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Robust Risk Management is Essential in ALL Business
Endeavours
“Why a spreadsheet will not cut it…”
Andrew Ferguson, FIE Aust, CPEng, CPL, MBA,
BEngRisk Decisions Pty Ltd4 Oct 2015
Phone: 0408 466 [email protected]
© Risk Decisions, 2015
Introduction Risk and management
Manage risk to “create, maintain and add value” from key projects, ventures, operations, enterprises
Why Spreadsheets WILL NOT do the job required
Features of well designed risk software
What good risk software should do
Examples of good software Representative screen shots only
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© Risk Decisions, 2015
Risk Management Failures? ALL business endeavours AND projects run into cost, schedule and
performance problems (see the examples below – add your own!) robust enterprise risk management helps!
COTS hardware obsolete before system SW delivered ~$3m Understanding of brownfield project risks
misunderstood complexity ~ $25m x n Changed life cycle environment risks
~ $100m… x n Complex IT project abandoned ~$20m
accounts still using DOS system!!! Company insolvencies….x nn WHS events, product failures,… Systems fail to meet expectations...
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© Risk Decisions, 2015
Proactive Risk Manager’s “Left Shift”4
Lifec
ycle
Cos
ts
Apply to all phases of Asset Life Cycle
© Risk Decisions, 2015
Proactive Risk Management Essentials Establish context for “venture” and risk management;
Determine risk appetite, culture and tolerance risk hierarchy and structure to record risks
flexible and adaptable risk management process… applying analysis to risks, actions, processes
risk reporting: risks and actions visible across the enterprise
risk monitoring, consulting and communicating
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© Risk Decisions, 2015
Why spreadsheets will NOT cut it… #1 No version control – There will be no “single point of
truth” as spreadsheets encourage independent working.
No process workflow - Without process or workflow control there is no audit trail of who changed what and when and why
No history inherently retained – no reasons for change kept, qualitative and quantitative data lost.
People Break “good” spreadsheets - invariably…
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© Risk Decisions, 2015
Why spreadsheets will NOT cut it… #2 No deadline tracking – Without tracking of deadlines
for risk assessments; risk actions and mitigation achievements are seldom visible
Limited ability to roll up risks into management view of whole enterprise / venture / projects / divisions
Limited security and access control as once the spreadsheet is open all users will see all risks and actions, even sensitive ones – commercial, financial, staff in confidence etc…(single user at a time…)
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© Risk Decisions, 2015
Why spreadsheets will NOT cut it… #3
Easy to corrupt information or use out of date information
Limited ability to measure risk treatment and effectiveness
No easy link to corporate reporting tools for review by selected levels of enterprise / management
No linking of project schedule and risks to view effect of risks and uncertainty – what is CRUCIAL?
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© Risk Decisions, 2015
Benefits of Good Risk Software #1 Standardisation across organisation / divisions
User Configurable to suit level of user Smaller projects need less functions but same power
Web Based – easy multi user access across time zones, clients, stakeholders
Multiple Simultaneous Access – no overwriting, ability to selectively lock parts of project / enterprise structure
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© Risk Decisions, 2015
Benefits of Good Risk Software #2 Data Security - visibility and access can be controlled
Integrated Schedule / Costs risk assessment Import directly from key Project schedule tools (MS
Project, Primavera…)
Enterprise Risk Management Scalable to manage risk, opportunities and issues
across enterprise functions, projects, operations, divisions, subcontractors – link to key objectives
© Risk Decisions, 2015
Smaller projects gain access to world class tool through concurrent licencing – trains people for large projects – common tool / process use
Executive reporting Wide range of flexible reports - standard, ad hoc, Charts, tables, dashboards, pdf, MS Office outputs… Integration into enterprise reporting tools
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Benefits of Good Risk Software #3
© Risk Decisions, 2015
Speed and efficiency! Excel based systems soak up time on data consolidation,
manipulation, reformatting, quality and error checking (~84% have errors)
A robust and mature Risk Management SW Tool enables this time to be spent on adding value to the risk based decision making process that is essential to good management
Out of the box usability – low cost implementation and maintenance over life cycle
Good Support - Technical / Business and Training
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Benefits of Good Risk Software #4
© Risk Decisions, 2015
The Following slides show some examples of what good risk software can do
We agree that in some cases a spreadsheet can do the same or a similar function
• But not without careful design and ongoing effort• And someone can break or change the settings unknowingly• Only one person can use it at a time• You will have difficulty in saving the history and trends• And so on• View and Enjoy
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Example Graphics from Good Risk Software
© Risk Decisions, 2015
Cumulative Risk Burndown Reporting14
All / Grouped RisksAll / Grouped Risks Single RiskSingle Risk
© Risk Decisions, 2015
Reporting Flexibility – Export to pdf, MS Office…Graphical / Tabular
Geo mapping views
© Risk Decisions, 2015
Filter data in flexible charts / dashboards
~Key ~Key data of data of interestinterest1 x Data 1 x Data
item item removeremovedd
Full ReportFull Report Risks by owner & statusRisks by owner & status2 x Data 2 x Data items items removeremovedd
Create DashboardsCreate Dashboards
© Risk Decisions, 2015
Heat Mapping of Risks / Opportunities17
© Risk Decisions, 2015
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End date: End date: ~Apr 17~Apr 17
MS Project Gantt view – critical path
© Risk Decisions, 2015
19 Good SW Gantt View - Cruciality
End date: End date: ~Jan 2018~Jan 2018@ 90% confidence@ 90% confidence
© Risk Decisions, 2015
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End Date Monte Carlo modelling
© Risk Decisions, 2015
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WBS Cost / Risk Analysis – Monte Carlo
© Risk Decisions, 2015
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Schedule, Risk, & Cost Sensitivity Analyses – tornado charts (or table % format)
© Risk Decisions, 2015
Visual capture of current and planned risk assessment levels 23
Configurable n x n Risk
Matrices / thresholds
Current Current
RiskRisk Residual Residual
RiskRisk
© Risk Decisions, 2015
Risk Structure & “Risks for Attention” promptPlus email alerting of actions required to participants
© Risk Decisions, 2015
Risk Identification, Categorisation screens
Risk linked to
Risk linked to
Key Key
Objectives
ObjectivesKey Risk
Key Risk
ID DataID Data
© Risk Decisions, 2015
Standard Reports Menu
© Risk Decisions, 2015
Example “out of the box reports” - #1
© Risk Decisions, 2015
Example “out of the box reports” - #2
© Risk Decisions, 2015
Additional Features of Good Risk Software Portfolio Risk Analysis / Risk Correlation
Linked parent / child risks and actions / trend analysis
Explorer style WBS structure / filters / clusters
Risk / Action Escalation and Delegation
Linking to Corporate Reporting tools /
Email prompts for overdue actions Import / export to MS Excel - If you really must!
And can produce a tabular risk register view for Excel addicts!
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Geo
Geo
MappingMapping
© Risk Decisions, 2015
Conclusions “…if a company is using a spreadsheet for their risk management; it
suggests that their risk management process is superficial and probably ineffective…”
Source: Senior Manager (with Government and Industry experience)
Sound asset management and project management NEEDS proactive risk management over the full asset life cycle
A spreadsheet will NOT do the job.
Good risk management culture and software WILL!
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© Risk Decisions, 2015
MS Excel
Import schedule or create structure
0% 5% 10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
Lag before Building Regs Fit Windows
All permissions in Place Cast Floor
Mortgage Application Fit Doors
Fit Door Frames Review and Award Contract
Procure Double Glazing Tender Construction Contract
Detailed Design Match & Procure Bricks
Construc t Roof Paint
Plaster Walls and Ceilings 1st Fix Serv ices
2nd Fix Services Build Walls to DPC level
Preliminary Des ign / Cost Estimate Procure Plumbing /Sanitary Ware
Build Walls to Roof Level Mobilise to site
Construc t Foundations Building Regulations
Construct ion Planning Approval Design & approvals
Tornado Chart for AmberGold Project
Predict! Risk Analyser
Predict! Risk Controller Lite.XLS import export
Predict! Risk Controller
Cost and Schedule Risk and Uncertainty AnalysisPredict! Risk Intelligence
ADHOC REPORTING
Predict! Connect
Predict! Software Suite
© Risk Decisions, 2015
Predict! Risk ControllerPredict! Risk AnalyserPredict! Risk IntelligencePredict! ConnectPredict! Risk Controller Lite
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Predict! Software Suite
© Risk Decisions, 2015
QuestionsQuestions
Are there rocks in Are there rocks in clouds?clouds?