Overcome Risk Using Process Management and Improvement

1 1 C an al C e n t e r P laz a , A le x an dr ia , V A 2 2 3 1 4 T 8 0 0 . 6 6 3 . 7 1 3 8 F 7 0 3 . 6 8 4 . 5 1 8 9 w w w . r o bbin s g i o ia . c o m

Confidential and Proprietary © 2014 Robbins-Gioia, LLC

Overcome Risk Using Process Management and Process Improvement


Goal

Understand how strong Process Management & Process Improvement disciplines can be leveraged to overcome Risk Management challenges

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Overview

Establish definitions – Risk, Risk Management, Process, Process Management and Process Improvement

Strategy Traceability

A Portfolio Perspective

Overcoming Risk via Process Management and Improvement

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Dictionary definition:

(Exposure to) the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility.

The ISO definition:

the 'effect of uncertainty on objectives'

Risk is related to probability and severity:

“The probable frequency and probable magnitude of future loss”

A Threat is a risk with potential negative outcomes

An Opportunity is a risk with potential positive outcomes

What is Risk?

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Economic risk

Business & Operational risk

Financial risk

Health, Safety & Environment (HSE) risk

Information technology & security risk

Examples

Types of Risk

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Confidential and Proprietary © 2014 Robbins-Gioia, LLC 6

Perceiving Risk

Perceived through science

Virtual

Directly Perceived


Issue Management

Active Risk ManagementActive Risk Gathering

Identify and Assess Risks

Triage Risks

Need Mitigation / Contingency

Plan

No Mitigation / Contingency Plan Needed

Develop and Manage

Mitigation / Contingency Plans

Program Start (Stage 0)

Assess New Risk

During life of program

Risk Becomes an Issue

Execute Contingency

PlanV

Take Steps to Mitigate Risks

Formal Risk Assessment

(Stage 1)

New Risk Identified

For Each Risk

OR VOR

Revise or Add Mitigation

Plans

Close / Downgrade

Risk

Monitor Risks & Reevaluate

as Needed

• Identify and Rate Risks

• Create Risk Management Plans

• Monitor Risks • Identify and Rate New

Risks

• Execute Contingency Plans for Risks that have become Issues

End-to-End Risk Management


Common Risk Management Strategies

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Risk Management Strategies

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=d0ZAarO4mQ8cmM&tbnid=Nc-SZuko2qWVJM:&ved=0CAUQjRw&url=http://www.dreamstime.com/royalty-free-stock-photo-playing-cards-border-poker-suits-image6838035&ei=RvgZU8bpAoPVkQfr5IGIDQ&bvm=bv.62578216,d.eW0&psig=AFQjCNFeR9R3AkRF8ScWbXZZ3dth-5U-1A&ust=1394297249433710









Process is…

A process is a series of steps and decisions that

transform inputs into outputs in order to deliver a product

or service of value to customers while meeting the

business objectives of the organization

Inputs can be material or information or both

The fundamental expectation is to produce good results

for customers and the organization while managing

problems or unforeseeable events.

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In our definition, Process includes what we traditionally think of as ‘process,’ along with its enablers: People and Technology


Process Management is…

Process management is the ensemble of activities of

planning, monitoring and controlling process

performance.

Planning: defining, designing, building, testing, deploying

and measurement planning

Monitoring: measuring, tracking & trending, analyzing and

interpreting

Controlling: taking actions within the current-state process

to maintain process outcomes within the desired ranges

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Process Management is…

…Complex

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http://www.braincourt.de/Business-Process-Management.96.0.html







Process Improvement is…

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“Not with inventions, but with improvements you create fortune.” Henry Fordx

Process Improvement is a series of actions taken to

define, analyze and improve existing processes within an

organization to meet goals and objectives.

Adoption is necessary to realize the potential benefits.

Sustainability is required for benefits to be ongoing.


Succeeding at Process Improvement

• The most successful process improvement effort is one that concentrates on:

• Increasing value to the Customer

• Creating effective processes

• Reducing resource consumption by improving process efficiency

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Manage Processes

Improve Processes

Two Sides of the Same Process ‘Coin’…

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Opportunities & Threats

Changes to Process & Measurements

There must be a balance between continual improvement and ongoing management of processes


Business Processes are the means by which organizations achieve those aspects of their Strategy that are realized through Operational Execution.

Clarification of problems and opportunities for improvement is integral to business analysis and process management.

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Guiding Principles – Strategy Realization


Traceability to Strategy


Customers do not experience processes, they experience a series of “moments of truth.”

Process management oversees multiple improvements, larger-scale transformations, and/or automation efforts to manage overall performance within and across processes.

A strategic focus on process clarifies the underlying risk management strategy for the whole organization.

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The End-to-End, Portfolio Nature of PM & PI


Managing Uncertainty to Improve Outcomes

Hypothetical Example: Uncertainty about Likelihood of Success

versus Typical Program Spending Profile

Relative Uncertainty about

Success

Spending

Profile

Low

High

Gate 0

Program Start

Gate 1 Gate 2 Gate 3 Gate 4 Gate 5

Launch

0%

100%

Rela

tive U

ncert

ain

ty

% o

f Pro

gra

m S

pen

d

from

Gate

s 0

-5

50%


This perspective increases understanding of processes from a constricted efficiency focus, to a more robust insight into risk mitigation and opportunity realization.

Maintaining a balanced focus on managing and improving processes helps organizations address risk in a structured manner

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Where we are…


This two-fold, balanced approach helps the organization enhance its success by:

• Proactively addressing performance issues with timely and informed decision making based on business process data analysis

• Systematically managing a disciplined approach to evaluate/improve effective control and governance processes

• Maintaining a continual focus on risk within and across all processes and change initiatives

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Contributing to success


The Point of All This

Risk Management is NOT separate from Process Management

Reframe Opportunities and Threats as upside and downside Risks

Not all types of risk may be in the scope of Process Management & Process Improvement

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Communication

“The two words ‘information’ and ‘communication’ are often used interchangeably, but they signify quite different things. Information is giving out; communication is getting through.”

- Sydney Harris

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One of the biggest risks any organization faces is not lack of information, it is lack of communication


In Conclusion

Do not think about Risk Management as separate and distinct from Process Management & PI

Process Management provides an ongoing means for identifying and managing risks

Risk Management activities feed the Process Improvement pipeline

Create a culture of constant awareness of risk What’s changed about current risks? What new risks are there?

What can we do about it? What will we do about it?

Communicate with clarity and verify understanding

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Questions?

Answers


Contact Information:

Mark Barnett

[email protected]

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Overcome Risk Using Process Management and Improvement

Leadership & Management

Transcript of Overcome Risk Using Process Management and Improvement