managing risks in uncertainty - building your organizational resilience

PowerPoint Presentation

Managing risks in uncertainty

Building your organizational resilience

Esther Oh, MCRL, GAICD, CRMA, CISA, FCPA(Aus)

All Rights Reserved AusAsia Resources

Are you prepared for the VUCA Century?V VolatileU UncertainC ComplexA - Ambiguous

Chart 1: ASX 200 trend from 1 Oct 2014 1 Oct 2015Source: www.asx.com.au


Session OutlineHow to manage risks and build your organizational resilience?

Risk ManagementBusiness ContinuityDisaster Recovery


Source: Resilience Programme, UKAll Rights Reserved AusAsia Resources

Source: Resilience Programme, UKAll Rights Reserved AusAsia Resources

Organisational resilience:

a businesss ability to adapt and evolve as the global market is evolving, to respond to short term shocksbe they natural disasters or significant changes in market dynamicsand to shape itself to respond to long term challenges.Source: http://www.organisationalresilience.gov.au/


Resiliency wraps around the organizations culture, values, attitudes and business practices, especially towards changes and disruptions.

Rod A. Beckstrom,The Spider and the Starfish


8

Why is resilience so important?It determines Your SURVIVAL & SUCCESS


Chances of failuresConsequences from such failuresTime to recovery

Reputation, trust & goodwillDemand from customersSpeed to respond

Benefits:All Rights Reserved AusAsia Resources

When facing tough challenges, you can choose to:

DeclineSurviveBounce backMove ForwardAll Rights Reserved AusAsia Resources

ComponentsLeadership CultureSystemsPeopleWorkplaceSource: Gartner GroupResilienceResilienceAll Rights Reserved AusAsia Resources

Putting the building blocks together


Remember:

- Fit for purpose- Current- Flexible- Responsive- Practical

Resilience FrameworkAll Rights Reserved AusAsia Resources

Reality Checklist:

Is your organization structure, policies and processes still fit for purpose?Does your organization embrace and adapt to changes quickly?Does your workforce exhibit commitment, flexibility and trust?Does your employees constantly seek to create value despite challenges?Are your employees engaged and connected to the vision, mission, values and strategies of your organization?


Source: http://www.resorgs.org.nz

How to know and improve your organizationalResilience?All Rights Reserved AusAsia Resources

Common RoadblocksNo commitment - lack of visible leadershipSilo mentality lack of communicationMyopic views lack of vision, purpose and valuesResistance to change lack of situational awarenessDetachment lack of teamwork/toxic cultureAll Rights Reserved AusAsia Resources


Top global risks at a macro level

Source: World Economic Forum, 2015 Global Risks Report, 10th edition,http://www.weforum.org/reports/global-risks-report-2015 All Rights Reserved AusAsia Resources

Top common risks at the micro level

ReputationalFinancingHuman capitalTechnologyMarketGeopolitical7. Credit risk8. Terrorism9. Foreign exchange 10. Regulatory11. Crime and security12. Natural disasters


DefinitionsRisk is the effect. of uncertainty on objectivesand an effect is a positive or negative deviation from what is expected.

Risk management refers to a coordinated set of activities and methods that is used to direct an organization and to control the many risks that can affect its ability to achieve objectives.It also refers to the architecture that is used to manage risk.

Source: ISO31000:2009 Terms and Definitions


Risk management frameworkISO 31000:2009 Risk Management Principles and Guidelines Principles (elements)Framework modelProcess

Useful reference: https://www.theirm.org/media/886062/ISO3100_doc.pdf


ISO 31000 RM framework


How to manage risks in uncertaintySet objectives within established frameworkAssess and quantify your risksDevise and implement your plans and strategiesUse tools and technology to monitor and reviewKeep consulting and communicating with stakeholders


Implementing ISO 31000 Risk management process, tools and resources

Source: http://esvc001356.wic015u.server-web.com/iso31000/index.html


Example of a Risk Map:Likelihood and impact of the major global risks in 2015Source: World Economic Forum, 2015 Global Risks Report, http://www.weforum.org/reports/global-risks-report-2015

LikelihoodAll Rights Reserved AusAsia Resources

More examples of tools:Risk registersRisk matrix heat mapsTraffic light indicators/trendSimulation modelsDecision tree analysisFault tree analysisRACI matrix DashboardsRisk Barometers/odometers


Examples of risk assessment techniques



Examples of Technology


According to Briers, one reason why companies risk management systems are incomplete is a lack of knowledge or experience of how to bring about this form of integration. Compliance, corporate governance, assurance, risk financing and so on need to converge, but the managers in these siloes are not confident enough to oversee the entire portfolio.

Source: KPMG article titled No paper chase: Transforming risk management at energy and natural resources companieshttp://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/no-paper-chase-v2.pdf


Integrating ORS-Keysfor effective risk management


Key Risk IndicatorsKey Performance IndicatorsProvide early warning of increasing risk exposureProvide high level indication of past performanceProvides forward looking prediction and insight on potential risks BEFORE the risk eventProvides historical performance of the organization AFTER the event occurredDecreases likelihood for management to override key controlsRewarding on KPIs alone increases likelihood of management override and risky behaviourPromotes risk awareness, proper management of risks and healthy risk cultureMeasuring by KPIs alone can lead to unnecessary risk taking and unhealthy risk appetite

Copyrights and All Rights Reserved AusAsia Resources.

Illustrative ExampleObjective: Manage bad debts to reduce financial loss

Strategies: Issue payment reminders 28 days before Due Date, Call customer 5 days after Due Date if not paid, escalate to CFO after 14 days overdue, determine if using external collections agency is worthwhile or notKRI: Accounts receivables turnover/month on month, payment trend for the top 25 customersKPI: Bad debts written off