Operational Risk Management at HSBC David Breden HSBC Operational Risk Consultancy.
OPERATIONAL RISK MANAGEMENT BACKGROUND & …€¦ · PPT file · Web viewA specific seven step...
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Transcript of OPERATIONAL RISK MANAGEMENT BACKGROUND & …€¦ · PPT file · Web viewA specific seven step...
OBJECTIVES
Describe what ORM is and why the USCG is using it.
Describe when and why to apply ORM.
Use the seven step USCG ORM process.
Use USCG ORM tools and job aids.
WHAT IS OPERATIONAL RISK MANAGEMENT (ORM)?
A systematic approach to optimizing risk to support best mission outcomes.
A specific seven step process supported with tools and job aids.
USCG ORM VISION
“Increase mission success while reducing the risk to personnel, resources and the environment…”
“Change from a compliance based to a risk-based philosophy…”
“Provide logical process to identify & exploit opportunities producing greatest return on our investment…”
WHY IMPLEMENT ORM?
ORM applications are proven to offer mission supportive breakthrough potential.
Force reductions make every USCG person and item of equipment more critical to mission success.
ORM can significantly increase USCG operational capabilities and training realism.
4 KEY ORM PRINCIPLES
1. Accept no unnecessary risks.
2. Make risk decisions at the appropriate level.
3. Accept risks when benefits outweigh costs.
4. Integrate ORM into operations and planning at all levels.
BUT.... NOBODY TAKES “UNNECESSARY” RISKS?
If all the hazards that could have been detected have not been detected then unnecessary risks are being accepted.
The single greatest advantage of ORM over traditional risk management is the consistent detection of 50%+ more hazards.
1. Accept No Unnecessary Risks
2. Make Risk Decisions at the Appropriate Level
Factors below become basis of a decision-making system to guide leaders
Who has operational control & responsibility?Who is the senior person at the scene?Who possesses best insight into the full benefits and costs
of a risk?Who has the resources to mitigate the risk?What level makes the most operational sense?
Taking calculated risks is essential for an organization to grow and capitalize on its capabilities.
MAINTAINING A BOLD, RISK-TAKING
ORGANIZATION IS ALWAYS A CHALLENGE.
ORM HELPS.
3. Accept Risks When Benefits Outweigh Costs.
Operational Process
Operational Process
Operational Process
Loss Control Staff Injects
Operational Leaders Add-On
Loss ControlOccurs WithinThe Process
This is the one we want!!
4. Integrate ORM Into Operations and Planning At All Levels.
HOW WILL THE COAST GUARD IMPLEMENT ORM?
Apply the seven step ORM process and the supporting tools
In a consistently mission supportive way
Through a highly integrated and decentralized approach
HOW DO WE ASSURE THAT ORM IS ALWAYS MISSION SUPPORTIVE?
Target optimum mission risk, not minimum risk.
Involve operators to insure risk controls are mission supportive.
Use only the amount of ORM dictated by the risk. Low risk - less ORM, high risk - more ORM.
USING THE 7-STEP PROCESS THE RISK MANAGEMENT CONTINUUM
PLANNING OPERATIONS AFTER-ACTION
-Deliberate ORM-Detailed Hazard ID-Integrated
-Largely Time-Critical-Change Analysis-Real Time-Highly Decentralized
-Assess Indicators-Deliberate ORM-Integration-Feedback
We try to get most ORM done
here
But continue the process
here and here
WHAT IS THE SEVEN STEP ORM PROCESS?
A decision-making technique
A job aid & tool
Optimizes risk
M o n ito r S itu a tion
E xe c u te D e c is ion
E v a lu a te R isk vs G a in
Id e n tify O p tio ns
A sse s s R isks
Id e n tify H a z a rds
Id e n tify M iss io n T a s ks
Clearly state the mission objective.
Define what tasks are required to
accomplish the mission.
Define the conditions under which to
accomplish the task.
Step 1 - Identify Mission Task(COMDTINST 3500.3, Encl 1)
M o n ito r S itu a tion
E x e c u te D e c is ion
E v a lu a te R is k v s G a in
Id e n tify O p tio ns
A s se s s R is ks
Id e n tify H a z a rds
Id e n tify M iss io n T a s ks
MISSION ANALYSIS
METHOD: List the events in sequence.
RESOURCES: Mission planners & operators.
COMMENTS: ORM must cover all aspects of an operation. The Mission Analysis supports that.
The “MA” is a must do!
MISSION ANALYSISAdvance Rescue Ops
Beach party on scene.Launch aircraft.Enroute considerations.Approach to water.“Survivor” & RS events.Aircraft Switch-OutSubsequent ScenariosRecovery all elements
Hazard: Any real or potential
condition that can cause mission
degradation, injury, illness, or death to
personnel or damage to or loss of
equipment or property.
Step 2 - Identify the Hazards(COMDTINST 3500.3, page 4)
M o n ito r S itu a tion
E xe cu te D e c is ion
E va lu a te R isk vs G a in
Id e n tify O p tio ns
A sse ss R isks
Id e n tify H a za rds
Id e n tify M iss io n T a sks
HAZARD ANALYSIS
What can go wrong?
Focus on the criticalcomponents of your mission:
•Equipment•Personnel/Experience•Environment•Timeline
OVERALL MISSION
HAZARD ANALYSIS
P.E.A.C.E.
Planning Event Asset Communication Environment
What Can Go Wrong?• Equipment• Personnel• Environment• Timeline
What Safe Guards Exist?
How Effective Are They?
Step 3 - Assess the Risks
The Processwhich associates
“hazardswith
“risks”.M o n ito r S itu a tion
E xe cu te D e c is ion
E va lu a te R isk vs G a in
Id e n tify O p tio ns
A sse ss R isks
Id e n tify H a za rds
Id e n tify M iss io n T a sks
HAZARD VERSUS RISK
HAZARDA description of a condition that can impair mission accomplishment. No indication of its mission significance.
RISKA hazard for which we haveestimated the severity,probability, and exposure to determine the scope with which it can impact our mission.
ASSESS RISKS
SEVERITY - What are the effects?
PROBABILITY - Can this happen to us?
EXPOSURE - What is the event frequency or degree of involvement?
SEVERITY
MissionManMachine/Materiel
Potential Consequences measured in terms of degree of impact on:
SEVERITY CATEGORIES
CATASTROPHIC - Complete mission failure, death, or loss of system.
MAJOR - Major mission degradation, severe injury, occupational illness, or major system damage.
SIGNIFICANT - Minor mission degradation, injury, minor occupational illness, or minor system damage.
MINIMAL - Less than minor mission degradation, injury, occupational illness or minor system damage.
NONE - No impact to personnel or mission outcome.
PROBABILITY
Likelihood that potential consequences will occur: Very likely to happen Likely, greater than 50% chance Occasional, about 50-50 chance Unlikely under normal conditions Remote under any conditions
Acknowledge “uncertainty”
EXPOSURE
Duration/repetition/number of people &/or equipment involved in event: Great Above Average Average None or below average
THE RISK PRIORITY LIST
Biggest hazard
Least hazardworthy of action
By ranking the hazards, we can work them on a worst first basis. This is vital because risk control resources are always limited and should be directed at the big problems first to assure maximum bang for the buck.
USCG Aviation Risk AssessmentModel
Simplifies SPE assessment through use of
Green Amber Red (GAR) Model
D a t e : _ _ _ _ _ _ _ M i s s i o n : _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
8 6 2 4 3 2 4 0L o w M e d i u m H i g h
R i s k A s s e s s m e n tR e v i e w q u e s t i o n s a n d c i r c l e t h e s c o r e a c c o r d i n g t oc u r r e n t l y a v a i l a b l e i n f o r m a t i o n . S c o r e i t e m s a c c o r d i n g t ot h e e x a m p l e s g i v e n a n d i n s t i n c t s . A b s e n c e o f d a t aa u t o m a t i c a l l y s e t s t h e s c o r e t o m a x i m u m p o i n t v a l u e .
P l a n n i n g : T h o r o u g h n e s s o f p r e - m i s s i o n p l a n n i n g . F a c t o r s w h i c h i n c r e a s e r i s k , B - 0 r e s p o n s ea s s e t s , i n - f l i g h t d i v e r t o f a s s e t .
A d e q u a t e M i n i m a l N o n eh1 2 3 4 5
E v e n t : R e f e r s t o m i s s i o n c o m p l e x i t y a n d g u i d a n c e o r d o c t r i n e a v a i l a b l e . F a c t o r s w h i c h m a y i n c r e a s er i s k : s k e t c h y d e t a i l s o r n o n - s t a n d a r d m i s s i o np r o f i l e .
C l e a r G u i d a n c e C o m p l e x /I n n o v a t i o n R e q u i r e d
h1 2 3 4 5
A s s e t : S e l e c t i o n o f a p p r o p r i a t e r e s o u r c e s . F a c t o r s t h a t e f f e c t r i s k : t i m e a t u n i t , u n f a m i l i a r w / O P a r e a , f a t i g u e ,f l i g h t t i m e ( t o t a l t i m e & t i m e i n t y p e ) , c r e w r e s t , 5 1 8 1 ’ s ,r e q u e s t o r ’ s k n o w l e d g e o f a s s e t c a p a b i l i t i e s .
A . P i l o t s
E x c e l l e n t A d e q u a t e M a r g i n a lh1 2 3 4 5
B . A i r c r e wE x c e l l e n t A d e q u a t e M a r g i n a l
h1 2 3 4 5
C . A i r f r a m e / R e s o u r c e s
F u l l y M i s s i o n P a r t i a l l y M i s s i o nC a p a b l e C a p a b l e
h1 2 3 4 5
C o m m u n i c a t i o n s : A b i l i t y t o m a i n t a i n c o m m s t h r o u g h o u t m i s s i o n . F a c t o r s : i n t e r n a l w / c o m m a n d a n de x t e r n a l w / c u s t o m e r .
A d e q u a t e M a r g i n a l N o n eh1 2 3 4 5
E n v i r o n m e n t : E x t e r n a l c o n d i t i o n s u r r o u n d i n g m i s s i o n : W e a t h e r , n i g h t , i l l u m i n a t i o n , m o u n t a i n o u s s e as t a t e , t e r r a i n , c u t t e r b a s e d , a l t e r n a t e a i r f i e l d s ,w a t e r t e m p , o n - s c e n e c o v e r .
B e n i g n M a r g i n a l H a z a r d o u sh2 4 6 8 1 0
A d d t h e v a l u e s f o r e a c h R i s k A s s e s s m e n t a n d p l o tt h e f i n a l R i s k A s s e s s m e n t o n g r a p h b e l o w ( i n c l u d er e - a s s e s s m e n t f r o m S t e p 2 ) .
R i s k M a n a g e m e n tR i s k M a n a g e m e n t i s t h e d e c i s i o n t o c o n t r o l o r r e d u c eh a z a r d s . B e l o w a r e C o n t r o l O p t i o n s t o a s s i s t i n r i s kc o n t r o l o r r e d u c t i o n . R e v i e w t h e o p t i o n s a n d r e a s s e s s t h er i s k s a s a p p r o p r i a t e .
S p r e a d - o u t – D i s p e r s e t h e r i s k b y l a u n c h i n g a d d i t i o n a l a i r / s u r f a c e a s s e t s .
T r a n s f e r – I f p r a c t i c a l , l o c a t e a b e t t e r s u i t e d a s s e t t o c o n d u c t t h e m i s s i o n i . e . d i f f e r e n t a i r f r a m e , s u r f a c e a s s e t , o rc r e w .
A v o i d – C i r c u m v e n t h a z a r d : W a i t f o r r i s k t o s u b s i d e i . e . w a i t u n t i l d a y l i g h t o r w e a t h e r p a s s e s .
A c c e p t – I n s o m e c a s e s t h e b e n e f i t m i g h t j u s t i f y t h e a s s u m p t i o n o f r i s k . I n t h e s e c a s e s a d e c i s i o n t o a c c e p t r i s km a y b e m a d e w i t h t h e s t i p u l a t i o n t h a t r i s k i s r e e v a l u a t e d a st h e m i s s i o n p r o g r e s s . ( N o a d j u s t m e n t t o R i s kA s s e s s m e n t )
R e d u c e – R e d u c e o r l i m i t r i s k e x p o s u r e : A d d i t i o n a l P R E C O M / E X C O M , b r i n g i n f r e s h o r m o r e e x p e r i e n c e dc r e w .
R e - a s s e s s S t e p 1 V a l u e s
R i s k v s . G a i nL o w G a i n – S i t u a t i o n w i t h i n t a n g i b l e b e n e f i t s o r a l o wp r o b a b i l i t y f o r p r o v i d i n g c o n c r e t e r e s u l t s . E x a m p l e si n c l u d e p a s s e n g e r t r a n s p o r t , n o n - c r i t i c a l l o g i s t i c s m i s s i o n s ,P A O d e m o n s t r a t i o n f l i g h t , e t c .M e d i u m G a i n – S i t u a t i o n t h a t p r o v i d e s i m m e d i a t e ,t a n g i b l e b e n e f i t s . E x a m p l e s i n c l u d e s a v i n g p r o p e r t y ,p r o t e c t i n g t h e e n v i r o n m e n t , d e t e r r i n g i l l e g a l o p e r a t i o n s .H i g h G a i n – S i t u a t i o n t h a t p r o v i d e s i m m e d i a t e , t a n g i b l eb e n e f i t s t h a t i f i g n o r e d c o u l d r e s u l t i n l o s s o f l i f e .E x a m p l e s i n c l u d e U r g e n t S A R a n d M E D E V A C s .
G i v e n t h e m i s s i o n d e s c r i p t i o n a b o v e , w h a t i s t h e “ G a i n ”f o r t h i s m i s s i o n ?
V s .
R i s k A s s e s s m e n t G a i n( H i / M e d / L o ) ( H i / M e d / L o )
U s e t h e R i s k v s . G a i n C h a r t o n t h e n e x t p a g ef o r a r e c o m m e n d a t i o n o n h o w t o p r o c e e dw i t h t h e m i s s i o n .
Use Risk Priority List - Attack “Worst First”
Step 4. Identify Options
Are risks acceptable or unacceptable?
Can we modify the mission to reduce risk?
Are any safeguards missing?
What new options should we consider?
M o n ito r S itu a tion
E x e c u te D e c is ion
E va lu a te R isk v s G a in
Id e n tify O p tio ns
A s se ss R is ks
Id e n tify H a za rds
Id e n tify M iss io n T a s ks
Mission Priority & Time Criticality Often Drive Options
S.T.A.A.RSpread OutTransferAvoidAcceptReduce
IDENTIFY OPTIONS
Equates to “Reality Check”
Step 5. Evaluate Risk vs Gain
Seek optimal risk management
Gain should balance or outweigh the Risk
Risk Decision made at lowest appropriate level
Command validates Assessment & Management
D a t e : _ _ _ _ _ _ _ M i s s i o n : _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
8 6 2 4 3 2 4 0L o w M e d i u m H i g h
R i s k A s s e s s m e n tR e v i e w q u e s t i o n s a n d c i r c l e t h e s c o r e a c c o r d i n g t oc u r r e n t l y a v a i l a b l e i n f o r m a t i o n . S c o r e i t e m s a c c o r d i n g t ot h e e x a m p l e s g i v e n a n d i n s t i n c t s . A b s e n c e o f d a t aa u t o m a t i c a l l y s e t s t h e s c o r e t o m a x i m u m p o i n t v a l u e .
P l a n n i n g : T h o r o u g h n e s s o f p r e - m i s s i o n p l a n n i n g . F a c t o r s w h i c h i n c r e a s e r i s k , B - 0 r e s p o n s ea s s e t s , i n - f l i g h t d i v e r t o f a s s e t .
A d e q u a t e M i n i m a l N o n eh1 2 3 4 5
E v e n t : R e f e r s t o m i s s i o n c o m p l e x i t y a n d g u i d a n c e o r d o c t r i n e a v a i l a b l e . F a c t o r s w h i c h m a y i n c r e a s er i s k : s k e t c h y d e t a i l s o r n o n - s t a n d a r d m i s s i o np r o f i l e .
C l e a r G u i d a n c e C o m p l e x /I n n o v a t i o n R e q u i r e d
h1 2 3 4 5
A s s e t : S e l e c t i o n o f a p p r o p r i a t e r e s o u r c e s . F a c t o r s t h a t e f f e c t r i s k : t i m e a t u n i t , u n f a m i l i a r w / O P a r e a , f a t i g u e ,f l i g h t t i m e ( t o t a l t i m e & t i m e i n t y p e ) , c r e w r e s t , 5 1 8 1 ’ s ,r e q u e s t o r ’ s k n o w l e d g e o f a s s e t c a p a b i l i t i e s .
A . P i l o t s
E x c e l l e n t A d e q u a t e M a r g i n a lh1 2 3 4 5
B . A i r c r e wE x c e l l e n t A d e q u a t e M a r g i n a l
h1 2 3 4 5
C . A i r f r a m e / R e s o u r c e s
F u l l y M i s s i o n P a r t i a l l y M i s s i o nC a p a b l e C a p a b l e
h1 2 3 4 5
C o m m u n i c a t i o n s : A b i l i t y t o m a i n t a i n c o m m s t h r o u g h o u t m i s s i o n . F a c t o r s : i n t e r n a l w / c o m m a n d a n de x t e r n a l w / c u s t o m e r .
A d e q u a t e M a r g i n a l N o n eh1 2 3 4 5
E n v i r o n m e n t : E x t e r n a l c o n d i t i o n s u r r o u n d i n g m i s s i o n : W e a t h e r , n i g h t , i l l u m i n a t i o n , m o u n t a i n o u s s e as t a t e , t e r r a i n , c u t t e r b a s e d , a l t e r n a t e a i r f i e l d s ,w a t e r t e m p , o n - s c e n e c o v e r .
B e n i g n M a r g i n a l H a z a r d o u sh2 4 6 8 1 0
A d d t h e v a l u e s f o r e a c h R i s k A s s e s s m e n t a n d p l o tt h e f i n a l R i s k A s s e s s m e n t o n g r a p h b e l o w ( i n c l u d er e - a s s e s s m e n t f r o m S t e p 2 ) .
R i s k M a n a g e m e n tR i s k M a n a g e m e n t i s t h e d e c i s i o n t o c o n t r o l o r r e d u c eh a z a r d s . B e l o w a r e C o n t r o l O p t i o n s t o a s s i s t i n r i s kc o n t r o l o r r e d u c t i o n . R e v i e w t h e o p t i o n s a n d r e a s s e s s t h er i s k s a s a p p r o p r i a t e .
S p r e a d - o u t – D i s p e r s e t h e r i s k b y l a u n c h i n g a d d i t i o n a l a i r / s u r f a c e a s s e t s .
T r a n s f e r – I f p r a c t i c a l , l o c a t e a b e t t e r s u i t e d a s s e t t o c o n d u c t t h e m i s s i o n i . e . d i f f e r e n t a i r f r a m e , s u r f a c e a s s e t , o rc r e w .
A v o i d – C i r c u m v e n t h a z a r d : W a i t f o r r i s k t o s u b s i d e i . e . w a i t u n t i l d a y l i g h t o r w e a t h e r p a s s e s .
A c c e p t – I n s o m e c a s e s t h e b e n e f i t m i g h t j u s t i f y t h e a s s u m p t i o n o f r i s k . I n t h e s e c a s e s a d e c i s i o n t o a c c e p t r i s km a y b e m a d e w i t h t h e s t i p u l a t i o n t h a t r i s k i s r e e v a l u a t e d a st h e m i s s i o n p r o g r e s s . ( N o a d j u s t m e n t t o R i s kA s s e s s m e n t )
R e d u c e – R e d u c e o r l i m i t r i s k e x p o s u r e : A d d i t i o n a l P R E C O M / E X C O M , b r i n g i n f r e s h o r m o r e e x p e r i e n c e dc r e w .
R e - a s s e s s S t e p 1 V a l u e s
R i s k v s . G a i nL o w G a i n – S i t u a t i o n w i t h i n t a n g i b l e b e n e f i t s o r a l o wp r o b a b i l i t y f o r p r o v i d i n g c o n c r e t e r e s u l t s . E x a m p l e si n c l u d e p a s s e n g e r t r a n s p o r t , n o n - c r i t i c a l l o g i s t i c s m i s s i o n s ,P A O d e m o n s t r a t i o n f l i g h t , e t c .M e d i u m G a i n – S i t u a t i o n t h a t p r o v i d e s i m m e d i a t e ,t a n g i b l e b e n e f i t s . E x a m p l e s i n c l u d e s a v i n g p r o p e r t y ,p r o t e c t i n g t h e e n v i r o n m e n t , d e t e r r i n g i l l e g a l o p e r a t i o n s .H i g h G a i n – S i t u a t i o n t h a t p r o v i d e s i m m e d i a t e , t a n g i b l eb e n e f i t s t h a t i f i g n o r e d c o u l d r e s u l t i n l o s s o f l i f e .E x a m p l e s i n c l u d e U r g e n t S A R a n d M E D E V A C s .
G i v e n t h e m i s s i o n d e s c r i p t i o n a b o v e , w h a t i s t h e “ G a i n ”f o r t h i s m i s s i o n ?
V s .
R i s k A s s e s s m e n t G a i n( H i / M e d / L o ) ( H i / M e d / L o )
U s e t h e R i s k v s . G a i n C h a r t o n t h e n e x t p a g ef o r a r e c o m m e n d a t i o n o n h o w t o p r o c e e dw i t h t h e m i s s i o n .
Risk vs Gain
High Gain Medium Gain Low Gain
LowRisk
Accept the Mission.Continue to monitorRisk Factors, ifconditions or missionchanges.
Accept the Mission.Continue to monitorRisk Factors, ifconditions or missionchanges.
Accept the Mission. Re-evaluate Risk vs. Gain,should Risk Factorschange.
MediumRisk
Accept the Mission.Continue to monitorRisk Factors andemploy ControlOptions whenavailable.
Accept the Mission.Continue to monitorRisk Factors andemploy ControlOptions whenavailable.
Accept the Mission.Continue to monitorRisk Factors andactively pursue ControlOptions to reduce Risk.
HighRisk
Accept the Missiononly with Commandendorsement.Communicate Risk vs.Gain to Chain ofCommand. Activelypursue ControlOptions to reduce Risk.
Accept the Missiononly with Commandendorsement.Communicate Risk vs.Gain to Chain ofCommand. Activelypursue ControlOptions to reduce Risk.
Do not Accept theMission. Communicateto Chain of Command.Wait until Risk Factorschange or ControlOptions warrant.
Step 6. Execute Decision
Control Options must be implemented
Decision Rational must be communicated
Facilitates S.A. regarding Risk Management process
M o n ito r S itu a t ion
E x e c u te D e c is ion
E va lu a te R is k vs G a in
Id e n tify O p tio ns
A ss e s s R is ks
Id e n tify H a za rds
Id e n tify M iss io n T a sks
Failure to respond to changes can become Links in the Mishap Chain
Step 7. Monitor Situation
Insure Control Options are effective
ID changes requiring further RA/RM
Capture “Lessons Learned” M o n ito r S itu a t ion
E x e c u te D e c is ion
E va lu a te R is k v s G a in
Id e n tify O p tio ns
A s se ss R isk s
Id e n tify H a z a rds
Id e n tify M iss io n T a s ks
USING THE 7-STEP PROCESS LEVELS OF EFFORT
Little:- Time- Complexity- Risk
Lot of:- Time- Complexity- Risk
“TIME CRITICAL” “DELIBERATE” “STRATEGIC”
ORM is applied ORM is applied proportionateproportionate to operational complexity, to operational complexity,
criticality, and risk!criticality, and risk!