opportunities & risk strategies
TRANSCRIPT
Opportunities & Risk StrategiesRethought
© Gavin Lawrence April 2013
The Ansoff Matrix 1957
Market Expansion Diversification
Product ExpansionMarket Penetration
Existing Technology New Technology
Ex
isti
ng
Ma
rke
tsN
ew
Ma
rke
ts
Increasing Risk
Inc
rea
sin
g R
isk
RIS
K
Risk and Innovation
Inc
rea
sin
g R
isk
New Level of
Technology & Scope
High Margin
Medium Level
Scope
Medium Margin
Medium Level
Technology
Medium Margin
Easy Technology
Low Margin
Innova
tion
Project Challenge
$m
RE
TU
RN
Increasing Risk
The Dynamics of Risk and Reward
Risk = Reward =
Opportunity to Excel
Traditional Risk Management
Strategy
Avoid Risk = Lower Profits =
Lost Opportunities
(Risk Averse)
Reinventing the Probability Impact Matrix (PIM)
VH 5 5 10 15 20 25
H 4 4 8 12 16 20
M 3 3 6 9 12 15
L 2 2 4 6 8 10
VL 1 1 2 3 4 5
1 2 3 4 5
VL L M H VH
47 110
20 47
Divide into 4 quadrants and total the values
Rethinking the Risk Management Strategy
47 110
20 47
Big Opportunity
High Risk
High Return
Intense Project & Risk
Management
Requirement
Medium ReturnHigh Standard Quantitative
Risk Management
Off-Radar Risks
Show Stopper? Potential Engineering
Opportunity
Constant Vigilance
Very High Standard of
Quantitative Risk
Management Required
High Standard
Quantitative Risk
Management
Risk = Opportunity =
Project Management Intensity
Redraw with proportionate areas to
create a new risk-reward graphic
What is important?
• New focus on the opportunities
that high risks create for
return maximisation (consistent with
business strategy thinking)
• The areas are now indicative of both the Project Management effort and return potential
• Risks highlight opportunities for innovation and creative solutions which is good thing
• A full risk register represents a project under control and well managed with challenges well understood
Big Opportunity
High Risk
High Return
Intense Project & Risk
Management
Requirement
Medium ReturnHigh Standard Quantitative
Risk Management
Off-Radar Risks
Show Stopper? Potential Engineering
Opportunity
Constant Vigilance
Very High Standard of
Quantitative Risk
Management Required
High Standard
Quantitative Risk
Management
Big Opportunity
High Risk
High Return
Intense Project & Risk
Management
Requirement
Medium ReturnHigh Standard Quantitative
Risk Management
Off-Radar Risks
Show Stopper? Potential Engineering
Opportunity
Constant Vigilance
Very High Standard of
Quantitative Risk
Management Required
High Standard
Quantitative Risk
Management
Healthy, Wealthy and Risky !!!