risk connectivity 4pp · active risk manager risk connectivity recent global crises – natural,...

ACTIVE RISK MANAGER

Risk ConnectivityRecent global crises – natural, geo-political and fi nancial – highlight that often it is not the risks which appear the largest and most likely that can ultimately cause the greatest impact. The degree of connectedness of risks – even small risks – can be the decisive factor. Risks with high connectivity can act as catalysts for chain reactions which lead to surprising and monumental outcomes.How can your management team identify and act to mitigate such risks?

How can you go beyond the focus on ‘Top Ten Risk lists’ and fi nd out where to apply management expertise and company resources to safeguard business performance, corporate reputation and shareholder value?

Risk Connectivity from Active Risk takes complex risk and opportunity information and presents it in a very visual and easy to understand way. It highlights interconnected systems of risks, emerging risks and the areas to introduce ‘fi re breaks’ to minimize knock-on effects that stem from a risk occurrence. Risk Connectivity means management teams can quickly identify where to focus time and resources to have the greatest impact.

This image shows the major global risks documented by the Davos World Economic Forum 2011 displayed dynamically in the Risk Connectivity tool to highlight interconnections

Risk Connectivity

HOW CAN MANAGEMENT TEAMS QUICKLY IDENTIFY THE KEY RISK AREAS FACING THE BUSINESS?

The ability to understand complex risk and opportunity

information is rapidly becoming a key management

competency needed to safeguard business

performance. Risk Connectivity from Active Risk is an

analytical software tool which provides unique insight

for management teams. It enables another way to look

at risks and their likely impacts and provides a rapid

decision support tool to show where to focus further

investigation and investment.

MOVE BEYOND THE TOP TEN RISK LIST

The best understanding of operational risks rests

with those closest to day-to-day business processes.

However, the ability to identify connections between

risks is most effective at the top of projects, programs

and organizations, where the widest view of the whole

landscape is possible. Traditional risk management

solutions have provided the bottom-up capabilities

to collect, score and roll-up risks. Risk-mature

organizations are increasingly adding a top-down

strategic risk view. This approach is very important but

can often lead to a simplistic, one dimensional ‘top ten

risk’ focus. This is especially true at the highest levels of

the business where time for analysis is most scarce.

Risk Connectivity from Active Risk provides a unique

and effective way to give senior management an

alternative perspective on risk which, when taken

together with traditional views, provides the complete

three dimensional picture – a top-down strategic view,

a bottom-up operational view and the risk connectivity

across the whole business.

HOW DOES RISK CONNECTIVITY WORK?

Risk Connectivity uses sophisticated algorithms to analyze risk information to provide this alternative view. Risk Connectivity has been developed by Active Risk in conjunction with academics working with the Universities of Bath and Bristol.

Detailed risk and opportunity data is collected throughout the organization, its partners and supply chain using Active Risk Manager (ARM), Active Risk’s leading Enterprise GRC tool. ARM provides a variety of ways to input this information: via rich web client; easy to use web and mobile data entry; or via risk workshop. Risks and opportunities are scored and assessed in ARM in the traditional way as they are reported up through the organization.

Risk Connectivity adds the capability to re-score risks based on their degree of ‘interconnectedness’. It then presents this information in a visual, dynamic way to facilitate investigation and discussion. No software tool can replace management experience and insight, however Risk Connectivity will help highlight risk connections and consequences in a way that has not been possible before.

The Risk Connectivity display makes clear the true picture of risk across the business:

The size of a ‘risk node’ indicates the likelihood it will happen

The depth of colour shows the size of its impact

Risks with a common colour share a risk source or type

The thickness of the lines indicates the level of connectivity

© Active Risk Ltd. All rights reserved.

BENEFITS OF RISK CONNECTIVITY

Provides a highly visual and dynamic view of risk

and opportunity information

Aids understanding of the inter-connectivity of risks

and the likely consequences which could follow a

risk occurrence

Gives a different perspective which will help isolate

‘toxic risks’ that have a high degree of connectivity

which can act as catalysts

Takes the management team beyond a focus on

static “Top Ten Risk Lists”

Highlights where organizations should focus

resources and further analysis

Enables informed discussion and debate on the

risks which can have the greatest impact on

business performance

Identifying the link between one risk and its effect on others has been one of the most diffi cult risk management challenges – but it is becoming increasingly important to understand – as organizations try to prepare for the consequences of risks rather than just focusing on whether isolated risks will occur.

ACTIVE RISK MANAGERActive Risk Manager (ARM) enables the identifi cation, communication, analysis and mitigation of risks and opportunities in both quantitative and qualitative formats. It covers project and portfolio risk, supply chain risk management, business continuity, reputational risk, health and safety, incident management, governance, compliance risks and more.

ARM is used by major organizations around the globe and was awarded “Risk Application of the Year” in November, 2010 at the global Risk Management Awards run in conjunction with the Institute of Risk Management.

Active Risk, formerly Strategic Thought Group, was founded in 1987 and is headquartered in the UK with its US operation, Active Risk Inc, based in Washington DC.

IN CONCLUSIONRisk Connectivity from Active Risk provides a new way to visualize risks and opportunities to enable management teams to zero in on key risks and identify how they connect. This meets the increasing business need to focus on interconnections and the consequences of risks to help defi ne where to direct expertise and resources.

risk connectivity 4pp · active risk manager risk connectivity recent global crises – natural,...

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