risk management, strictly speaking – success factors of support

Author: Manu Steens

An organizational structure , a decree or law, (a) (some) measure (s), … must be supported to succeed. To be supported, they must be recognized. (I have no criterion to say in which cases this model is all relevant, for that a study should be done of successful and failed business in hindsight.)

Recognition in itself, however, is based on four success factors:

  • legitimacy,
  • cohesion of the target group due to proximity with civilians / the employees of the organisation,
  • effectiveness with purpose and perseverance,
  • authority.

These four pillars are interdependent. If you remove one leg from the table, the other legs will come along and the table will fall. So you cannot actually view them as independent. For the sake of the further discussion, I do that here anyway.

One thing that seems to be clearly supported is the EU regulation of the GDPR. Something that does not seem to be supported is the Brexit . Let us therefore illustrate these two things with this idea.

Success factors of support applied to the GDPR.

  • Legitimacy: The GDPR legislation was imposed by the EU and applies to all EU countries for implementation
  • Cohesion of the target group through proximity : The EU countries are interdependent because they are related to the EU, but also because they have free movement of people, which implicates that they can enjoy similar legislation despite traveling in the EU. At the same time, the EU is for the most part a coherent whole, as a result of which the countries are coherent in terms of supporting the legislation. Proximity is perhaps best illustrated by the fact that EU citizens have recognized the legislation as something that concerns them very much. It belonged very quickly to the
  • Effectiveness: A true barnum advertising has been conducted for the GDPR, pointing out that this legislation applies to the citizen. This was so effective that the people of the EU and the organizations are aware of their rights. And in the very short term jobs have been created: eg. lawyers specializing in GDPR but also DPOs, courses, …
  • Authority: There is also a place in the legislation itself for punitive measures in case of non-application of the law by the organizations in the EU. Also, auditing capabilities were provided. Partly as a result of the possible effect of the hammer, many organizations applied the law, and there was a great sense of “doing something about it”.

Conclusion: due to the barnum advertising, this legislation was strongly founded on these four success factors, so that it could actually only succeed.

Success factors of support applied to the Brexit .

  • Legitimacy: It came about through an unclear referendum with a majority “behind the comma”. There is total division within and across the political parties and within the people. The British Prime Minister was therefore completely in a gap of uncertainty. None of the proposals from the EU or the British themselves was accepted by a clear majority.
  • Cohesion: The British are divided. The votes for and against are neatly divided and without clear coherence. Many people, together with their politics, attach great importance to their sovereignty. Others opt for the possibilities that a cohesive Europe together with the British could mean. The connection is lost. The division is down to the granular level of the population.
  • Effectiveness: Due to a great deal of uncertainty, all proposals about the Brexit in a reasonable manner were As a result, it is regularly postponed. As a result of that, it is unclear how, if and when the Brexit will be a fact.
  • Authority : The Brexit could turn out differently from day to day in a new referendum. There is also a difference of opinion between, for example, the Scots and the rest of the British. In addition, the British regularly state the historic words of Churchill that “GB is with the EU but not of the EU”.

Conclusion: The Brexit cannot be called a success .

Resilience strictly speaking – Disaster management: Red Ants, Gray Rhino's, Black Swans, and the relation between BCM, Risk Management (RM) and Crisis Management (CM)

Author: Manu Steens

A first question I ask myself: how do these concepts relate to one another?

The following figure of disasters can offer a solution: this is about known knowns.

This table provides a minimalistic sketch as an answer to the question “What can Disasters be like?

In addition, there are Unknown Knowns such as the Gray Rinho’s.

These are things that come to us, that we know they are there, but that we choose not to see, or forget about them.

Gray Rhino’s are not divisible in well-known or poorly known probability and impact. The impact is great. The probability is great. They are always well-known in terms of probability and impact, and thus fit within the quadrant of Disasters, as follows:

Known Unknowns also exist. These are things we know that are there but we do not know exactlywhat they are. Therefore we can not treat them. These can not be classified with a probability or impact. The consequences may or may not be known. The odds equally. If the consequences are large, but not actively known, and the probability is estimated low, but it suddenly occurs, without any expectation of the event, we speak of a Black Swan. The turkey does not know why the farmer always gives him food, but could have suspected it from a suspicious “Why” question. But the turkey does not know the Christmas party, and can not really assess the probability.

Finally there are Unknown Unknowns. We do not know that we do not know them.

Not only do we not know the probability and the impact, we do not know the event, we do not know the reason, we do not know the consequences. So we can not give a foresight example of this. Unless you look back on the past (Hindsight). Was it right of the priest to save Adolf Hitler from drowning, when he had fallen through the ice as a child?

It is the intention of Resilience management to get to know as many of these four groups as possible and to push them back within the possibilities of the disasters square.

This provides a possible way to frame resilient needs. Where is CM, however? The answer is: everywhere. In all 4 groups, CM actively takes action when a threat manifests itself. Because the known knowns are best known, it is always an advantage to elaborate and prepare RM.

Question 2: what are historically the added values of BCM, RM and CM?

The known added values already known for these three disciplines, are:

  • Compliance with legislation and with clients
  • Protection of the reputation of the organization and the strength of the brand
  • For the time being: competitive advantage
  • Operational improvements
  • Capturing the knowledge and experiences
  • Value protection

Question 3: what are the “new” added values ​​of BCM & RM?

The new added values according to ISO 31000 are:

  • Value creation, and therefore also
  • Included opportunities

Value creation

  • By studying the threats in new and existing projects and processes, these threats can be tackled so that they happen with a greater probability of success and with less costs in the aftercare phase.
  • This also increases the quality of the output and the outcomes, enabling a stronger positioning in the market, which attracts potential customers.
  • This immediately improves the reputation, creating a positive spiral that reflects in a better market value of the organization and generates a positive effect on the stock market.
  • By applying RM in its projects, the government organizations will mutatis mutandis create added value on a social level, which also means more income for the governments and thus create a positive value spiral for society.

Included opportunities

  • When an opportunity presents itself, it can be recorded correctly, in the sense that the risks run by the organization are known and can be tackled in order to optimize its probabilities of success.
  • Because RM has an ‘outlook’, threats, but also opportunities, are better and faster seen.
  • Because there is systematic reporting that is integrated into all layers of the organization and the processes and projects of the business, the policy can assess the opportunities better and faster correctly.

These added values also apply to BCM.

Question 4: what is the most important added value of CM?

What I really want to know is what is expected by the co-workers and by society.

People expect more and more from organizations. They desire certainty in uncertain times. This is what the organization has to do:

  • Deal with the threat
  • Meet the urgency
  • Fight the uncertainty

Deal with the threat

Threats are relative and personal. There are also general threats that affect us all. Perhaps the best example is terror. Although terrorist attacks demand far fewer casualties than fine dust year after year, it affects the people personally through the choice of method, place of occurrence and the timing. They choose these well to maximize fear. This fear touches everyone personally, because there is arbitrariness where when and how one can be a victim. The society does not know, and as a result, everyone of the potential victims address their anger against the perpetrators.

Meet the urgency

Urgency is personal. A potential crisis that affects you personally is usually urgent as long as you are still hoping for opportunities to escape from it.

Fight the uncertainty

The organization mainly does this by making a division into operational management, communication management and strategic management.

With the operational management the organization can show that the problem is being addressed. Counter actions take place and there are claims to be observed. With the strategic management the organization can do sensemaking, and give an understanding to the people of where they stand. The organization can also indicate its actions, explaining the reasons for these actions, to include its liabilities. Also to learn lessons, to avoid the problems in the future. With the communication management, the organization can make itself be heard about the situation, that it is working on the problem, and what the expectations are.

Question 5: And now this: What about Red Ants?

Is this yet another invention to describe risks? No, actually not. It is a disaster type that is naturally present: incidents with small to moderate impact and small to high probability, but with the possibility to grow into a Black Swan or a Gray Rhino very quickly.

Black Swans (Nicolaas Taleb): very small probabilities, very big impacts.
Gray Rhino’s (Michèle Wucker): Very big probabilities, very big impacts
Red Ants: Very big probabilities, smaller impacts.

Often Red Ants are the small incidents without major consequences that are a warning of imperfections in the safety of a system or organization. Usually a large number of red ants precede a gray rhino or a black swan. In addition to the fact that red ants are an annoying phenomenon in the field of security they are a reason to extinguish a lot of fires, and they therefore have a serious warning function. This is: find the root cause and tackle it thoroughly, otherwise sooner or later really big accidents happen.

So every “animal species” is therefore to be taken seriously.

Question 6: And what can you do about it?

Well, let’s present this schematically in the disaster management table:

Conclusion:

  • CM Exercises are the most necessary aspect in disaster management.
  • Risk management includes preventive measures and protective measures (by analogy with the bow-tie analysis method).
  • Uncertainties have the characteristic that probabilities are poorly known but the impacts are better known. Usually because causes are poorly known. As a result, there is a particular need for protective measures.
  • Ambiguities have the characteristic that impacts are poorly known but the probabilities are better known. Usually because consequences are poorly known. As a result, there is a particular need for preventive measures.
  • In the event of unkown probabilities and impacts, the focus must be on the lookout, to estimate unexpected matters in a timely manner and to incorporate measures in the policy of the organization on a continuous basis.

Crisis management strictly spoken: mini exercises

Author: Manu Steens

In the context of training, both large and regular small exercises are very important. The main objective of these 30-minute exercises is to learn to work together in a crisis situation. The emphasis is therefore also on getting to know each other in these kinds of circumstances. But also to learn to brainstorm together.

Here are some small exercises:

Does history repeat itself? Or not?

Author: Manu Steens

Before we can answer this question, we need to clarify three things: linear events, complicated events and complex events.

What are linear events? These are generally regarded as events that can be addressed by applying routine tasks. For example, chopping a tree with an ax. There may have to be thought about where the tree can best fall, because it does not always, but in general this is a task that requires no special higher studies. Which does not mean that no responsibility can be hidden behind such a task.

Another thing is complicated things. These are things that, with sufficient effort, such as acquiring sufficient knowledge, are just manageable and predictable, but not for a layman. For example, building an airplane. You have to know enough about aerodynamics, materials, fuels, strengths of materials, standards, fluid dynamics and nowadays even electronics and computer sciences to design an airplane. But we succeed, provided we work together.

Thirdly, there are the complex systems. These are things that we absolutely can not predict. Not so much because we can not know our own actions, but mainly because we can not know all parameters in a complex system, among other things because they are never the same twice. Or because it is too much. Some examples are nature, climate changes, society, …

Then we come to the statement “history repeats itself” or the prediction “history will repeat itself”. The question I ask is whether, in the context of the previous three definitions, these statements can be taken seriously. The question is also whether if similar macro-states (such as a political system, wars, …) occur, this statement actually applies to it. After all, we live in a world that must be characterized as a succession of very many complex systems.

A thought experiment should be able to bring us back to the situation after an event of which repetition is predicted. The question then is whether we can then predict the future with the knowledge of the past. I do not think so, because we not only have no control over all parameters, or even just the relevant ones, we do not even know them all. We simply do not know them.

The prediction “history will repeat itself” is therefore useless. In nature, in the climate, in crisis management. However, this does not detract from the fact that we can have a positive influence on the events. Taking measures has always been meaningful. Also for the climate. Also now. Because we are obliged to future generations, to do our best to give them a liveable world.

Urgency Assessment

Author: Manu Steens

(inspired by “Risk Management – Concepts and Guidance” by Carl L. Pritchard)

Purpose of this type of assessment:

Classically risks are evaluated on a risk matrix, with typical colors red, orange, yellow and green, to decreasing values ​​of the risk. The boxes in that risk matrix that have the value depend on the probability and the impact of the risk event. Within one such box can put more than one risk. These can then all be handled and impacted in the risk register. Yet there are still reasons to take one risk, such as a shortage of personnel, before another. The question then is in which order these will be prioritized. An urgency assessment is required for this.

Construction of a template:

Since an urgency assessment is assigned to an organization, two sets of inputs are required:

– The brainstorm for drawing up the template
– Fit the inputs of the project / process / objectives / strategic risks to the template.

The former need knowledge of the environment of the organization. This is often dependant on the organization. Because of that, a template can often be reasnably uniform within an organization, but this can change over time with the environment variables.

The template is drawn up as a table, with evaluation criteria per row, and score descriptions per column.

The outputs of this assessment is a score one obtains as the sum of the values of the applicable columns, per row. The higher the score, the more urgent the risk must be treated.

Example of a template:

Project name: Risk event:
Urgency Assessment
Evaluation criteria

1

2 3

4

Score
Experience of the project / process / objectives team with this type of risk.
Knowledge of / competence in workarounds and ad hoc solutions for this type. Some experience in dealing with this type of risk among the team members. One or two team members who have experience with this type of risk. No member of the team has experience with this type of risk.
Chance that the risk occurs before the next review. The probability is higher the later in the project and it does not occur for the next review. The probability is just as high later in the project as before the next review. The probability is high prior to the next review. The probability is highest the following two time periods (eg weeks, months).
Customer sensitivity The customer has no expectations regarding this risk and would suggest that we solve it. The customer expects this problem to be resolved immediately without delay. This risk affects multiple modules and quickly occurs in the project. This risk affects multiple modules and the project / process is highly dependent on each of them.
Complexity of / integration in the project / process / objective The risk only affects one module of the project and that module can be handled independently. This risk affects the entire project / process but only occurs at the end of the life cycle of the project / process. This risk affects multiple modules and occurs early in the project / process. This risk affects multiple modules and the project / process is highly dependent on each of them.
Visibility This risk can easily be identified in advance, which allows for a last minute intervention. The risk has a few recognizable features that allow for early identification. This risk is only identifiable when it occurs. This risk is only identified when it has happened.
Total

 

Steps in using this technique:


The first step in building this template is to determine the types of criteria that make one risk more urgent than the other. Criteria that indicate that one or more events are about to arrive.

The second step is to create a scale. For each criterion you determine a numerical scale that indicates the influence on the urgency of the risk, running from a high number for a high urgency to a low number for a low urgency. (In the example there is only a single numerical scale.)

Step three: validate the template. Validation can be performed by testing against a number of well-known cases of high and low urgency. If the template differs from what is known from the history of the cases, the scales must be adjusted.

Step four: evaluate all major risks. These are typically the risks in the red and orange zone of the risk matrix.

Step five: prioritize the risk events. Red risks with a high urgency should be given priority on, for example, orange risks with a lower urgency.

Step six: Arrange the risk register according to the priority and implement the measures.