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Guest Post by Ed Perkins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
Risk Management is like vitamins; we know it is good for us, but we don’t always want to take it.
Why? Human nature is to avoid discomfort and unpleasantness. What does this have to do with risk? What is the real impact of consequence of a Risk? Why do we not want to face it? If you think about it, it is the underlying of risk – it is Fear. [Read more…]
Guest Post by Ed Perkins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
One area that does not receive much emphasis in risk management is the human factor. In risk assessments, risk events, likelihoods and consequences, vulnerabilities are the usual focus. People are viewed as ‘weak links’ in risk prevention, but what about risk mitigation? Your risk planning depends on people to respond when an event occurs. How good is their risk decision-making under stress? There is the weak link.
In 1996, IEEE published a book on “Probabilistic Risk Assessment and Management for Engineers and Scientists” by Kumamoto and Henley[1]. This book is about using probability to assess reliability and safety risks in an industrial environment. The book introduces some interesting concepts, such as risk perception and ‘Human Reliability’. [Read more…]
Guest Post by Ed Perkins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
Why are there “bad” decisions? No one starts out to deliberately make a bad decision. If you look into available thought papers and reports, you can find some evidence that can provide some understanding of how bad decisions are made.
COSO in 2012, commissioned a report on “Enhancing Board Oversight”[1] focusing on challenges and biases in making professional judgments.
More recently, several HBS faculty authored a study an “attribution error”[2], where decisions are biased by unjustified attributions of goodness to applicants based on “luck” rather than ability. [Read more…]
Guest Post by Greg Hutchins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
Did we get it all wrong? Wow! This could break our business model. Let me explain:
We developed Certified Enterprise Risk Manager® and all of our risk IP based on a simple fact. We live in VUCA time (volatility, uncertainty, complexity, ambiguity). We based our business business model on providing:
So, what’s the problem? [Read more…]
Guest Post by Ed Perkins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
There is a lot of literature written on decision making, ‘how to’, best practices, process, factors and so to follow to make ‘good’ decisions. We have been exploring ‘risk based’ decision making in these blogs. We have looked at factors, process, frameworks, psychology and bias.
But we have not discussed perhaps the most important aspect of any decision – implementation or that double edged word ‘execution.’ (Of course this assumes that the decision maker wants something to actually happen as a result of the decision, but that is a topic for another day).
Let’s use the nicer word – Implementation – which implies there is a course of ACTION, with a timeframe for results to be produced or to occur. [Read more…]
Guest Post by Chris Peace (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
Sometimes, it seems that every newspaper edition, news broadcast or news website carries yet another story about a disaster – an event that might have been avoided by better decision making.
But do we ask whether such decisions were informed by risk assessments? And if so, how effective were those risk assessments for informing the decision makers about the risks? Which techniques were used in the risk assessments? Were the results presented in a way that made sense to the decision makers? Do risk assessors follow a good process and so achieve some consistency in results, or do they just get lucky? [Read more…]
Guest Post by Rod Farrar (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
The project management body of knowledge generally focuses on scope management, time management, and cost management. Risk management generally comes in at about 8th place out of the ten.
However, risk management is potentially the biggest part of the project management planning process.
Often organizations assign resources, dollars and time to project objectives to know exactly when the project is going to finish, how much it is going to cost and what resources are needed.
The problem with doing this is they have not identified risks. [Read more…]
Guest Post by Ed Perkins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
There is no end to helpful advice about making decisions.
Most of this advice assumes that decision-making is fact-based, procedural, and decision-makers can follow a process. You need to have proper “framing”, know desired outcomes, be objective, evaluate alternatives, etc.
In theory, this is very good advice. [Read more…]
Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
I was supposed to be in Boston presenting at “The Disaster Conferences” on 28 January 2015. Well, the weather just put us out to 19 March 2015 for the now rescheduled Boston conference.
I guess that they are still feeling the effects of this week’s blizzard, now named “Juno”; that left Boston with over 24 inches of snow.
According to the Weather Channel Winter Storm Juno pounded locations from Long Island to New England with heavy snow, high winds, and coastal flooding late Monday into Tuesday. The storm is now winding down.
The National Weather Service has dropped all winter storm and blizzard warnings for Juno. [Read more…]
Guest Post by Ed Perkins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
In the 1960’s Ralph Nader became famous by writing an expose’ of the Corvair, a rear-engined Chevy built by General Motors.
He called it “Unsafe at Any Speed: The Designed-In Dangers of the American Automobile “[1][2]. He accused car makers of ignoring safety, resisting providing seat belts and other design issues that contributed to injuries in accidents.
In 1966 the U.S. Congress passed the Highway Safety Act (aka National Traffic and Motor Vehicle Safety Act), which created mandatory federal safety standards for motor vehicles and established what is now the National Highway Traffic Safety Administration. [Read more…]
Guest Post by Rod Farrar (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
The project management body of knowledge generally focuses on scope management, time management, and cost management. Risk management generally comes in at about 8th place out of the ten.
However, risk management is potentially the biggest part of the project management planning process. [Read more…]
Guest Post by Geary Sikich (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
Exposure to threats, hazards, and risks leads to vulnerabilities that an organization must deal with.
Commonly these are addressed via a mitigation process. Once mitigation is accomplished, often times the organization feels that the risk, threat, hazard does not need to be revisited. However, as a result of the mitigation efforts on the part of the organization, the risks, threats, hazards reconfigure and re-emerge in a different form.
In order for mitigation to be successful, it has to be a constant and ongoing process that produces a resilience to the negative effects of risks, threats, and hazards that are realized. [Read more…]
Guest Post by Howard M. Wiener (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
How we design and implement systems and processes can play a large role in determining their usability.
Poor usability can contribute to avoidable risks. This post addresses the need to employ risk identification and mitigation techniques in the course of designing things in order to minimize the probability of negative outcomes. [Read more…]
Guest Post by Ed Perkins (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
While we look at risk-based decisions and making decisions under uncertainty, these approaches all have one basic assumption – that the participants in these processes are doing so consciously, with eyes open and with an appreciation of the risks and consequences involved. [Read more…]
Guest Post by Malcolm Peart (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
It has been suggested that Stone Age man had a higher IQ than today’s modern homo sapiens.
“That cannot be,” says the modern man, but if one thinks about such an assault on our modern-day ego and self-confessed superiority, the alleged ‘primitive’ man was able to survive in extreme conditions, traveled the planet and set the foundations for today’s societies. [Read more…]
