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www.jakeman.com.au. Slip on wet surface. www.jakeman.com.au. www.jakeman.com.au. www.jakeman.com.au. www.jakeman.com.au. One page is enough!. www.jakeman.com.au. Risk Management Policy. Policy Philosophy Objectives Business Planning Application Performance Acceptance Criteria

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Www jakeman com au

www.jakeman.com.au


Www jakeman com au

Slip on wet surface

www.jakeman.com.au


Www jakeman com au

www.jakeman.com.au


Www jakeman com au

www.jakeman.com.au


Www jakeman com au

www.jakeman.com.au


Www jakeman com au

One page is enough!

www.jakeman.com.au


Www jakeman com au

Risk Management Policy

  • Policy

  • Philosophy

  • Objectives

  • Business Planning

  • Application

  • Performance

  • Acceptance Criteria

  • Documentation

  • Responsibilities

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Www jakeman com au

www.jakeman.com.au


Www jakeman com au

Risk Bow-Tie

The universal multi-tool

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RiskEvent

Relationship Of Defined Terms

CONSEQUENCE

S

O

U

R

C

E

H

A

Z

A

R

D

T

H

R

E

A

T

S

E

F

F

E

CT

CONSEQUENCE

BARRIERS

ESCALATIONCONTROLS

ESCALATION

FACTORS

ESCALATION

FACTORS

ESCALATIONCONTROLS

THREAT

BARRIERS

LIKELIHOODMANAGEMENT

CONSEQUENCEMANAGEMENT

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Event

Bow Tie & Resilience

CONSEQUENCE

S

O

U

R

C

E

H

A

Z

A

R

D

E

F

F

E

C

T

T

H

R

E

A

T

S

PLANNING

PREPARATION

RESPONSE

RECOVERY

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Risk Bow-Tie

PREVENTION

EXPLOITATION

Threat

BENEFIT

Threat

EVENT

BENEFIT

Opportunity

LOSS

LOSS

Opportunity

RECOVERY

OPTIMIZATION

LIKELIHOOD MANAGEMENT

CONSEQUENCE MANAGEMENT

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The Risk Bow-Tie

PREVENTION

Threats

Benefits

EXPLOITATION

Rough roads

Reduced mortality

Electronic Stability Program (ESP)

Automatic alarms to emergency services

Anti lock brakes(ALB)

Wet weather

CAR SKIDSINTO TREE

Economic stimulus

New car sales

Opportunities

Market the benefits of ALB

Losses

Seatbelts

Airbags

New car sales

Injury or death

Modular design

Legislate for ALB

Repair costs

Improved safety

RECOVERY

OPTIMIZATION

LIKELIHOOD MANAGEMENT

CONSEQUENCE MANAGEMENT

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RiskEvent

CONSEQUENCE

BARRIERS

ESCALATIONCONTROLS

ESCALATION

FACTORS

ESCALATION

FACTORS

ESCALATIONCONTROLS

THREAT

BARRIERS

CONSEQUENCE

S

Resilience & Bow-Ties

S

O

U

R

C

E

H

A

Z

A

R

D

THRE

AT

S

E

F

F

E

CT

S

LIKELIHOODMANAGEMENT

CONSEQUENCEMANAGEMENT

Julian Talbot (ASIS 2009)

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Loss $

$

Loss $

ALARP

ALARP

$$$

Loss $

Assault

$

Assault

$$$

As Low As Reasonably Practicable

Assault

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Eliminate

Eliminate

Substitute

Isolate

Engineer

Administrative Controls

Personal Protection

ASSETS

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Eliminate

ASSETS

E Don’t explore for oil

S Mauritania not Iraq

I Staff in remote areas not city

E Fence, gates, armoured veh.

A Policies, Travel safety training

P Bullet-proof vests

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As Low As Reasonably Practicable (ALARP)

Magnitude of Risk

Intolerable levels of riskAdverse risks are intolerable whatever the benefits and risk mitigation measures are essential at any cost if activity is to continue.

Risk Increasing

Intolerable

Cost Increasing

As Low as Reasonably PracticableA level of risk that is tolerable and cannot be reduced further without expenditure ofcosts disproportionate to the benefit gained or where the solution is impractical to implement

ALARP

Ideal levels of riskRisks are negligible, or so small that they can bemanaged by routine procedures and no additional risk treatment measures are needed.

Tolerable

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ALARPAs Low As Reasonably Practicable

“A level of risk that is tolerable and cannot be reduced further without the expenditure of costs that are disproportionate to the benefit gained or where the solution is impractical to implement”

Level of Risk

Risk

Cost

$, Resources, Effort

ALARP

Cost / Benefit

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Www jakeman com au

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AHLARP

Positive Risk

AHLARP

Resources Applied

Consequence

Negative Risk

Likelihood

RTP

AHARP

ALARP

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Cost/Benefit of Mitigation

AHLARP: ‘As High/Low As Reasonably Practicable’. “The range between the RTP, ALARP and AHARP forms the boundary where the level of risk/resources/reward is optimal, and appropriate to the resources applied and to the accepted risk criteria.”

Positive Risk

AHLARP is based on the assumption that an initially small amount of resources, if applied well, will achieve significant immediate benefit, but that at some point, even an infinite amount of additional resources will provide minimal if any, additional benefit. Ie. The point of ‘diminishing returns’.

Risk Tipping Point (RTP): is based on the concept that success for most initiatives is initially unlikely (though not impossible) but that the input of sufficient resources will reach a point where the balance between negative risks and positive risks, will tip in favour of positive outcomes

AHLARP

Resources Applied

Consequence

Negative Risk

Likelihood

RTP

AHARP

ALARP

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Positive v. Negative Outcomes

  • The “effect of uncertainty on objectives” is likely to produce more negative outcomes than positive if ‘resources’ are limited or the ‘quality’ of implementation is poor. Examples:

  • EVOLUTION: No conscious risk management – leads to more extinct species than successful

  • NATURAL DISASTERS: – Difficulty in predicting them and the vastness of required resources means that it is difficult if not impossible to harness energy/benefits of an earthquake

Magnitude of Likelihood

Negative (adverse) consequences

Positive (beneficial) consequences

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Www jakeman com au

Positive v. Negative Outcomes

  • The “effect of uncertainty on objectives” is likely to produce more negative outcomes than positive if ‘resources’ are limited or the ‘quality’ of implementation is poor. Examples:

  • EVOLUTION: No conscious risk management – leads to more extinct species than successful

  • NATURAL DISASTERS: – Difficulty in predicting them and the vastness of required resources means that it is difficult if not impossible to harness energy/benefits of an earthquake

Magnitude of Likelihood

Negative (adverse) consequences

Positive (beneficial) consequences

www.jakeman.com.au


Www jakeman com au

Positive v. Negative Outcomes

  • The “effect of uncertainty on objectives” is likely to produce more negative outcomes than positive if ‘resources’ are limited or the ‘quality’ of implementation is poor. Examples:

  • EVOLUTION: No conscious risk management – leads to more extinct species than successful

  • NATURAL DISASTERS: – Difficulty in predicting them and the vastness of required resources means that it is difficult if not impossible to harness energy/benefits of an earthquake

Magnitude of Likelihood

Negative (adverse) consequences

Positive (beneficial) consequences

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Www jakeman com au

Positive v. Negative Outcomes

  • Target area for the “effect of uncertainty on objectives” is:

  • BENEFITS: As High As Reasonably Practicable (AHARP)

  • LOSSES: As Low As Reasonably Practicable (ALARP)

Magnitude of Likelihood

Negative (adverse) consequences

Positive (beneficial) consequences

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Www jakeman com au

Risk Management

  • Target area for the “effect of uncertainty on objectives” is:

  • BENEFITS: As High As Reasonably Practicable (AHARP)

  • LOSSES: As Low As Reasonably Practicable (ALARP)

Magnitude of Likelihood

Negative (adverse) consequences

Positive (beneficial) consequences

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Investment vs. Effectiveness of risk treatments

Zone of prudent investments

Perfect Security

Totally Vulnerable

Risk Management Investment

0%

5%

25%

50%

75%

95%

Level of assurance and consistency

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Investment vs. Effectiveness of risk treatments

Zone of prudent investments

Perfect Security

Totally Vulnerable

Oil & Gas Facility

75%

Prudent Zone

Risk Management Investment

Hotel / Restaurant

54%

Manufacturer

34%

Stationery Supplier

24%

Bank

61%

Medical Center

49%

0%

5%

25%

50%

75%

95%

Risk Management Effectiveness

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Cost Effectiveness

Discretionary

Risk Management Investment

Risk Management Effectiveness

Best Practice

AHLARP region

Base (Prudent) Costs

Compliance Costs

Sunk Costs

Decreasing Variability

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Risk Management Journey

Risk Controllers

Risk Enhancers

Risk Transformers

+ Positive (Benefits)

Target: AHARP

AHLARP range

Target: ALARP

- Negative (Adverse)

Compliance & Hazard Control

Operational Performance

Opportunity Realisation

Earlier

More Recent

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Risk

Quality

Resources

Exposure

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Risk Equilibrium (Optimal Trade-Off)

Resources

10

9

8

7

6

5

4

3

2

Negative (adverse) consequences

Quality

Risk

Positive (beneficial) consequences

Exposure

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Risk Equilibrium (Optimal Trade-Off)

Quality

Resources

Magnitude of Risk

Lower Risk Higher Risk

Intolerable

Resources and Quality in appropriate proportion to the Exposures for end result of risk ALARP

ALARP

Tolerable

Exposure

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Few resources but high quality

Resources

10

9

8

7

6

5

4

3

2

Lower Risk Higher Risk

Quality

Risk

Exposure

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Significant Resources still equals High Risk if Exposures are High & SRM Quality is Poor

Magnitude of Risk

10

9

8

7

6

5

4

3

2

Lower Risk Higher Risk

Quality

Resources

Risk

Exposure

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Risk is still High if Resources & Quality are Limited

Magnitude of Risk

10

9

8

7

6

5

4

3

2

Lower Risk Higher Risk

Quality

Resources

Risk

Exposure

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Few Resources & Poor Quality still result in low Risk if Exposure is Low

Magnitude of Risk

10

9

8

7

6

5

4

3

2

Lower Risk Higher Risk

Quality

Resources

Risk

In practice, risk this low is unlikely to occur as there are also limited opportunities here and this represents poor Return on Equity

Exposure

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Www jakeman com au

Example – Arson Attack

Recover

Respond

Delay

Detect

Insurance, BCP, counselling, etc

Fire suppression & emergency systems

Internal barriers & access control

Deter

Intruder alarms & CCTV

Fences, patrols, CCTV, etc

Failed or Absent Barriers

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Organisational Influences

Inadequate Oversight

Pre-Conditions

Inappropriate Behaviours

Failed or Absent Barriers

Example: Arson Attack(Offender enters unsecured rear door to light fire)

Inadequate security training for managersand staff

Inadequate management interventionregarding access control or rear door

Lack of maintenance meantthat air-con failed during

warm weather

Rear door left ajarto allow airflow on a warm day

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Recover

Respond

Delay

Detect

Example – Workplace Assault

Counselling, Rehabilitation

Police, Security

Internal doors and barriers

Deter

Door ajar alarms & CCTV

Reception and Security Guards

Failed or Absent Barriers

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Organisational Influences

Inadequate Oversight

Pre-Conditions

Inappropriate Behaviours

Failed or Absent Barriers

HFACS Example

Inadequate selection processesfor selection of senior manager

Inadequate training in security procedures

Cognitive task saturation- insufficient time to process information

Allowed crew fromunidentified boat to dock & disembark

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Human Factors

Julian Talbot (ASIS 2009)

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Regulation, Standards and Policy

Training and Education

Operations and Application

Governance and Oversight

Sustainability and Resilience

Risk Management Framework

ActivityAreas

Practice Areas

Strategic Knowledge Areas

Risk Treatments

‘Quality

Risk

Resources

Exposure

Risk Management Application

Integration

Design

Application

Assurance

Operational Competency Areas

Enablers

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PSPF SRM Framework

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Communication

and

Consultation

Establish the Context

Monitoring

and

Review

Risk Assessment

Risk Identification

Risk Analysis

Risk Evaluation

Risk Treatment

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INPUTEstablish scope, formalise terms of reference and conduct initial research

PROCESS

Risk Assessment, document review, site inspection

OUTPUT

Policy, Procedures, Protocols, Plan

FEEDBACK

Audit reporting

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