Risk registers - Management tool or trap?
Dr Costas Chryssou
February 13, 2022
tamegon Innovation and Growth Advisory Firm
Effective risk management, is critical to the success of any business or project and it is one area that demands a great deal of the management team's time and attention.
Risk management is the process of identifying, assessing, prioritising and responding to risk factors in order to minimise the negative impact they may have on an organisation....
One of the most common techniques used for recording, analysing and capturing responses to risk factors is the risk register. Risk registers provide the platform for capturing identified risks – also confirming that the perceived risk is a risk and not a business worry or a constraint; evaluating the risk's size – its impact, probability and proximity; and identifying a risk response – looking at the alternatives and deciding whether it is worth taking pre-emptive action, for example. If the cost of management action exceeds the beneficial impact then we just need to monitor the risk and plan our post-maturity actions (mitigation after the risk event); otherwise we need to plan for managing the risk and develop an appropriate risk management strategy – risk avoidance, risk reduction, risk transfer, or protect against the risk.
Although risk registers can be valuable in providing a thorough process and a single place for identifying and capturing risks, sometimes they can also act as a management trap.
Risk registers may for example encourage the impression that risks are static and that we just need to only identify and capture risks at the initial stages of a project or propose management responses and then re-visit the business risk register occasionally. They also tend to contain a large number of risks, often badly stated, that should not be in the risk register in the first place, overwhelming the business and risk managers with too many items to be able to actively monitor and respond to.
From my experience, risk registers can become more effective in assisting an organisation to monitor and respond to strategic and operational risks by
- making sure the risk is well understood stating clearly for all risks the ‘cause’, the ‘condition’, the ‘consequence’, an appropriate agreed ‘management action’ that addresses the cause, consequence or both, and a 'risk owner'.
- eliminating 'generic' risks – risks such as ‘a project might be late’, ‘business resources may not be available’, and ‘project requirements may be wrong’. These should be addressed by using organisational standard operating procedures and project management methods, particularly during the planning process.
- treating as business or operational assumptions risks that have low probability and low impact, and keeping them out of the risk register document. These business assumptions should be monitored and elevated to risks (and to the risk register document) only if a change has occurred affecting their probability and/or impact that changes their significance above a specific threshold level that needs to be determined from the outset across the organisation.
- treating as critical success factors risks that have high probability of occurrence and high impact. If such risks, critical to the success of the business strategy or a change management project, exist then they should be dealt with outside the risk register document elevated to business priorities.
- defining and standardising across the organisation what 'low probability, 'high probability', 'low impact' and 'high impact' actually mean in the organisational context, based on the organisation's actual past experience, enabling risk managers, risk owners and the business to use the same terminology making communications clearer.
By putting into practice the above points, I have found that organisations are left with a reduced number of well-articulated risks that are more effectively monitored and acted upon according to the risk management strategies and actions that have been agreed by the organisation and the person that has the responsibility to do so.
Costas Chryssou
MBA, PhD
Founder and Managing Director
Sign up for our
articles
Sign up to our newsletter
This post articulates the need for and benefits of changing the organisational culture with the view to successfully implement a digital transformation project.
According to Forbes more than 76% of digital transformation (DT) projects fail to achieve their desired benefits for the organisation. The reasons mostly quoted for so many failings include: lack of leadership, treating technology as a panacea, absence of defined goals from the outset, not having a clear idea of internal capabilities, not understanding the people aspect of the organisation, and misalignment between business and technology parts of the organisation. Regardless of the above outlined difficulties in successfully implementing DT projects, specifically with sustainability in mind, DT is a necessity for all organisations across industries and sectors to remain competitive and relevant to their customers while harnessing technology and change to capitalise on internal efficiencies. So how can organisations improve the implementation of their DT projects ensuring the desired benefits are achieved, and the specific organisational changes (impacts) are introduced? Reflecting on successfully implemented DT projects in several organisations, we have found that following the implementation phases, broadly described below, significantly improves the likelihood of success: Phase I - Designing and Focusing Investment To successfully implement a digital transformation project organisations need to firstly gain a good understanding of the " As-Is " - where they are today, challenges they face, and opportunities they can harness through digitalisation, either internally or externally to grow and develop a sustainable future. During Phase I organisations need to answer questions such as, How can digitalisation strengths be utilised better? How can digitalisation weaknesses be turned into strengths? How can opportunities be seized through effective digitalisation? How can threats and disruption be avoided? We have found that a good starting point for any organisation to gain a good understanding of their internal capabilities and assess their digital maturity is to use tools such as the one described in the below link http://digital.sa.gov.au/resources/topic/digital-government/digital-transformation-toolkit . Such a tool, among many others, enables any organisation to explore current capabilities across five pillars, namely Governance and Leadership , People and Culture , Capacity and Capability , Innovation and Technology , and assess their level of competence across five levels of maturity from minimal to transformed. A SWOT analysis for digitalisation further allows an organisation to reflect on their internal challenges and strengths (e.g. improving internal company performance) and external opportunities and threats (e.g. external capabilities when dealing with customers and partners) and coupled with the digital maturity assessment findings to define the objective(s) for their DT project and the specific outputs and outcomes expected.
This article describes the latest trends in internationalisation in Higher Education, challenges and opportunities with a particular emphasis in Oman.
Digital transformation (DT) market is projected to grow at a higher than 20% compounded annual growth rate from 2023 with an associated spending of 1.6 $trillion in 2022 and a projected spending forecast of 3.4 $trillion in 2026. Although this astonishing growth is attributed mainly to the Covid-19 pandemic, which since 2020 caused many organisations to increase significantly their investment and adoption of digital, there are many other contributing factors at play including changing customers' behaviours, preferences, and needs. While digital transformation is a necessity for all organisations to remain competitive, the term is often overused, sometimes confusing businesses and practitioners alike. Many times the terms digitisation, digitalisation, and digital transformation are used interchangeably, together with digital change and even metamorphosis. So what do they all mean and what are their benefits for an organisation? Digitisation is about converting analogue data into digital form and it is the first step that organisations need to take in their digital journey towards digital transformation. Digitisation enables businesses to gain valuable insights from their data, leading to advanced business analytics and the capability of informed decision-making processes. By digitisation, many businesses, that still use manual processes to interact with their customers, can move a step closer to enhancing their customer experience. Digitalisation , on the other hand, involves the change of workflows and the adaptation of organisational processes, procedures, and systems to enable the adoption of digital technologies. Through their digitalisation efforts, organisations can leverage digitisation to improve their business processes through automation, enrich their products or services, and offer enhanced value to their customers. For example, an organisation could be using digitised customer data, as gained from different sources, to automatically generate insights from their behaviour and inform existing products and services and create new ones. Although the transition path may not be linear, digitisation and digitalisation lead to digital transformation. Digital transformation builds on the above described digitisation and digitalisation efforts and prepares organisations to leverage their knowledge and integrate it in all business areas to enhance customer engagement and experience, innovate their business model, and create new value. By utilising digital technologies, successfully implemented digital transformation projects make organisations more agile in responding to changing markets and disruptive business models, thereby making them more resilient to external disruption. Through digital transformation, organisations can achieve significant growth and gain competitive advantage. “…Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how it operates and delivers value to customers…”
This article outlines the criteria for evaluating and selecting ERP vendors that universities and HEIs should consider using to maximise ROI for their organisation.
Recent surveys indicate that more than 50% of Project Management Offices (PMOs) [1] have been in existence for less than two years. This article comments on how to bring innovation into the PMO so that it remains relevant to the needs of the organisation.
It seems that most articles, presentations and websites represent innovation using lightbulb images putting the focus and emphasis of the whole innovation process, it seems, entirely on the eureka moment - the lightbulb moment. However is this the most significant step in the innovation process? This article outlines the drawbacks of associating innovation only with creativity and proposes the use of innovation management frameworks for organisations to be more successful in their innovation pursuits.
Although benefit attribution of a project is very important to any organisation, it is considered very hard to implement and therefore organisations do not put any concerted efforts behind it. This article recommends the development of a ‘line of sight’ between the intended benefits, the changes to the organisational blueprint and the project deliverables in order to ensure that the "right" projects are implemented.
This article builds the case around the advantages and disadvantages of building an ERP solution versus purchasing one from a well established vendor.
This article discusses the efficient frontier analysis as a means of optimising innovation project selection, developing balanced innovation portfolios.
