Creating value with riskope ore 31 10_2012

Optimum Risk Estimates (ORE)® will help you steering your organization.

Creating Value in your Company
by
Strategic Integration of
Knowledge and Risk Landscape
Using
Optimum Risk Estimates (ORE)®
(ORE)®
Franco Oboni & Cesar Oboni
Oboni Riskope Associates Inc.,
Vancouver, British Columbia, Canada

(c)Oboni Riskope Associates Inc. www.riskope.com foboni(a)riskope.com Page 1 of 24 12/10/2012


Risk Management used to be a “Compliance”
or “Loss Minimization” afterthought, not a
Value Creation tool.
Companies interpreted the
results of Risk Assessments
with fuzzy Probabilities-
Impact (Losses) Graphs
(PIGs) which often were
misleading and did not
really promote or increase
an holistic understanding of
the business' environment.


PIGs became ubiquitous, despite intrinsic
conceptual errors, with potential dramatic
negative consequences on their users.
Using PIGs
generates risks,
instead of Probabilities and Consequences
Are Poorly Defined, Arbitrarily
solving your and Wrongly Scaled! Risks are
Business Misrepresented!

problems: this is
a real PIG from
a large project
Risk
Assessment.


To prove how misleading PIGs can be, look at
some historic and recent sets of tolerability
criteria & real probability-consequences data...



...and plot the PIG on top, discrepancies
become evident, misrepresentation is blatant!
We can fore-
see that
cases will be
challenged
in Courts of
Law against
companies
using PIGs
for their
risk asse-
ssments and
the resulting
decisions.


Let's guess, your car has a
better cockpit than this old
clunker!
Modern cars have more
sophisticated instruments,
right?

However, in your company
you probably still use this
PIG matrix as a RM/ERM
cockpit.
At Riskope we believe your business deserves
better than this rudimentary, obsolete tool! Manage
it using all available information...read further!


From the early '90s on clients started
asking for real MEASUREMENT OF RISK.
They understood that bringing risk
management in, even at (Pre) Feasibility
Stage, would CREATE VALUE.
VALUE.
They are starting now to look at
STRATEGIC INTEGRATION OF RISK.
There was no chance that a flawed,
simplistic, misrepresenting PIG would
bring them satisfying replies...Riskope
replies...Riskope
had to start building innovative solutions.


From the end of the '90s we started using ORE v.1.0
allowing explicit measures & uncertainties thanks to
the “bubbles”.
Instead of
arbitrary
Indexes we
used real
values, we
values,
introduced
explicitly
defined
Client's
tolerability
thresholds,

enabling the measurement and understanding of
the holistic Business risks environment...


Lets' summarize PIGs characteristics and see
how the latest versions of ORE solve them:
them:
-Arbitrary selection of cell limits, Eliminated
-Arbitrary selection of “coloring” frontiers,
Eliminated
-Simplistic definition of consequences, solved by
generating wide spectrum Consequence functions
-Lack of “resolution” between risks, Eliminated
-Fuzzy results, poor decision making
support, Eliminated
We will now see the advantages brought in by Ore
deployment...


Case Study 1

We will use, for this first Case Study, Operation
Ten (OT) belonging to our client AAA Inc. (AAA)
(names, locations and risk names have been
altered to respect client's confidentiality), a
medium sized business. Geographic location,
business type and product(s) do not matter for
this discussion.

They had prepared a PIG....
PIG....



Using common procedures and
instructions for the definition of
probabilities/frequencies and
consequences.
Class Frequency of Failure

1 1 in over 100 years
2 1 between10 to 100 years
3 1 between 5 to 10 years
4 1 between 1 to 5 years
5 more than 1 failure per year

Class Severity
1 $0 to $1,000,000 in costs
2 $1,000,000 to $5,000,000 in costs
3 $5,000,000 to $15,000,000 in costs
4 $15,000,000 to $50,000,000 in costs
5 more than $50,000,000 in costs



They defined 50 risks which split into:

-0 Severe
-14 High
-25 Medium
-11 Low risks

They called Riskope in to help because
they did not know how to tackle 14
high, 25 medium...too fuzzy, too
costly!!!


Riskope deployed ORE (Optimum Risk Estimates) as
Riskope teaches in short courses all over the world.

ORE is the result of twenty years experience world-
wide and has been deployed for various clients,
including Fortune 500 at various stages including
acquisitions, pre-feasibility, operations, changes.

We will now see how ORE help formulating strategic
and tactical plans, increase to get a clearer roadmap
for managing, decision making, etc...



Let's build a Tolerability Curve: we display it here on
top of the original client's PIG's cells, for comparison.
A specific Tolerability
Curve exists for any
project, operation,
company.

NB: if uncertainties are
included then you'd see
a band instead of a line,
and risks would be
plotted as “bubbles”, on
this p-C diagram.



For each risk let's evaluate the intolerable
part (orange) v.s. tolerable part (blue).



Top 20 Total Risks prioritization. However,
prioritization.
we can do better than that!



The best Risks prioritization is based on the
intolerable part as discriminant. It constitutes
the core of ORE because...
...the only risks that
actually matter for your
company are the ones
that extend above the
Tolerability Criteria
created for your specific
project/operation/
company.



Now it is possible to take rational decisions in
allotting mitigative funds, planning ahead!
ORE show that in this
Case only 5 scenarios
count for 83% of the
total intolerable risks.
Concentrating on them
will greatly improve
the situation.

Five instead of 14
(+25) suggested by
PIG.



Case Study 2

We will use, as a second case study, a diversified
producer of equipment and service company.
Again, names, locations and risk names have
been altered to respect client's confidentiality.
This is a complex international business producing
in three different countries and delivering to many
more. Geographic location, business type and
product(s) do not matter for this discussion.

They had always used PIGs....
PIGs....



...but realized that:

PIGs are too limited to evaluate all risks – whereas
ORE is a broad based risk assessment tool, used
globally and based on actual activity, results, and
data available, compliant with ISO 31000.

Furthermore they recognized that Riskope has
unique academic preparation, experience, &
research & application of Risk Assessment world-
wide

Riskope deployed ORE...



These pictures are another
example of ORE results
displaying tools



But the most comprehensive is a ORE Cockpit.
Acme Inc. Sources of Threats
4 Divisions:
A,B,C,D;
Diversified
3 countries;
International
Exports. Potential Losses per Product

Logistic Risks Media Vulnerability Hazardous Sectors


What Clients Say about Riskope.
... I want to express my gratitude for all of the time and effort you have put in
before and during the ... hearings.

... I very much enjoyed getting to work with you in person, and have tried to
learn as much I can from your and Cesar's approach, reasoning, and methods.

It has been a real treat for me. I believe you have offered a perspective unlike
any other experts we have had.

…..lots of challenges, so again thank you for your endless help.

...Riskope's results are irrefutable, transparent, fact-based.

...Rigourous development coming from a group with solid real-life experience and
outstanding theoretical skills.

...Riskope is never boxed in the “let's do like all the others” scheme. On the
contrary, they always seek the development of tools matching exactly clients'
needs and requirements



ORE are the key
to your business
prosperity,
survival and
sustainability.

With Riskope
and ORE you
can “drive”
safely towards
your goals.
CONTACT: Franco Oboni
foboni(a)riskope.com

Creating value with riskope ore 31 10_2012

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Andere mochten auch

Andere mochten auch (18)

Mehr von Oboni Riskope Associates Inc.

Mehr von Oboni Riskope Associates Inc. (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Creating value with riskope ore 31 10_2012