implementing an effective risk management strategy based upon knowledge peter scott

Implementing an effective risk management strategy based

upon knowledge

Peter Scott

PETER SCOTT CONSULTING

What is Risk?

“Chance of bad consequences”

The concise Oxford Dictionary

PETER SCOTT CONSULTING

What is Knowledge?

“The sum of what is known”

The concise Oxford Dictionary

PETER SCOTT CONSULTING

Risk

Management

Knowledge

Management

An integrated strategy

PETER SCOTT CONSULTING

Law Firm Risks

Peop

le

Op

eration

alRegulatory

IT

Co

mp

etit

ion

/bu

sin

ess

Eco

no

mic

,p

olit

ical

,fi

scal

Financial

Asset

Reputational

Management

PETER SCOTT CONSULTING

Risk/KM

Risks are inter-related

Failure to manage knowledge

involves widespread risk

KM is an essential part of an

integrated risk management

strategy

PETER SCOTT CONSULTING

Example: Reputational Risk

OperationalPeopleRegulatoryIT Competition & Business MarketsEconomic, Political & FiscalFinancial Assets

Interaction with Knowledge/KM?

PETER SCOTT CONSULTING

Law Firm Risks

Peop

le

Op

eration

alRegulatory

IT

Co

mp

etit

ion

/bu

sin

ess

Eco

no

mic

,p

olit

ical

,fi

scal

Financial

Asset

Reputational

Management

PETER SCOTT CONSULTING

Management Risks

Is your management in control of its knowledge and managing your risk?

PETER SCOTT CONSULTING

Your Risks?

Where does the knowledge relating to your risks reside?

Can you access it?

Can you capture it?

Can you maintain and upgrade it?

PETER SCOTT CONSULTING

Implementing a Risk Strategy

DIAGNOSIS

Identification and assessment

MITIGATION

Control, transfer and avoidance

MONITORING

Tracking and reporting

When a risk crystallises

LIMITATION

Minimising the effect of

crystallised risks

PETER SCOTT CONSULTING

Risk Identification Involves:

Being management drivenBrainstormingFacilitated discussionsQuestionnairesTop down/bottom up

PETER SCOTT CONSULTING

Risk Diagnosis

Assess severity of high-level risks

Identify high level risks

Set criteria for assessing risks

Identify detailed risks

Assess severity of detailed risks

Risk map

Risk summary

PETER SCOTT CONSULTING

Risk Assessment

Incidence - probabilityImpact - severity

PETER SCOTT CONSULTING

Risk Mapping

PETER SCOTT CONSULTING

Risk Mitigation

Designed to:ReduceAvoidAcceptTransfer

PETER SCOTT CONSULTING

Risk mitigationRisk map

Risk summary

Consider impact/probability

correlation

Required controls

summary

Insurance requirements

summary

Contingency plan

requirements

Residual risk

summary

Consider available mitigation techniques

PETER SCOTT CONSULTING

Monitoring involves

Tracking and reportingComparing actual outturns to preset indicatorsConfirming effectiveness of risk responsesReporting compliance and exceptions

PETER SCOTT CONSULTING

Risk monitoringRequired controls

summaryContingency

plan requirements

Insurance requirements

summary

Set risk indicators and methods to monitor them

Annual Risk Management

Report

PETER SCOTT CONSULTING

Limitation involves

Risk crystalisation scenarios Contingency plansLimitation proceduresPost event assessment

PETER SCOTT CONSULTING

Use of IT Use an integrated risk management system to quantify, assess and control risk by :

streamlining diagnosis, mitigation and monitoring

embedding common risk management procedures

providing information access to all who need it

creating and maintaining one central, up to date risk database

PETER SCOTT CONSULTING

Example – Risk Summary – an overview of risks

PETER SCOTT CONSULTING

Example – Detailed Risks

PETER SCOTT CONSULTING

Example - Controls

PETER SCOTT CONSULTING

Example - Questionnaires

PETER SCOTT CONSULTING

Example – Final Evaluation

PETER SCOTT CONSULTING

Advantages of a formal risk management process?

Structured approach focuses on key risksElimination of redundant proceduresComfort / assurance to PI insurersUniversal application to all risk areasContinuous monitoring ensures management of risk is “lived” day to day

PETER SCOTT CONSULTING

Risk/KM

Risk

Management

Knowledge

Management

PETER SCOTT CONSULTING

Implementing a Risk Strategy

DIAGNOSIS

Identification and assessment

MITIGATION

Control, transfer and avoidance

MONITORING

Tracking and reporting

When a risk crystallises

LIMITATION

Minimising the effect of

crystallised risks

PETER SCOTT CONSULTING

Any questions?