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Using risk management to survive and thrive

Using risk management to survive and thrive. ACEVO Conference November 2011. Paul Emery Head of Community and Social Organisations Zurich Tilden Watson, Zurich Risk Engineering. Through the risk management maze. Risk Expertise Take full advantage of future opportunities

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Using risk management to survive and thrive

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  1. Using risk management to survive and thrive ACEVO ConferenceNovember 2011 Paul Emery Head of Community and Social Organisations Zurich Tilden Watson, Zurich Risk Engineering

  2. Through the risk management maze • Risk Expertise • Take full advantage of future opportunities • Confidence for commissioners supply chain • Enables innovation • Those that most effectively embrace manage risk (and have the capacity and resilience to take on more risk) will be the most successful • Guide to help demystify risk management. • We believe in keeping risk management practical and proportionate. • This session will seek to explore some of the current risk challenges.

  3. Surviving and thriving Threats to our resilience The resilience of others Living with risk?

  4. What is Resilience? Resilience: • Ability to resist shocks ………or, to…….. • ‘Bounce back’ quickly when the unexpected happens Business resilience: Having processes in place for planning, organising and controlling the activities of the organisation in order to minimise the effects of risk.

  5. Building a resilient organisation Surviving and thriving Managing risks Corporate planning Opportunity selection Setting an appetite Understanding and managing the supply chain Robust crisis management approach Business Continuity Planning (BCP) Being prepared

  6. Group 1 – Charity sector risk view over the next two years (use template No 2) • Group 2 - Charity sector risk view over the next ten years (use template No 2) • Group 3 - (the positive group) opportunities over the next two years (use template No 3) Quick exercise

  7. How do the results compare?Tough choices – Medium term view • Loss of funding / financial instability • Continuity and crisis response • Damage to reputation and brand equity • Comprise to charitable aims and purpose • Commissioning environment • Execution of organisational change • Short term decisions • Workforce planning and capacity • Governance failure and data loss • Gaps in the CSO network • Partner and supply chain failure

  8. How do the results compareGlobal risks sixth editionLonger term view(produced in collaboration with Zurich) TOP TEN 1) Climate change 6) Energy price volatility 2) Fiscal crises 7) Geopolitical conflict 3) Economic disparity 8) Corruption 4) Global governance failures 9) Flooding 5) Extreme weather events 10) Water security • ONES TO WATCH • Cyber security [online data /information security] • Demographic challenges [age structure/ population growth] • Resource security – commodities / energy challenges (volatility) • Retrenchment for globalisation [protectionism] • WMD [terrorists / geopolitical conflict] Interactive website: http://www.weforum.org/globalrisks2011

  9. Becoming resilient a few thoughts • Using both risk and opportunity to inform your plans • Less is more - not quantity of paperwork [key messages and robust conversations] Remove jargon. • Up-skill Board Members to use / challenge risk information • Not just short term. Think longer term as well. • Nobody reads risk strategies. Define yours on one page? Management co-ordination Escalate if required

  10. now….as I was saying about risk management Risk management benefits(aka why bother?) • Tangible benefits • Credit ratings (S&P) • Reduce “Total Cost of Risk” incl. insurance • Less interruptions / resilience • Inspection regimes satisfied (compliance) • Industry groups • Achieve objectives • Intangible benefits • Consensus at the Board level • Improved communication (down and up) • Increased (internal) confidence in mitigation • External confidence • Focus and prioritisation

  11. Surviving and thriving Threats to our resilience The resilience of others Living with risk?

  12. 1 in 5 year event……It will happen to you or your partners Capacity issues (e.g. flu etc) Power cuts Flood fuel Accidents System failure Partner failure

  13. Examples Employees LEVEL 0 People Value creation (production) LEVEL 1 Process Physical flow (logistics) LEVEL 2 Infrastructure Strategic (partnerships) LEVEL 3 Organisation networks Regulatory, Exchange rates, Country, region issues LEVEL 4 External environment Supply chain understanding is a must * Derived from Cranfield University – Supply Chain Risk study

  14. Who do we fundamentally rely upon? • What examples of mitigation do we have in place? Quick exercise

  15. Be prepared • Understand and manage your supply chain – they fail – you fail • Robust method for managing a crisis (how, decision making, recording, communicating) • Understand your key priorities within your organisation (what must you keep going versus areas you can stop)

  16. Surviving and thriving Threats to our resilience The resilience of others Living with risk?

  17. Fundamental - defining what risks to live with? “The biggest risk you can take is not to take any risks”J.Guardiola {May 2011} Requirements for effective delivery • Board buy-in / sign-off vital • Set clear boundaries for escalation / reporting • Set clear expectations down through an organisation • Define risks that threaten objectives • Define metrics e.g. performance, financial, reputational “The amount of risk that an organisation is willing to pursue or retain”[ISO 31000]

  18. Quick “academic” exercise You are going away as a group for a weekend in the Lakes …. Plot your groups appetite for risk (shade the squares where you are prepared to take a risk) Catastrophic = Death Critical = Loss of limb Marginal = broken bone (it will heal) Negligible = Scratches Very high >90% High 31 - 90% Significant 5% - 30% Low < 5% Very Low < 1% Almost impossible <0.1% Negligible Catastrophic Marginal Critical

  19. Key messages regarding resilience…. Embed at the top table! Don’t just think short term Understand your supply chain Tilden Watson CPFA, IIA, MBCI Team Leader, Strategic Practice Zurich Risk Engineering UK Mobile: +44 (0)7730 735 409 e-mail Tilden.watson@uk.zurich.com Risk appetite can bring focus and set cultural tone

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