-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
1/16
Group 4 Securicor
Risk Mitigation Strategies and Examples A Private Sector View
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
2/16
“ Risk is defined as something happening
that may have an impact on theachievement of objectives as this is most
likely to affect the service delivery…it
includes risk as an opportunity as well as athreat”
NAO
“ Managing Risks to Improve Public Services”
Oct 04
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
3/16
Mindset
Senior leadership buy-in Creating a culture
Training and practice
Checks and balances
Clear and defined SLAs
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
4/16
Category of Risk
External Arising from the external environment, not
wholly within the organization's control but
where action can be taken to mitigate therisks
Operational Relating to existing operations – both current
delivery and building and maintainingcapacity and capability
Change Risk created by decisions to pursue new
endeavours
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
5/16
Category of Risk
External Political, economic, socio-cultural, technological, legal,
environmental Operational
Capacity and capability, governance, reputational, delivery(service/product failure)
Human Resources Business Continuity
Security of physical assets and information
Change Change programme
New products
New policies
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
6/16
Why Change?
Tangible Benefits
Deliver better services Improve efficiency
Make more reliable decisions
Support innovation
Stay ahead of the competition
“ The UK Government announced in the Spending Review inJuly 2004 its intention to achieve savings of £21.5bn a yearstaff reductions of 84,000 and asset sales of £30bn by 2010”
NAO
“ Managing Risks to Improve Public Services”
Oct 04
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
7/16
Managing Risk
Identifying the risks and managing them is key:
Committed senior leadership
Identify and document the risks Evaluate the risks using an agreed methodology
Select the risks to work on
Determine ways of reducing the risks Review the risks regularly
“ Risk management means having in place a corporate and
systematic process for evaluating and addressing theimpact of risks in a cost effective way and having staff withthe appropriate skills to identify and assess the potentialfor risks to arise”
NAO
“ Managing Risks to Improve Public Services”
Oct 04
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
8/16
What Next?
Acceptance in its entirety
Prevention/Reduction (minimizing the impact and
reduction of the likelihood of the risk occurring)
Transfer to an insurer or sub-contractor
Rejection of the risk as being unacceptable
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
9/16
Experience
Two examples, not comparisons
MNC Off-Shore project
Risks not fully identified
Cost of risk mitigation
Secure Training Facility
Creation of SPV
Identification and allocation of risks.
"What is the cheapest to you now is l ikely to be the dearest
to you in the end."
John Ruskin (1819–1900)
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
10/16
Off-Shore Relocation
An MNC relocated back-office operations and call centre from HongKong to three off-shore locations in India and China. The migrationtook 24 months to complete.
Failure to correctly measure existing delivery & costs
Benchmarking success became untenable
Failure to identify processes suitable for relocation Processes relocated to disparate geographies and needing
additional resources
Insufficient capability to deliver to existing service level
Increased management time spent answering customercomplaints
Negative impact on customers’ satisfaction
Initiative is unpopular; no benefit delivered to customer
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
11/16
Off-Shore Relocation
Resilience low due to complicated BCP support
All sites require back-up
Staff issues
Training, turnover & background checksLoss of knowledge
Management team are disintermediated
Cost of compliance
Legal and Safety, Health & Environment
Operational Control
On-going project management, audit & monitoring
Security of information
Increased access
These lessons were learnt resulting in a happy ending
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
12/16
Secure Training Centre
Milton Keynes
A PFI prison for 80 juveniles procured by the Youth Justice
Board (YJB) under a DCMF (design, construct, manage,finance) contract with a 25 year duration.
A ‘Special Purpose Vehicle’ (SPV) set up as the contracting
entity by the consortium partners (the construction
company, operating company and an equity investor)
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
13/16
Secure Training Centre
PUBLIC SPECI L
CONSTRUCTION
OPER TIONS
SECT OR PURPOS E CO
COMP NY
COMP NY
DESIGN SUIT BILITY
CONSTRUCTION COST OVERRUN
DEL Y IN OPENING
VOLUME RISK
SERVICE F ILURE
SERVICE C OST OVERRUN
INSUR NCE RENEW L
LIFE C YCLE RENEW L
FUNDING
INFL TION
GENER L LEGISL TIVE CH NGE
SPEC IFIC LEGISL TIVE C H NGE
N TURE OF RISK
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
14/16
Lessons Learnt
Innovation, especially in recruitment and deployment of
staff
Development of relevant SLAs
Decency agenda
Public sector service quality improvement
Competitive pricing affecting service delivery
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
15/16
Summary
Outsourcing does work, but risks must be:
Made Explicit Quantified
Leadership commitment
Risk management culture
Partnership
= improved services
-
8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE
16/16
“ An outsourcing agreement is not an
opportunity to cut a proportion of acompany’s cost base and offload it to
someone else. It is a partnership in which
both sides remain responsible for the
delivery of service.”
FT Article 24/8/05
British Airways’ lesson on how not to outsource
J. Fitzgerald