Risk Doctor: A decade of progress but risk managers can do better

The Risk Doctor first reviewed the improvements which he listed as the following: Scope. Risk management used to focus only on technical threats to time and cost in major projects. Now we use the risk process to identify opportunities alongside threats. We assess impact against other project objectives as well as schedule and budget. We use a Risk Breakdown Structure (RBS) to consider multiple sources of risk, not just technical risks. Risk management is applied across the business, not just on projects. We are also starting to consider a wide range of uncertainties that might affect outcomes, not just uncertain events. Integration. This has improved in two ways. We used to keep risk management separate from overall management of the project or the business, but now risk-based decision-making is increasingly common. We've also learned how to manage risk at various levels in the organisation, developing a truly enterprise-wide approach to risk management. Software. The first Risk Doctor risk register was produced using dBase III, and we did Monte Carlo simulation using paper-tape to control a program running on a water-cooled mainframe! Today's risk tools are cheap, fast and reliable, with powerful functionality and great user interfaces. hideThese are all significant steps forward and Mr Hillson's conclusions certainly concur with the findings of Commercial Risk Europe's own Risk Frontiers surveys carried out since our launch in February of 2010. Unfortunately however, as Mr Hillson pointed out, some things have not changed much from the early days. He said that these 'unwelcome similarities' mostly relate to the culture that surrounds risk management in today's project and business environment. Mr Hillson said that two aspects, in particular, are common: Box-ticking. It is still common to find project teams and management boards who just go through the motions, 'doing risk management' instead of actually managing risk. They follow the risk procedure because it is required by the quality system or by a client contract, but they show no commitment to action and no understanding that managing risk is supposed to add value to the project or support better decision-making in the business. Instead risk management is seen as additional cost, an optional extra, and a necessary evil to be endured and got through as quickly as possible. Experts only. Senior management still tends to view risk management as a technical function or a specialist discipline for engineers and technicians, safety specialists, or people interested in statistics and the like. They don't see how managing risk links to creating value for the business or the project. As a result risk management is treated as something that is performed by risk experts, and it is not viewed as relevant to the overall management of the project or business. In conclusion The Risk Doctor said that 'considerable' progress has certainly been made. But he added: "There is still some way to go before risk management is seen to deliver on its full promise as a major contributor to project and business success."

Risk Doctor: A decade of progress but risk managers can do better

Want to read this article?

Read Next

Insured losses from Storm Boris rise to €2.19bn: Perils

Beazley meets renewable energy demand in Iberia with new hire

Health and safety top risk for D&Os in WTW survey

Europe hosts 77% of global corporate insolvencies: Allianz Trade

Lloyd’s premium up 6.5% despite rates levelling off

Insured losses from Storm Boris rise to €2.19bn: Perils

Beazley meets renewable energy demand in Iberia with new hire

Health and safety top risk for D&Os in WTW survey

Europe hosts 77% of global corporate insolvencies: Allianz Trade

Lloyd’s premium up 6.5% despite rates levelling off

Keep yourself informed

Sign up for Commercial Risk’s newsletters

Want to read this article?

Read Next

Insured losses from Storm Boris rise to €2.19bn: Perils

Beazley meets renewable energy demand in Iberia with new hire

Health and safety top risk for D&Os in WTW survey

Europe hosts 77% of global corporate insolvencies: Allianz Trade

Lloyd’s premium up 6.5% despite rates levelling off

Related Articles

Keep yourself informed

Sign up for Commercial Risk’s newsletters