLUS Concern assessment
Getting a broad picture of the risk
Understanding
Deciding
Pre-Assessment
Appraisal
Management
Communication
Is the risk tolerable, acceptable or unacceptable?
Characterisation and Evaluation
Categorising the knowledge about the risk
Is the risk simple, complex, uncertain or
ambiguous?
Bunting (2007). An introduction to the IRGC Risk
Governance Framework