Main points covered:
• ISO 31000 defines risk as “effect of uncertainty on objectives” and an effect as “a deviation from the expected – positive and/or negative”. And yet the majority of organizations have an overwhelming focus on the negative. Why is this?
• Do organizations really understand the need to balance positive and negative?
• What do the new standards say about risk? How can organizations maximize their opportunities (upside) while still mitigating or controlling their risks (downside)?
Presenter:
This webinar was presented by Mike Gray, a highly qualified vocational education trainer and assessor and a Certified Trainer for PECB delivering training in ISO 9001 Quality Management, ISO 14001 Environment, OHSAS 18001 Health and Safety, ISO 22000 Food Safety, ISO 27001 Information Security, ISO 28000 Supply Chain Security and ISO 31000 Risk.
Link of the recorded session published on YouTube: https://youtu.be/BxEAO1IwLCs
2. Mike Gray
Director/CEO Pirii Australia Pty Ltd
Mike is a highly qualified vocational education trainer and assessor and a certified trainer for PECB
delivering training in ISO9001 Quality Management, ISO14001 Environment, OHSAS18001 Health and
Safety, ISO22000 Food Safety, ISO27001 Information Security, ISO28000 Supply Chain Security and
ISO31000 Risk.
+61 (0)419 090 186
mike.gray@mgtdpirii.edu.au
www.mgtdpirii.edu.au
linkedin.com/mike.gray
twitter.com/@mgtdpirii
www.facebook.com/pirii.com.au/
3. Where we are!
• Perth, Western Australia
• Most isolated continental
capital in the world
• Closer to Indonesia (Jakarta)
than Sydney!
• Nearly 4,000 Kms from
Australian Capital (Canberra)
• Population of approx. 2.02 M
• Metro Area of 6,417.9 km2
4. A quick introduction
Pirii Australia Pty Ltd is an Australian training organisation (RTO 88194)
trading as MGTD Pirii and Compass Assurance Training.
We deliver vocational qualifications in all areas of Management and
Business including Audit and Risk Management, Project Management,
Work Health and Safety and many more.
Pirii is a training partner with PECB delivering courses in ISO9001
Quality Management, ISO14001 Environment, OHSAS18001 Health and
Safety, ISO22000 Food Safety, ISO27001 Information Security,
ISO28000 Supply Chain Security and ISO31000 Risk.
5. What we will discuss
• ISO31000 defines risk as “effect of uncertainty on objectives” and an
effect as “a deviation from the expected – positive and/or negative”.
And yet the majority of organisations have an overwhelming focus on
the negative. Why is this?
• Do organisations really understand the need to balance positive and
negative?
• What do the new standards say about risk? How can organisations
maximise their opportunities (upside) while still mitigating or
controlling their risks (downside)?
6. The risk and opportunity context
• It is now widely accepted among risk professionals that risk and
opportunity are not complete opposites.
• Risk can be a source of opportunity as well as a source of loss.
• Maximising opportunity may lead to a positive outcome but there is
also the possibility of a negative outcome if conditions change.
• So risk management should always be as much about maximising the
positive consequences as about minimising or mitigating the negative
consequences.
7. Understanding the upside and downside
If we look at risk and opportunity in the terms of upside and downside
then perhaps we can develop greater clarity.
•A major incident in the workplace, such as a fire, major injury or
massive equipment failure is unlikely to have any immediate upside,
certainly over the short term.
•If, on the other hand, we invest in a major facility and equipment
upgrade, based on a predicted upturn in customer base and product
sales, then there may be a positive or negative outcome. The question
is this: if we achieve the exact forecast, is this a positive or a negative?
8. Upside and downside (cont.…)
• If we actually achieved exactly the predicted increase and
improvements that were projected is this really an upside?
• Surely there is only an upside if we actually achieve a greater than
expected improvement in our business and exceed our targets.
• If we achieved our production targets but our costs increased
unexpectedly, then this would be considered a downside.
• An increase in incidents and accidents, as a result of unfamiliarity
with the new facility and equipment, is also a downside.
• However, if we find, as result of the increased production we have a
greater purchasing power, with reduced costs, then this is an upside.
9. Some typical downside scenarios…
• Damage to reputation
• Negative feedback from stakeholders
• Increased investigations as a result of accidents and incidents
• Increased complaints (as a result of product failure, delays etc.)
• Increase in workplace injuries
• Escalation in insurance/claims(as a result of incidents, failures etc.)
• Additional management burden
• Increased environmental exposures
• Failure to retain staff
10. But are they really a downside…
Let’s look at some examples:
Damage to reputation and negative feedback from stakeholders are
often accompanied by processes that are reactive. They focus on
limiting the damage or turning the feedback around.
Surely, if the organisation has already identified the risk then it would
be smarter to focus on ensuring that they prevent the situations
occurring in the first place.
So is this really risk, or is it actually an opportunity?
11. But are they really a downside…
Another example:
Increase in workplace injuries is often accompanied by additional
scenarios such as increased investigations as a result of accidents and
incidents, escalation in insurance/claims and additional management
burden.
Is this sort of organisation focusing on the upside or the downside?
Where is the language of the risk scenario leading to – a reactive focus
on control and mitigation or a proactive opportunity for prevention
and improvement?
12. Can there be a change of focus?
If we consider other scenarios related to accident and incident the
major focus almost always seem to be on increased failures or
accidents and incidents that result in increased cost to business.
In fact, in my experience, the language used in the formulation of risk
scenarios, and thus the focus of assessment and management, is
almost always on the negative and therefore reactive.
With a greater focus on Risk and Opportunity in the latest standards
perhaps now is the time to reconsider our approach.
13. What can be done?
• Encourage the organisation to see the opportunity for improvement
in any situation where risk can be identified and defined
• Encourage the thorough examination, identification and definition of
risk in light of the opportunity to improve
• Ensure that not only is an incident prevented, but measures are put in
place to ensure that the risk does not develop again in a repetitive
cycle
• Encourage the organisation to look upon risk in a more professional
and complete way, seeking out the opportunity for real improvement
14. What can be done?
• Perhaps, with the introduction of the new standards, now is the
opportunity to refocus on a holistic view of risk.
• Avoid the trap inherent in developing “the balancing act” risk
scenarios: The significant risk of accident or incident with serious
consequences is often balanced against an opportunity not to have
the incident or accident!
• Avoid describing scenarios in purely negative terminology, rather
consider terms such as “variation in” or “change to”
• By changing the language we can encourage people to think about
maximising opportunity rather than just focusing on avoiding the
downside
15. A conclusion…
• The concept of risk and opportunity is not new, but perhaps we have
allowed Risk to overshadow Opportunity
• This does not mean that we should ignore the downside – far from it,
we should welcome its identification as an opportunity to build more
robust management systems
• By the same token we should not focus only on the upside – we need
to take a balanced view and strive to fully understand the real context
of our risks and opportunities.
16. A great man once said…
The greater danger for most of us lies not in setting our
aim too high and falling short; but in setting our aim too
low, and achieving our mark.
I saw the angel in the marble and carved until I set him
free.
Michelangelo
17. CONTACT DETAILS:
MIKE GRAY
Pirii Australia Pty Ltd
PO Box 8
Ballajura WA 6066
Email:
mike.gray@mgtdpirii.edu.au
+61 (0) 419 090 186
Thankyou for attending this webinar