Risk Analysis

“Winners don’t do different things, but

they do things differently”

YOU CAN WIN

by Shiv Khera

UNDERSTANDING RISK

As opportunity

To take more risk

To managing risk

Create risk bearing culture

Risk Analysis

Definition: A systematic, proactive approach to deal with uncertainty

Purpose: to enable the organisations to progress towards its goad in the most direct, efficient and effective manner.

Risk “ imprecations of uncertainty about level of performance achievable

Definition

Source of risk: any factor which can affect institutions ability to meet its objectives

Risk is not danger rather it is more of opportunity.

Risk imprecations of existence of uncertainty about Institution’s ability to meet its objectives.

Features of good risk management

Simple

Systematic documentation

Identifies organisations attitude and approach to risk.

Source of risk

Any factor which can affect ActionAid’s ability to meet its adjectives– e.g. Shift in Institution’s stance towards

greater emphasis on influencing activities Source can have +ve or -ve impact, i.e.

they can reduce or improve ability to meet objectives.

Opportunity associated

What are the risks and opportunity associated with each sources?e.g. – Risks -ve

Loss of income?Upset local governmentWithdrawal of local support

– Opportunities +veIncrease effectivenesshigher national profile

Source of uncertainty

Who?– Are the parties involved (stakeholders and non stakeholders)?

What – Is it the partners are interested in (I.e. service or product)?

Why?– What to partners want to achieve?

Which way? – How are the activities to be carried out?

Where?– What resources are regard?

When?– Does it have to be done?

Risk matrix Risk identification

– Objective– Implications of risk– Source of risk

Risk Assessment– Significant– Probability– Time scale– Assumptions

Risk management– Responses– Likely effectiveness– Action plan– Persona responsible

Risk identification

ObjectivesRich picture

Source of riskBrainstorming

Implication of uncertainty £

•Stakeholders•Issues•Relations•Environments•Relationships

Analysis (PEST, SWOT)

Source of uncertainty 6WRisk types Risk sources

Market StructureOperating CultureEnvironment People Legal SystemFinance Control processInfrastructure Environment

Identification of Risk

Use of rich Picture

– Tasks Constructing the

pictureIdentifying the

issue arising from it.

What is Rich picture?

Interaction of parts within the whole

A plate form to identify sources of risks

Risk mapping with clear view based on objectives

All stakeholders should be in the picture

Indicate and define line as – Relations– Communication– Interaction

What makes it rich?

Holistic picture, diagrams Complexity relations, interaction, interfaces Make “conflict” explicit typically through appreciation

of different perspectives Include all tensions and risks Things very small but very important Linkage, relational diagrams All stakeholders Messy picture is good and should be fun No risks but pictures Arrow or line different for different size, shape and

clearly explained

Assessment of external environment

PEST Analysis

– Political Environment – Economic Environment – Socio-cultural Environment– Technological Environment

Five Forces Model

– Risk of entry by potential ‘competitors’

– Bargaining power of ‘suppliers’– Rivalry among existing

organisations– Threat of substitute product– Bargaining power of beneficiaries

Environments

Resources Technology Technical Administrative Managerial Legal Environmental Social

Financial Communications Knowledge Information Political Commercial Economic Quality

Stakeholders

Owners Creditors Clients Employees Unions Media Local communities Local Government National Government

Researchers Laboratories Persons in education Supplier Competitors Management Source of new technology Public interest group Religions group

Responses to risks

R1: modify objectives R2: avoid R3: prevent (Change probability of occurrence)

R4: mitigate (reduce impact)

R5: develop contingency plan (provide reactive capability)

R6: keep option open (delay choice and commitment, versatile options)

R7: monitor ( (keep and update data on problems and impacts)

R8: accept (accept risk and do nothing about it – PREPARED !)

SWOT Analysis

Potential Internal Strength Potential Internal Weakness

Potential External Opportunities

Potential External Threats

Fault tree Analysis

Im p ac t

S ou rce o f ris k

Im p ac t

F in a l Im p ac t o f ris k

Event tree Analysis

D on 't

D on 't

D on 't

D on 't D o

D o

D o

D o

A n even t

Risk matrixObjective Implication

of uncertainty

Source of risk

Impact on organisation

Likelihood Time scale

Appropriate responses

Assumptions

1 a I

II

III

IV

b I

II

III

IV

Queries?

Thank You

END