Management of Risk

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Background
Management of Risk (M_o_R) is intended to help organisations establish an effective framework for taking informed decisions when addressing threats to their business. Importantly Management of Risk doesnt just look at risk from the what might go wrong perspective but also encourages organisations to apply the same rigour to how they research and manage potential opportunities. Management of Risk offers a simple, effective approach to creating a disciplined environment geared towards the pro-active management of risk. It is a generic structure that is applicable to any industry or business type. Instead of risk being handled by a few specialists, it demonstrates how all staff, at whatever level, has a role to play in identifying, analysing and controlling risk. Management of Risk was first launched in 2002 and has since been refreshed in 2007 and 2010 to ensure that it remains relevant and includes up to date best practice. It is owned by the UK Governments Cabinet Office and aligns to other best management practice including PRINCE2 , Managing Successful Programmes (MSP ) and Management of Portfolios (MoP ).

Benefits
route map for identifying, analysing and controlling risks that can be applied at all Simple levels across the organisation process for treating risk information ensures that all risks, wherever they arise, are Streamlined treated like for like, enabling clearer understanding of their impact greater flexibility in responding to external forces (such as the market and regulatory Enables environment) as there is confidence in how to assess and action changing circumstances perception of the organisation as the robust process of risk management can be Positive demonstrated to all stakeholders Detailed understanding offered by the Management of Risk equips managers to devise and implement a customised approach to managing risk within their own organisations, ensuring that the risks identified and the decisions on mitigating actions are relevant to the organisations business. The practical business benefits of Management of Risk include:

M_o_R, PRINCE2 , MoP and MSP are registered trade marks of the Cabinet Office

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Contents
Risk management is the systematic application of principles, approaches and processes to the tasks of identifying and assessing risks and then planning and implementing risk responses. Management of Risk covers a wide range of topics including the activities required to identify and control exposure to risk, the techniques for analysing risks and clarifying their impact and probability and guidance on who to involve in each step of the risk management process. Management of Risk provides a step-by-step guide for what to look for, how to assess and categorise risks, how to plan mitigating actions to overcome them and details a number of techniques that can be used in estimating the severity of risk. The approach for project risk is aligned to the guidance in the PRINCE2 project management methodology and the approach to programme risk is aligned to the guidance in Managing Successful Programmes (MSP). a set of high level principles which an organisation can use to develop its own risk Specifies approach - its policies, process and plans a four step process model which enables the identification, assessment and control Proposes of risk Identifies four organisational perspectives through which risk can be identified a comprehensive set of documentation for recording how risks will be identified and Suggests managed Management of Risk is a framework for managing risks which:

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Principles
There are 8 principles in Management of Risk which are organised into 7 enabling principles that leads to the achievement of the 8th principle as shown below: Aligns with objectives Fits the context ENABLERS Engages stakeholders Provides clear guidance Informs decision-making Facilitates continual improvement Creates a supportive culture Achieves measurable value A result of implementing risk management

Universal in that they apply to all types of organisation and industry Self validating in that they have been proven to be true over time in that they engender confidence in the usefulness of risk management Empowering activities
They provide the basis upon which an organisations specific approaches to risk management can be developed.

Each principle is:

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Process
The process for applying Management of Risk is explained via a lifecycle model, which is simple and intuitive. It enables all staff to understand when risk should be addressed, what the individual steps in the process are, and who should be responsible for these steps.

Manageme nt o fR isk

Em be d

an

Re

w vie
Implement

Pr in

es pl ci

Plan

Communicate

Identify

Assess

The four steps of Identify, Assess, Plan and Implement are drawn as a circle as they are likely to be repeated several times as more situations evolve and more information becomes available. Communication is in the centre of the diagram because it is a central activity that is undertaken using information from each of the four other steps. To make the guidance as readable as possible, each process step contains information under the same headings:

Goals: the key outcomes of the process Inputs: the information that is transformed by the process Outputs: the information produced by the process the recognized risk management tools and techniques that may be applied to Techniques: the process step to help create the outputs the actions that need to be completed to transform the inputs into the outputs with the Tasks: aid of the techniques
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Perspectives
the risks associated with achieving the strategic objectives of the organisation. Strategic There is a wide remit for identifying risks that includes assessment of all external drivers, and ties closely with the long term planning and goal setting. Management of risk ensures the comprehensive identification of risks by including 3 perspectives in the guidance: and project - the risks associated with delivering change across the organisation, Programme assessed for their impact on the strategy and the shorter term operational goals Operational the risks associated with the ongoing business as usual tasks These perspectives are one of the greatest advantages of the Management of Risk structure, because by looking at risk on this basis, the silo based approach of risk management by business function is avoided. It also removes the need for risk management activities to be carried out only by risk specialists, as senior managers are responsible for the strategic perspective and operational managers the operational perspective.

Documentation
management strategy - a very useful document as it sets out in simple terms this is how Risk we handle risk in our organisation. It ensures that the different scales of probability and Management of Risk contains a comprehensive set of documents for defining the approach to risk management and recording specific information about individual risks and how they are managed. Examples of these documents include: impact (e.g. high, medium and low) are clearly explained, so that they can be applied in the same way to any and every risk. It sets out who should be involved in analysis and decision making, and who is to receive reports, what these reports contain and when they should be created.

management policy - a strategic document that sets out the risk appetite of the Risk organisation, and how much risk can be tolerated across different departments or business Management Plans sets out how the risk management policy and process will be Risk implemented for each specific organizational activity.

functions. In creating this policy, it creates a forum to discuss and formally acknowledge the many assumptions and processes that managers are already following.

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Qualifications
The Management of Risk Foundation and Practitioner course is relevant for anyone who is involved in project, programme, change and operational management, as risk is examined from each of these perspectives. The Management of Risk approach provides a simple, step by step guide for identifying and managing risks. It is an essential element of your management skill set. The popularity of the course continues to grow, with a 16% increase in candidates sitting the Foundation examination in 2012. In total more than 10,000 people have the Management of Risk qualification. The learning outcomes for the course are:

Understand the framework, principles, approach and processes associated with M_o_R the differences in perspectives between project, programme, operational and Appreciate strategic risk Practice a number of specialist risk techniques and understand when they are most relevant

There are two levels of qualification: your understanding of the risk management principles, approach and processes Tests defined in Management of Risk: 75 question multiple-choice examination Must get 35 or more marks to pass 60 minutes duration your ability to apply risk management techniques and processes to risk situations Tests 3 hours objective based testing examination 4 questions each worth 20 marks Must get 40 or more of the available 80 marks Practitioner Foundation

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Maven Company Overview

Maven provides business transformation solutions to our clients in a project management environment. Maven can help your organisation in these areas: Management - help you understand why change is required, implement the change Change necessary to advance and realise the benefits in doing so development identify the people within your organisation who can drive Leadership change forward We deliver our interventions through supporting your organisation and working with you to recognise and build on the ultimate vision for the future. Our aim is to always help organisations through change, not to do change to you.

Tools and techniques

Maven employs the use of various tools and techniques to help you achieve your goals, some examples of which include: Management Framework - designed to help you apply a methodical and structured Change approach to your change programme blueprint - designed to assist individuals to identify their own personal leadership Leadership style and competencies, and structure their long term approach to leadership Capability Assessments - this tool helps your staff to assess their current skills Competency levels, identify skills gap and focus on areas of improvements All Maven services are delivered in line with our quality management system and processes.

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For further information about Maven Training please contact: Telephone: 020 7403 7100 e-mail: info@maventraining.co.uk www.maventraining.co.uk

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