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3.08.05

Risk management

The Open University Business School chaired a discussion between Philip Thomas, Director of Risk Management at Bass plc (a UK brewing and leisure group) and Paul Hopkin, Head of Risk Management for the BBC.

Thomas explained the process at Bass: a bubble chart is created representing the business, then senior management annotate key risks in a structured brain storming session to establish a risk map. At first, risks for the entire organisation are established, at a second step, individual risks are identified. According to Thomas, key is to keep it simple. One of the main questions is: what needs to be done to improve management risks?

Hopkin from BBC agreed with Thomas, however, he added some additional points. He argued about the timescale of different risks (namely strategic, project and operational) which in his view had to be determined before hand. This should result in the opportunity that within a brain storming session, senior management is aware of the different time frame. After the brain storming session (and risk identification), a long list is produced which then has to be short listed (prioritised) in order to establish the organisational risk profile. When prioritising, the key criteria are the following:
. what is the likely impact of the risk (how, medium, low)
. what is the likely probability of the risk (how, medium, low)
. what about the timing when risks may cristalize

Finally, this should lead to areas of improvements, that address the question: what is your level of confidence is existing measures?

Although, the two approaches differ slightly, both managers agree that:
. risk management should be part of managers’ routine (each day of work)
. risk management is an appropriate tool to consolditate management’s view as to those areas that needs to be pushed forward
. it is vital to be honest to oneself and question existing measures regularly
. it is not about policy, but about action: identify key actions, since organisations are not able to cover all risks; this is appreciated by senior management.
. sometimes senior management doesn’t want to discuss some risk; however, the risk mapping process showed them all risks so that they had to respond to them.

For BBC, one of the benefits of risk mapping was the insight that some risks were overmanaged (for instance, safety risks).

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