risk mgmt for non rms & risk assessment 101 - final · avoid the risk–the activity is too...
TRANSCRIPT
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RISK ASSESSMENT 101RISK MANAGEMENT FOR NON‐RISK MANAGER (AND FOR RISK MANAGERS TOO!)
Presented by
Erin FullertonErin Fullerton
Campus Risk ManagerCal State San Marcos
”Fitting the Pieces” ConferenceSan Diego
April 23‐25, 2018
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Deep Thought for the Day:
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WHAT IS RISK MANAGEMENT?
RISK = The possibility that something bad could happen.
RISK MANAGEMENT =The process of identifying, understanding and addressing risks in order to achieve the objectives of the
organization.
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WHY DO WE TAKE RISKS?
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Ancient Chinese symbol for risk:
Danger Opportunity
Deep Thought for the Day #2:
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RESPONSIBLE RISK ENGAGEMENT = BALANCE
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EVERYDAY RISK MANAGEMENT
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RISK MANAGEMENT AT ITS MOST BASIC
Is the potential reward worth the potential risk?
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BASIC RISK ASSESSMENT
1. What is the likelihood something bad will happen?
‐AND‐
2. How bad will it be if it does?
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LIKELIHOOD
IMPA
CT
Low Medium High
Low Med
ium H
igh
SAMPLE 3x3 RISK RATING GRID
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SAMPLE 5X5 RISK RATING GRID
Catastrophic High High Very High Very High Very High
Significant Medium Medium High Very High Very High
Moderate Low Low Medium High High
Limited Very Low Very Low Low Medium Medium
Minimal Very Low Very Low Very Low Low Low
Rare Unlikely Possible LikelyAlmost Certain
LIKELIHOOD
IMPA
CT
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YOU’VE RATED YOUR RISK –NOW WHAT ?
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Avoid the Risk – the activity is too risky, and there are no reasonable ways to reduce risk to an acceptable level.
Transfer the Risk – the level of risk to our organization is too high, so we will transfer the risk to another party.
Reduce the Risk – the level of risk is at a higher level than we are comfortable accepting, so action is required to reduce the level of risk (either likelihood or impact).
Accept the Risk– the level of risk is low enough to accept without any further action required.
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RISK ASSESSMENT EXERCISE
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SAMPLE RISK ASSESSMENT WORKSHEET
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SAMPLE ‐COMPLETED R.A. WORKSHEET
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MISSION‐BASED RISK MANAGEMENT
ASK YOURSELF:
Is what we are doing (or proposing to do) supporting and/or helping us achieve our mission?
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What is our mission?
What is yourmission?
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THE PSYCHOLOGY OF RISK
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COGNITIVE BIAS
Recency/Primacy Effect – people tend to remember best the information they hear first and last
Zero Risk Bias – people tend to favor reducing a small risk to zero over a greater reduction in a larger risk
Confirmation Bias – tendency to listen/give weight to only that information which supports our existing position/beliefs
Ostrich Effect – tendency to avoid or ignore negative information
Availability Heuristic – tendency to overestimate the importance of the information that is available to us
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OVERCOMING COGNITIVE BIAS IN RISK EVALUATION
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“DREAD FACTORS”
1. Scale
2. Immediacy
3. Imaginability
4. Personal Control
5. Lack of Choice
6. Unfairness
7. Children Involved
8. Lack of Familiarity
9. Untrustworthy Origin
10. Media Coverage
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PETER DRUCKER QUOTE:
“People who don’t take risks make about two BIG mistakes a year.
People who do take risks make about two BIG mistakes a year.”
Final Deep Thought for the Day:
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