integrated risk management charles yoe, phd cyoe1@verizon.net institute for water resources 2009
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Integrated Risk Management
Charles Yoe, PhDcyoe1@verizon.net
Institute for Water Resources2009
Learning Objectives
• At the end of this session participants will be able to:– Define and discuss risk– Discuss risk management– Identify and discuss the elements of the risk
management model proposed for the Corps
Risk Explained
o Risk –chance of something happening that will effect National or Corps’ objectives
o Measured in terms of consequences and likelihoodsoConsequence can be negative (loss) or
positive (potential gain)oUncertainty can produce results better or
worse than expected
Risk Management
• Essentially, making decisions under uncertainty
• Planning, analyzing, organizing, implementing and monitoring efforts to control the effects of uncertainty on the Corps’ Civil Works Program
Characteristics of Integrated Risk Management
• Universal Applicability
• Analytically-based and judgment-driven
• Simple and Flexible
• Systematic and Scalable
• Iterative
• Transparent and Open
• Dcoumented
Establish Decision ContextEstablish Decision Context
Identify RisksIdentify Risks
Analyze RisksAnalyze Risks
Evaluate RisksEvaluate Risks
Risk MitigationRisk Mitigation Mo
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COE Risk Management
Establish Decision Context
Description• This task establishes the decision
context in which a risk management decision will be made. It includes defining the management problem, and establishing the measurable objectives of the activity to which the risk management process is being applied. Decision making criteria, evident uncertainties, and the questions to be answered in subsequent analytical steps are identified in this step.
Outputs• A written problem statement
• A written statement of the activity’s objectives
• A written list of management information questions
• A written list of the decision criteria
• A written list of the key uncertainties
Establish Decision Context
• Something triggers RM activity
• Decision problem is defined
• Goals, objectives, and strategies of RM identified and articulated
• Decision criteria explicitly considered so appropriate information is gathered
• Stakeholder and public involvement begins
Establish Decision ContextEstablish Decision Context
Defining a Problem
• Problem identification-recognizing a problem exists
• Problem acceptance-deciding to focus attention and resources on it
• Problem representation-articulating the problem for the Corps and others and linking it to possible solutions
Establish Decision ContextEstablish Decision Context
Identify Risks
Description• Identify the risks relevant to
the decision context. This means identifying but not yet quantifying the consequences (positive or negative) and likelihoods and how they will be expressed. It includes asking and answering “what can go wrong” and “how can it happen” about the problem setting.
Outputs
• A narrative description of the risks or significant uncertainties of concern to this risk management activity.
• A decision whether or not to pursue a risk assessment.
Tasks
• Start of risk assessment when one is done
• Identify – Presenting/existing
risks– Risk reductions– Residual risks– Risk transformations– Risk transfers
• Ask and answer (scenarios)– What can go wrong?– How can it happen?
• Methods depend on nature of activity, process, or asset
• Stakeholder and public involvement
Identify RisksIdentify Risks
Analyze Risks
Description• Estimate the consequences and
likelihoods of the risks identified in the previous step. At the same time recognize and report decision critical uncertainties and incorporate them as a source of risk. The consequence and likelihood for each risk may be combined to produce an estimated level of risk. Alternative management strategies are analyzed in this step. This is often the principle analytical step in the risk management process.
Outputs
• Written answers to the risk managers’ questions with a focus on relevant uncertainties
• Descriptions of formulated alternative risk mitigation strategies
• Risk characterization of each significant risk with a focus on relevant uncertainties
• Formal risk assessment if required
Analyze Risks
• Remainder of risk assessment
• Each individually identified risk is analyzed– Gather information – Identify and assess significant sources of
uncertainty– Identify options for achieving RM objectives
and solving the problems– Evaluate and compare risk management
options while accounting for uncertainty
Analyze RisksAnalyze Risks
Evaluate Risks
Description• Risk management alternatives
are evaluated and compared to identify the best solution. This evaluation includes consideration of the risk and other values important to the decision. The evaluation will consider the cost to reduce increments of risk; who bears the risk; what risks are managed, reduced, borne, transferred, and so on.
Outputs• An effective summary or
display of the uncertainties most relevant to the risk manager’s decision
• Display of the varying contributions of the risk management options to the risk management objectives and other social values considered in the decision process
Evaluate Risks
• Separates minor/acceptable risks from major/unacceptable risks
• With stakeholder and public input determine if risk is tolerable or not
• Tolerance is based on trade-off among residual risk, cost of risk reduction and other factors
Evaluate RisksEvaluate Risks
Risk Management Decision
Description• A decision is made to accept or take
action to manage the identified risks. If action is taken, a risk management strategy is developed and implemented. Desired and measurable outcomes of the management strategy are identified at this step so the success of the plan can be monitored and evaluated. To the extent there is significant analytical uncertainty, the risk management strategy will include an adaptive management plan to reduce such uncertainties over time and as needed modify the execution of the actions taken.
Outputs• Determination of a tolerable
level of risk for this risk management issue
• Selection of the best risk management option
• Identification of measurable desired outcomes to monitor the options success
• When appropriate, an adaptive management plan
• An implementation plan• An implemented plan
Risk Mitigation
• Reduce unacceptable risks to TLR– Combinations of options may be needed
• RM plan should identify mitigation measures, responsibilities, schedules, expected outcomes, and measurements associated with mitigation strategy
• It’s critically important to identify desired outcomes of RM strategy prior to implementation
Risk MitigationRisk Mitigation
Mitigation Strategies
• Acceptance/retention• Avoidance• Reduction• Transfer or risk sharing • Containment • Constant monitoring • Continuous research • Development of
substitutes • Precautionary principle
• Increasing resilience-resistance and robustness to surprises
• Treatment of risk • Build confidence and
trustworthiness • Reduce uncertainties • Clarify facts • Involve affected people • Deliberation • Accountability
Risk MitigationRisk Mitigation
Communicate and Consult
Description• Active communication is an
essential part of risk analysis. Communicate and consult with internal and external stakeholders as appropriate at each stage of the process. If there are shared risk management decisions, they should be identified, the decision participants recorded and a formal agreement documenting the shared responsibility for the decision prepared and signed by all responsible participants.
Outputs
• Preparing and executing a public involvement plan including provisions for risk communication.
Communicate and Consult
• Keep all stakeholders informed about – Process– Findings of risk
assessment steps– Nature of risk and its
associated benefits – Deliberations that lead to
risk management decision – Their role in implementing
the solution
• Continual communication among participants to minimize misunderstandings and surprises at the end of the process
Communicate and ConsultCommunicate and Consult
Monitor, Evaluate, Modify
Description• There are several purposes of post
implementation monitoring. One is to assure that there is progress toward achieving the outcomes of the implemented risk management strategy. If there is an adaptive management process there will be data collection targeted to testing hypotheses required to reduce analytical uncertainties identified in the initial planning process. This task also scans the overall setting for the activity to identify hazards or changes in socioeconomic preference or conditions that may not have been recognized during the initial risk analysis process, or that may have changed in their significance. In all cases, the risk mitigation strategy may be modified in accordance with what is learned.
Outputs
• A plan for monitoring, reviewing and modifying the implemented solution
• Implementation of that plan
Monitor, Evaluate, Modify
• Implication of uncertainty is RM is evolutionary decision making
• Assure decision is having desired outcome
• Monitoring-gather information that measures progress toward desired outcome(s)
• Information is evaluated to determine if adequate progress is being made toward outcomes
• If outcomes are not satisfactory changes are needed
• A mechanism for change, e.g. adaptive management plan, is part of best practice
Monitor, Evaluate, ModifyMonitor, Evaluate, Modify
To learn more about Actions for Change visit us on the web at
https://maps.crrel.usace.army.mil/AFC/
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