Risk Management Workshop John Watt and Paul Popescu

Risk Management Workshop

John Watt and Paul Popescu

A case study

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

From this….

To this by:2012..

http://emeaportal.lendlease.com/Athletes_Village/CGI/Aerial%20CGI_120707_3k%20(2).jpg

• The development of London 2012 Olympic Games in East London is a project twice the size of Heathrow’s 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

Development of 2012 Olympic Park.

Risk Architecture, Strategy and Protocols

A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO 31000(IRM, AIRMIC and ALARM)

AV Governance Model Reporting Structure

Verified information for LL R&C Functional Reports e.g.:• Risk• H&S• Sustainability• Financial/Commercial• ICT• HR/Recruitment• Comms

Project RiskRegister

ProjectProgramme

Project H&S /Sustainability Report

Project Com/FinReport

Project Support Functions Report

(e.g. QA, Resources, etc)

Internal PCG (OPERATIONS+CONTRACT)

Project Report

Program Report

PCG Report

PCG Report (Verified)

Village OPSBoard

(Fortnightly)

Village Program

Board(Fortnightly)

Program Interfaces

Update

Program IssuesUpdate

Program RiskRegister

LL R&CCorporate

BLLCorporate

Program Support Functions Report(e.g. Community, M&S, Comms etc)

Project ReviewProject ReviewProject ReviewProject Reviews

Program Board (OPERATIONS)

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Village PCG

Verified information for BLL Functional Reports e.g.:• Risk• H&S ( Webcare)• Sustainability• Financial/Commercial• ICT• HR/Recruitment• Comms

Contract Report (Funding, Legal, etc)

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ProgramConsolidation

Verified information for LL R&C Functional Reports e.g.:• Risk• H&S• Sustainability• Financial/Commercial• ICT• HR/Recruitment• Comms

Project RiskRegister

ProjectProgramme

Project H&S /Sustainability Report

Project Com/FinReport

Project Support Functions Report

(e.g. QA, Resources, etc)

Internal PCG (OPERATIONS+CONTRACT)

Project Report

Program Report

PCG Report

PCG Report (Verified)

Village OPSBoard

(Fortnightly)

Village Program

Board(Fortnightly)

Program Interfaces

Update

Program IssuesUpdate

Program RiskRegister

LL R&CCorporate

BLLCorporate

Program Support Functions Report(e.g. Community, M&S, Comms etc)

Project ReviewProject ReviewProject ReviewProject ReviewsProject ReviewProject ReviewProject ReviewProject Reviews

Program Board (OPERATIONS)

On

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onth

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1/4

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Village PCG

Verified information for BLL Functional Reports e.g.:• Risk• H&S ( Webcare)• Sustainability• Financial/Commercial• ICT• HR/Recruitment• Comms

Contract Report (Funding, Legal, etc)

Pro

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ProgramConsolidation

Athlete’s 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 project’s 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.

Threats

OpportunitiesOpportunities

Risk management framework

A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO 31000(IRM, AIRMIC and ALARM)

Risk management process - Theory

A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO 31000 (IRM, AIRMIC and ALARM)

The risk management process at Athletes Village

Actions

Action Owners

Identification

Assess(Pre-mitigation)

Strategy(Mitigation)

Re-assess(Post-mitigation)

Fallback Plans

Trigger

RiskOwners

Monitor

ActionsActions

Action OwnersAction Owners

IdentificationIdentification


Strategy(Mitigation)Strategy(Mitigation)



Fallback PlansFallback Plans

TriggerTrigger

RiskOwners

RiskOwners

MonitorMonitor

It is a process of constant discovery, hence…

Risk Management Plan

Identification




Monitorand Report

Identification




Monitorand Report







Monitorand Report

Monitorand Report

Planning(Objectives/Context)

Planning(Objectives/Context)

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 riskEach 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.

Identification

Identification




Monitorand Report

Identification




Monitorand Report







Monitorand Report

Monitorand Report


– 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 Team’s expertise and experience to identify and assess potential risks.Generic RisksAs 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.

Generic Site Wide Risks held at this level

Generic Area Risks developed into Specific Plot Risks held at plot level

Generic Area Risks held at this level

Generic Site Wide Risks developed into Specific Area Risks held at Area level

Senior Risks held at this level or higher

There are three generic risk levels:Senior Risks – Business risks held and owned at upper management levelSite Wide Risks – Infrastructure and overarching risk held at Site levelArea Risks – Project risks held at Area level

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.

Generic Risks

Risk Ownership

Identification




Monitorand Report

RiskOwners

RiskOwners

RiskOwners

IdentificationIdentificationIdentification




Monitorand Report

Identification




Monitorand Report







Monitorand Report

Monitorand Report

RiskOwners

RiskOwners

RiskOwners


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

Pre-mitigation Assessment

Identification




Monitorand Report



Identification




Monitorand Report

Identification




Monitorand Report







Monitorand Report

Monitorand Report



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.

Probability Estimation

Very High Expected to occur >= 50%

High Probably will occur < 50%

Medium Could occur <25 %

Low Not expected to occur < 10%

Very Low Occurs very rarely <5 %

Pro

bab

ility

Impact Estimation

Impact Very Low Low Medium High Very HighInfrastructure

(Project)< £ 500 K< 4 weeks

< £ 750 K< 5 weeks

< £ 1.5 M< 6 weeks

< £ 2 M< 8 weeks

>= £ 2 M>= 8 weeks

Infrastructure (Top)

< £ 1.5 M< 3 weeks

< £ 2 M< 6 weeks

< £ 4 M< 8 weeks

< £ 6 M< 10 weeks

>= £ 6 M>= 10 weeks

Plots < £ 100 K< 2 weeks

< £ 250K< 3 weeks

< £ 500 K< 4 weeks

< £650 K< 5 weeks

>= £ 650 K>=5 weeks

East & West < £ 500 K< 4 weeks

< £ 750 K< 5 weeks

< £ 0.85 M< 6 weeks

< £1 M< 7 weeks

>= £ 1 M>= 7 weeks

Vertical Development

< £ 1.0 M< 6 weeks

< £ 1.5 M< 7 weeks

< £ 2 M< 8 weeks

< £ 2.5 M< 9 weeks

>= £2.5 M>= 9 weeks

PCG & Programme

< £ 1 M< 7 weeks

< £ 2.5 M< 9 weeks

< £ 3 M< 10 weeks

< £4 M<12 weeks

>= £ 5 M>= 12 weeks

Functional < £ 100 K< 2 weeks

< £ 250K< 4 weeks

< £ 500 K< 5 weeks

< £ 650 K< 6 weeks

>= £650 K>= 6 weeks

Scoring SystemThe 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:

Very High >= 50% 8 17 18 20 25High < 50% 7 10 13 19 24

Medium <25 % 3 9 12 16 23Low < 10% 2 5 11 15 22

Very Low <5 % 1 4 6 14 21Impact Very Low Low Medium High Very High

Pro

ba

bil

ity

The system shows the magnitude of the risk both numerically and by ‘traffic light’ colours that are used to formulate reports.

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 understoodReputationalUncontrollableGrowing in magnitudeOf a management nature, not directly connected with your day to day project or job

Mitigation Strategy

Identification




Monitorand Report

Actions

Action Owners


RiskOwners

RiskOwners

RiskOwners

Identification




Monitorand Report

Identification




Monitorand Report







Monitorand Report

Monitorand Report

Actions

Action Owners

ActionsActions

Action OwnersAction Owners


RiskOwners

RiskOwners

RiskOwners

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 objectiveTo maximise the probability and/or impact of opportunities on an objective

Mitigation actions

Identification




Monitorand Report

Identification




Monitorand Report







Monitorand Report

Monitorand Report


If you can’t 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

If you still can’t 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.

Fallback Planning

Identification




Monitorand Report

Fallback Plans

Trigger

Identification




Monitorand Report

Identification




Monitorand Report







Monitorand Report

Monitorand Report

Fallback PlansFallback Plans

TriggerTrigger

If you can’t terminate or eliminate a risk, don’t forget Murphy’s 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 themThe 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.

Monitoring & Reporting

Identification




Monitorand ReportMonitor

and ReportMonitor

and Report

Identification




Monitorand Report

Identification




Monitorand Report







Monitorand Report

Monitorand ReportMonitor

and ReportMonitor

and Report

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

Complexity

Maximise the scientific knowledge of the risk and mitigation options

Uncertainty

Involve all affected stakeholders to collectively decide best way forward

Ambiguity

Societal debate about the risk and its underlying implications

Simple

Use existing routines to assess risks and possible reduction measures

Dominant risk characteristic

Type of participation

Actors

Stakeholder Involvement

As the dominant characteristic changes, so alsowill the type of stakeholder involvement need to change

Regulatory bodies/industry experts

External Scientists/ Researchers

Affected stakeholders

Civil society






Affected stakeholders

After Bunting (2007). An introduction to the IRGC Risk Governance Framework

Risk Map – What actually the risk (stakeholder engagement)

Risk Perception Map – What we think level of risk is

VH 5 5 10 15 20 25

H 4 4 8 12 16 20

M 3 3 6 9 12 15

L 2 2 4 6 8 10

VL 1 1 2 3 4 5

1 2 3 4 5VL L M H VH

Impact

Prob

abili

ty

18

33

29

2820

5

11

66

34

19

55

17

52

30

32

1 10

12

22

13

25 6123

21

62

64

70

45

58

5715

65 69

43

49

53

5960

2

50

31

7251

42

4

3

54

6867

56

48

26

44

7

14

6

16

46

3627

35

37

38

63

47

24

71

• 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.

WFS/EP

Athletes Village

Stakeholder Risk Communication

Client (intr&extr) & Client’s client

Neighbours

Transport,Infrastructure & Utilities

Planning consent& Design

Environment (Sustainability)

Interest groups &Stakeholders in Delivery

Employment &Training (Sustainability)

Emergency services& Security

OlympicRelated

Media &Sales and Marketing

Government agency/NGOs

Government

ODA

LOCOG

WWF

LL R&C

First East

ODA

LLCDLR

ODALB of Newham & Waltham Forest

GLA

LB of Newham, Hackney, Waltham Forest, Tower Hamlets

GLA

Environment AgencyLDA

Thames Gateway London Agency

East Potential

BeOnSite

JCP

Unions

LOCOG

National Press

Met Police (Secure by design)

Building control

MP & LD of Newham

Subcontractors

Trade contractors

Consultants & designers

CTRL

Excel centre City airport

Resident Associations

ODA

Ambulance Service Fire Brigade

MI5 & MI6

Armed Forces

ODA

HSE

Job shops

DfES

Local Resident & Community Groups

Westfield

Metropolitan Police

DCMS

BLL

LCR

NHBC (Warranty)Design contractors

BRE(CodeforSustHomes)

PDTDRP ERPSCAG

ODANewham(Workplace)

East Thames

ODA

Industry Press

First Base

East ThamesLocal Press

LCR

Local BoroughsInternational Press

Sales Agent

LLCLocal Boroughs

Local Interest Groups

Greenpeace

BTP

Emergency Planners

Home Office

HR/ LEGAL /MARKETING /CEO

Ceo / directors

Strategic planners

Business unit heads

SECURITY TEAM

HR / DIRECTORS

Environmental team

Project Managers

Construction directorsCEO / DIRECTORS

Operational directors

ODA/CLMCTRL/Network Rail

Westfield WFS/Skanska

Minister for Olympics

DfTDCLG/TGDU

HM Treasury

DoHDfES

DEFRA

FCOHome Office

ParliamentNo.10

UK Sport

Minister for Housing

GofL

Housing Corporation

LGO

LTGDCLVRPA

LR

ELBA

London FirstGWTL

Local Boroughs

First Thames

DCMS

DCFSSRP

ODAIOC

LOCOGOlympic Board

BOA

Minister for Olympics

UK Sport

TfL

URN/CTRL Network Rail

DLR

LuL

Architectural Foundation

Ambulance Service

Highways Agency

Westfield SL/ODA

ELYOFulcrum (Gas)

EDF

Thames Water

GLA

ODA

POWER: ….have power over the projectINTEREST: …….interested in the project

Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent)

B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

ODA

Client (internal & external) & client’s client

LLCLL R&C

BLL

LCRLOCOGGLA



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

Neighbours

Westfield/Skanska

DLR

CTRL/Network Rail

ODA/CLM

Excel

5 Boroughs

City Airport



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

Transport, Infrastructure & Utilities

Westfield/ODA

DLR

URN/CTRLNewham, Highways

Ambulance Service

Network RailThames Water

TfLEDFELYOFulcrum(Gas)

LuL

Architectural Foundation



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

Interest groups & Stakeholders in Delivery

ODA

CLM

HSE

Trade contractors

Local Resident & Community

GroupsCTRL

East Potential Thames Gateway

LDA

Westfield



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

Government & NGOs

First Thames

Various NGOs

Local Boroughs Housing

Corporation

DCMS

DCFSMinister for OlympicsMinister for

Housing

HM Treasury

Various Gov agencies



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

Olympic related

ODA

IOC

LOCOG

UK Sport

Minister for Olympics Olympic

Board

BOA



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

Media and Marketing & Sales

ODA

First base

Local Boroughs

LOCOG

Industry Press

Local PressSales Agent

East Thames

LCR

International Press



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

Environment (Sustainability)

ODA

LLC

WWF

GLA

Local Interest Groups

Environment Agency

Local Boroughs

Greenpeace

Resident Associations



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

ODA

Planning consent & design

PDTDRP

ERP

SCAGNewham & WF

First East

GLABRE Building

ControlNHBC

Met Police Design Contractors

Consultants & Designers



B: Manage Closely

C: Monitor

A: Keep satisfied

D: Keep informed

POW

ER

INTEREST

ODA

Emergency services & security

Home Office

Fire Brigade

British Transport

Police

MI5 & MI6 (CPNI)

Metropolitan Police

Ambulance ServicesEmergency Planners

DCMS

Armed Forces

Security & Logistics / Health and Safety

Environmental and Sustainability

Risk Management- Communication

Vertical Development and construction activities, planning and execution

Construction of Infrastructure, planning and execution of works

Athletes Village Interfaces Development and Delivery of the Project

Interface

Internal - External

Stakeholders

Information and Participation

Management planning, finance, procurement and commercial risks

Development & Delivery

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

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 ?)

IRGC’S RISK GOVERNANCE FRAMEWORK

Pre-Assessment

Characterisationand Evaluation

AppraisalManagement Communication

Categorising the

knowledgeabout the

risk

UnderstandingDecidingGetting a broad picture

of the risk

Is the risk tolerable, acceptable or unacceptable?

Risk assessment

PLUS Concern

assessment

Is the risk simple, complex, uncertain

or ambiguous?Bunting (2007). An introduction to the IRGC Risk Governance Framework

Documents

Risk Management Workshop John Watt and Paul Popescu