7/22/2019 131134073-ISO-31000.pdf

1/37

ISO 31000: The challenges of implementing

a new approach

Professor Martin Loosemore FRICS, FCIOB

7/22/2019 131134073-ISO-31000.pdf

2/37

WHY ARE WE HERE?

High risk (and opportunity) environment- large, high-value, innovative projects with long risk exposure.

Surge in risk-related legislation.

Pre-qualification requiring a demonstrable capability in risk

management.

Corporate responsibility and citizenship evolving fast.

Rapid growth (skills shortages and capacity problems).

Customer base changing.

Penalties for non-compliance becoming increasingly severe.

Risk and opportunity management is ourcore business

Working overseas (culture, pressures, everything is new)

Protect and enhance ourreputation

7/22/2019 131134073-ISO-31000.pdf

3/37

COMPETITIVE ADVANTAGE

57% Regularly declined tenders due to a lack of

confidence in managing high risks OR added too largecontingency and lost the job as a result.

59% Companies did not review risks on a regular

basis.

38% Directors were not confident in their risk

management systems.

7/22/2019 131134073-ISO-31000.pdf

4/37

22 COMMON PROBLEMS

1. COMPLIANCE RATHER THAN BEST PRACTICE.

CSA 1997 BS6079-3 (2000) IRGC 2004 COSO (2004) AS/NZS4360 (2004) ISO 31000 (2008)

1. Initiation

2. Preliminary

analysis

3. Estimation

4. Evaluation

5. Control

6. Action/monitor

7. Communicate

1. Context

2. Identification

3. Analysis

4. Evaluation

5. Treatment

6. Communicate

7. Review/update

1. Pre-assessment

2. Appraisal

3. Tolerability and

acceptability

judgement

4. Risk management

5. Communicate

1. Environment

2. Objectives

3. Identification

4. Assessment

5. Response

6. Control

7. Communicate

8. Monitoring

1. Context

2. Identification

3. Analysis

4. Evaluation

5. Treatment

6. Communicate/

consult

7. Monitor/review

1. Mandate/

commitment

2. Context

3. Identification

4. Analysis

5. Evaluation

6. Treatment

7. Communicate/

8. consult

9. Monitor/review

Key : CSA Canadian Standards Association; IRGC International Risk Governance Council; COSO Committee of Sponsoring

Organizations; ISO International Standards Organisation; AS/NZ Standards Australia and Standards New Zealand;

BS British Standards

7/22/2019 131134073-ISO-31000.pdf

5/37

2. HUNGER FOR PROFIT WITHOUT A RISK APPETITE.

3. FROM THE BOTTOM RATHER THAN THE TOP.

4. CRISIS MANAGEMENT RATHER THAN RISK MANAGEMENT.

22 COMMON PROBLEMS

7/22/2019 131134073-ISO-31000.pdf

6/37

5. RISK TRANSFER RATHER THAN RISK MANAGEMENT.

6. SELFISH RATHER THAN COOPERATIVE.

7. INCESTUOUS RATHER THAN CONSULTATIVE.

8. NEGATIVE RATHER THAN POSITIVE.

22 COMMON PROBLEMS

7/22/2019 131134073-ISO-31000.pdf

7/37

Likelihood

Consequence

Insignificant Minor Moderate Major Catastrophic

Almost certain L M H H E

Very likely L M M H E

Likely L L M H E

Unlikely L L M H H

Rare L L M H H

E = Extreme, H = High, M = Medium, L = Low

22 COMMON PROBLEMS

7/22/2019 131134073-ISO-31000.pdf

8/37

10. UNSYSTEMATIC RATHER THAN CONSISTENT.

9. PROJECT-BASED RATHER THAN PORTFOLIO-BASED.

11. SILO MENTALITY.

12. BUCK-PASSING RATHER THAN TAKE RESPONSIBILITY.

22 COMMON PROBLEMS

7/22/2019 131134073-ISO-31000.pdf

9/37

13. COMPLEX RATHER THAN SIMPLE.

14. CENTRALISED RATHER THAN DECENTRALISED.

15. PERIODIC RATHER THAN CONTINUOUS.

16. COMMERCIAL RISKS RATHER THAN OPERATIONAL

RISKS.

22 COMMON PROBLEMS

7/22/2019 131134073-ISO-31000.pdf

10/37

17. QUANTITATIVE RATHER THAN QUALITATIVE.

18. ANALYSIS RATHER THAN IDENTIFICATION.

19. PERIPHERAL RATHER THAN CORE ACTIVITY.

20. ONE DIMENSIONAL RATHER THAN 3 D.

22 COMMON PROBLEMS

7/22/2019 131134073-ISO-31000.pdf

11/37

21. PAPER-BASED RATHER THAN MULTIMEDIA.

22. TECHNOLOGY RATHER THAN PEOPLE.

22 COMMON PROBLEMS

http://images.google.co.uk/imgres?imgurl=http://www.contractservicing.com/images/paperwork.jpg&imgrefurl=http://www.contractservicing.com/default.asp%3Fsvc%3Doutsourcing_main.htm&h=753&w=1141&sz=72&hl=en&start=3&tbnid=fEjnTAFIQXPYPM:&tbnh=99&tbnw=150&prev=/images%3Fq%3Dpaperwork%26gbv%3D2%26svnum%3D10%26hl%3Denhttp://images.google.co.uk/imgres?imgurl=http://www.contractservicing.com/images/paperwork.jpg&imgrefurl=http://www.contractservicing.com/default.asp%3Fsvc%3Doutsourcing_main.htm&h=753&w=1141&sz=72&hl=en&start=3&tbnid=fEjnTAFIQXPYPM:&tbnh=99&tbnw=150&prev=/images%3Fq%3Dpaperwork%26gbv%3D2%26svnum%3D10%26hl%3Denhttp://images.google.co.uk/imgres?imgurl=http://www.contractservicing.com/images/paperwork.jpg&imgrefurl=http://www.contractservicing.com/default.asp%3Fsvc%3Doutsourcing_main.htm&h=753&w=1141&sz=72&hl=en&start=3&tbnid=fEjnTAFIQXPYPM:&tbnh=99&tbnw=150&prev=/images%3Fq%3Dpaperwork%26gbv%3D2%26svnum%3D10%26hl%3Denhttp://images.google.co.uk/imgres?imgurl=http://www.contractservicing.com/images/paperwork.jpg&imgrefurl=http://www.contractservicing.com/default.asp%3Fsvc%3Doutsourcing_main.htm&h=753&w=1141&sz=72&hl=en&start=3&tbnid=fEjnTAFIQXPYPM:&tbnh=99&tbnw=150&prev=/images%3Fq%3Dpaperwork%26gbv%3D2%26svnum%3D10%26hl%3Den

7/22/2019 131134073-ISO-31000.pdf

12/37

Awareness

Confidence Image

Processes

Application Skills

CultureResources

RMMT - www.synergymcg.com

RISK MANAGEMENT MATURITY

7/22/2019 131134073-ISO-31000.pdf

13/37

Riskm

anagementmaturity

Time

Hardware

phase

Systems

phase

People

phase

Ignorance

phase

RISK MANAGEMENT MATURITY

Corporate social

responsibility

7/22/2019 131134073-ISO-31000.pdf

14/37

STEP ONE

7/22/2019 131134073-ISO-31000.pdf

15/37

STEP ONE

UNDERSTAND WHY YOU WANT

A NEW APPROACH

FOR MULTIPLEX?

7/22/2019 131134073-ISO-31000.pdf

16/37

FOR MULTIPLEX?

Very big risky projects one problem can wipe

out margins or company.

New legislation was requiring it

Pre-qualification requiring a demonstrable

capability in risk management.

Rapid growth was stretching existing systems.

Customers becoming more risk averse.

Risk and opportunity was seen as essential to protectand enhance reputation.

End of supply chain and being passed a lot of risk.

STEP TWO

7/22/2019 131134073-ISO-31000.pdf

17/37

STEP TWO

UNDERSTAND YOUR

PHILOSOPHY AND MATURITY

FOR MULTIPLEX: A NEW WAY TO MANAGE

7/22/2019 131134073-ISO-31000.pdf

18/37

Breaking down barriers

FOR MULTIPLEX: A NEW WAY TO MANAGE

RISK

Risk portfolios

Benefits of risk/opportunity management

Cost of risk/opportunity management

Pro-activity

Project life cycle

Risk seen as an asset

A NEW WAY TO MANAGE RISK

7/22/2019 131134073-ISO-31000.pdf

19/37

Meaningful consultation

Taking responsibility

A NEW WAY TO MANAGE RISK

Simple

S G

7/22/2019 131134073-ISO-31000.pdf

20/37

RISK MANAGEMENT MATURITY AUDIT

Awareness

Confidence Image

Processes

Application Skills

CultureResources 32 44 23 1

1

3

2

4

4

2

3

1

4

3

2

1

1

2

3

4

1

4

3

2

1

1

2

3

4

STEP THREE

7/22/2019 131134073-ISO-31000.pdf

21/37

STEP THREE

DEVELOP THE SYSTEM

D l t d i l t ti

7/22/2019 131134073-ISO-31000.pdf

22/37

FOCUS GROUPS WITH KEY STAKEHOLDERS.

DOCUMENT THE SYSTEM

PILOT THE SYSTEM, COLLECT

FEEDBACK AND REFINE IT.

Development and implementation process

THE END RESULT

7/22/2019 131134073-ISO-31000.pdf

23/37

THE END RESULT

7/22/2019 131134073-ISO-31000.pdf

24/37

7/22/2019 131134073-ISO-31000.pdf

25/37

7/22/2019 131134073-ISO-31000.pdf

26/37

7/22/2019 131134073-ISO-31000.pdf

27/37

7/22/2019 131134073-ISO-31000.pdf

28/37

7/22/2019 131134073-ISO-31000.pdf

29/37

2008 Beijing Olympics

http://images.google.com.au/imgres?imgurl=http://prmeetsmarketing.files.wordpress.com/2008/04/beijing-olympics-2008.jpg&imgrefurl=http://prmeetsmarketing.wordpress.com/2008/04/09/off-topic-beijing-olympic-torch-relay/&h=280&w=367&sz=20&hl=en&start=3&tbnid=ni6IdzwdY45IyM:&tbnh=93&tbnw=122&prev=/images%3Fq%3Dbeijing%2BOlympics%26gbv%3D2%26hl%3Den

7/22/2019 131134073-ISO-31000.pdf

30/37

2008 Beijing Olympics

http://images.google.com.au/imgres?imgurl=http://prmeetsmarketing.files.wordpress.com/2008/04/beijing-olympics-2008.jpg&imgrefurl=http://prmeetsmarketing.wordpress.com/2008/04/09/off-topic-beijing-olympic-torch-relay/&h=280&w=367&sz=20&hl=en&start=3&tbnid=ni6IdzwdY45IyM:&tbnh=93&tbnw=122&prev=/images%3Fq%3Dbeijing%2BOlympics%26gbv%3D2%26hl%3Den

7/22/2019 131134073-ISO-31000.pdf

31/37

www.risk-opportunity.com

Companies using multimedia to manage risks include

7/22/2019 131134073-ISO-31000.pdf

32/37

Companies using multimedia to manage risks include

STEP FOUR

7/22/2019 131134073-ISO-31000.pdf

33/37

STEP FOUR

IMPLEMENT THE SYSTEM

Lessons

7/22/2019 131134073-ISO-31000.pdf

34/37

Lessons

Easy to change behaviour butdifficult to keep it changed!

Need to educate your employees,

clients and business partners abouttheir role in the process

Lessons

7/22/2019 131134073-ISO-31000.pdf

35/37

Risk

Manager

External specialist

consultants.

Information

manager

(Collection,

storage,

maintenance and

dissemination ofrisk-related

information.)

Intranet

Manager

(Maintain

MFMs

web

site.)

Risk analysts.

(Assistance in

statistical risk

analysis

using MRI,

Pinnacle,@Risk, Cougar

and RCM

Turbo)

Technical

advisers.

(Advice on

contractual,

legal,

insurance,safety,

environmental

matters etc.)

Human

Resources

(Selection,

training,

appraisal,

rewardsetc)

Effective support is crucial

esso s

Lessons

http://images.google.com.au/imgres?imgurl=http://www.freememberssupport.com/resources/_wsb_556x424_HandHoldingPeople.jpg&imgrefurl=http://www.freememberssupport.com/&h=424&w=556&sz=21&hl=en&start=10&tbnid=ItHdyLLqsPr8CM:&tbnh=101&tbnw=133&prev=/images%3Fq%3Dsupport%2Bpeople%26gbv%3D2%26hl%3Den

7/22/2019 131134073-ISO-31000.pdf

36/37

People find the concept of risk

difficult to understand many need

help

Be patient its takes more time

than you think (5% rule!)

Expect resistance from strange

places

Lessons

http://images.google.com.au/imgres?imgurl=http://earthissquare.com/wp-content/uploads/2007/09/bush-confused.jpg&imgrefurl=http://www.earthissquare.com/index.php%3Fs%3Djavaforge&h=304&w=380&sz=12&hl=en&start=2&tbnid=IpV476Fpy7kxqM:&tbnh=98&tbnw=123&prev=/images%3Fq%3Dconfused%26gbv%3D2%26hl%3Denhttp://images.google.com.au/imgres?imgurl=http://earthissquare.com/wp-content/uploads/2007/09/bush-confused.jpg&imgrefurl=http://www.earthissquare.com/index.php%3Fs%3Djavaforge&h=304&w=380&sz=12&hl=en&start=2&tbnid=IpV476Fpy7kxqM:&tbnh=98&tbnw=123&prev=/images%3Fq%3Dconfused%26gbv%3D2%26hl%3Denhttp://images.google.com.au/imgres?imgurl=http://earthissquare.com/wp-content/uploads/2007/09/bush-confused.jpg&imgrefurl=http://www.earthissquare.com/index.php%3Fs%3Djavaforge&h=304&w=380&sz=12&hl=en&start=2&tbnid=IpV476Fpy7kxqM:&tbnh=98&tbnw=123&prev=/images%3Fq%3Dconfused%26gbv%3D2%26hl%3Denhttp://images.google.com.au/imgres?imgurl=http://bradyinc.com/MPj04003460000%255B1%255D.jpg&imgrefurl=http://www.bradyinc.com/ChangeFormula.htm&h=853&w=1280&sz=270&hl=en&start=2&tbnid=TxVjq8Z8JX7OvM:&tbnh=100&tbnw=150&prev=/images%3Fq%3Dresistance%2Bto%2Bchange%26gbv%3D2%26hl%3Denhttp://images.google.com.au/imgres?imgurl=http://bradyinc.com/MPj04003460000%255B1%255D.jpg&imgrefurl=http://www.bradyinc.com/ChangeFormula.htm&h=853&w=1280&sz=270&hl=en&start=2&tbnid=TxVjq8Z8JX7OvM:&tbnh=100&tbnw=150&prev=/images%3Fq%3Dresistance%2Bto%2Bchange%26gbv%3D2%26hl%3Denhttp://images.google.com.au/imgres?imgurl=http://bradyinc.com/MPj04003460000%255B1%255D.jpg&imgrefurl=http://www.bradyinc.com/ChangeFormula.htm&h=853&w=1280&sz=270&hl=en&start=2&tbnid=TxVjq8Z8JX7OvM:&tbnh=100&tbnw=150&prev=/images%3Fq%3Dresistance%2Bto%2Bchange%26gbv%3D2%26hl%3Denhttp://images.google.com.au/imgres?imgurl=http://earthissquare.com/wp-content/uploads/2007/09/bush-confused.jpg&imgrefurl=http://www.earthissquare.com/index.php%3Fs%3Djavaforge&h=304&w=380&sz=12&hl=en&start=2&tbnid=IpV476Fpy7kxqM:&tbnh=98&tbnw=123&prev=/images%3Fq%3Dconfused%26gbv%3D2%26hl%3Den

7/22/2019 131134073-ISO-31000.pdf

37/37

Manage the risks of risk

management!

Senior management leadership and

commitment is crucial

Expect knock-on effects