Risk Analytics

Risk

refers to the likelihood that an unwanted or negative event will occur and the potential impact of that event.

Risk

It is a measure of the uncertainty or potential for loss, damage, or any other negative consequence in a given situation or decision.

Low

Categories of Risk

(may vary depending on the context of the industry

Likelihood: __________

Impact: Minimal

Action: No immediate action

Medium

Categories of Risk

(may vary depending on the context of the industry

Likelihood: __________

Impact: Moderate

Action: Monitoring

High

Categories of Risk

(may vary depending on the context of the industry

Likelihood: __________

Impact: Severe

Action: Immediate Action

Risk analytics

is evaluating and managing potential risks to an organization using statistical and mathematical techniques.

Identify Risk

Risk Management Process

- Brainstorming

- Checklists

- Interviews

- Root cause analysis

- SWOT analysis

Brainstorming

IDENTIFY

A group of individuals can gather together and discuss potential risks, using a _________ session to generate ideas.

SWOT analysis

IDENTIFY

An acronym for Strengths, Weaknesses, Opportunities and Threats. This method is used to identify the internal and external factors that could impact an organization.

checklists

IDENTIFY

Organizations can use __________ to identify common risks that are relevant to their specific industry or operations.

Interviews

IDENTIFY

Individuals or groups can conduct __________ with employees, stakeholders, or experts in a particular field to gather information about potential risks.

Root cause analysis

IDENTIFY

This method is used to identify the underlying causes of a problem or event, which can reveal potential risks.

Strengths

SWOT Analysis

- What do we do well?

- What have our customers or partners told us they like about us?

- In what areas do we outpace our competitors?

- What's unique about our business, products, or services?

- What assets do we own (Intellectual property, proprietary technology, capitol)

Weaknesses

SWOT Analysis

- What can we improve?

- What are our customers or partners dissatisfied with?

- Where do we fall behind our competitors?

- Where are we lacking in knowledge or resources?

Opportunities

SWOT Analysis

- What emerging trends can we take advantage of?

- Which of our strengths might be valuable to potential partners?

- What adjacent markets might we tap into?

- Are there geographic locations with less competition?

Threats

SWOT Analysis

- What is our competition doing?

- How could our weaknesses leave us vulnerable?

- What market trends are we unprepared for?

- What economic or political issues could impact our business?

Strengths and Weaknesses

SWOT Analysis

Internal Initiatives

Opportunities and Threats

SWOT Analysis

External Initiatives

Strengths and Opportunities

SWOT Analysis

Positive

Weaknesses and Threats

SWOT Analysis

Negative

Analyze

Risk Management Process

- Qualitative risk analysis

- Quantitative risk analysis

- Fault tree analysis

- Failure mode and effects analysis

- Monte Carlo simulation

Qualitative risk analysis

ANALYZE

This method involves evaluating risks based on expert judgment, rather than numerical data. It is often used when data is limited or uncertain.

Quantitative risk analysis

ANALYZE

This method involves using numerical data to evaluate risks. It is often used when data is available and the risks can be quantified.

Fault tree analysis

ANALYZE

This method is used to identify the possible causes and consequences of a particular event. It is often used in safety-critical industries such as aviation, nuclear power, and chemical manufacturing.

Failure mode and effects analysis

ANALYZE

This method is used to identify potential failure modes in a system or process, and the potential effects of those failures. It is often used in manufacturing and engineering.

Monte Carlo simulation

ANALYZE

This method uses statistical sampling to model risk. It is often used to model complex systems and to evaluate the potential impact of multiple risks.

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Evaluate/Assess

Risk Management Process

- Likelihood and Consequence

- Cost-benefit analysis

- Decision matrix

- Risk appetite

- Risk Tolerance

Risk evaluation

Risk Management Process

is the process of determining the significance of identified risks in order to prioritize and allocate resources for risk management. It involves comparing the likelihood and potential impact of identified risks to a set of predefined criteria or standards.

Likelihood and Consequence

EVALUATE

This method involves evaluating the likelihood of a risk occurring and the potential consequences if it were to occur. The risks are then ranked based on the product of likelihood and consequence.

Cost-benefit analysis

EVALUATE

This method involves evaluating the potential costs of implementing risk management measures against the potential benefits of those measures.

Decision matrix

EVALUATE

This method involves creating a matrix that compares the likelihood and potential impact of risks against a set of predefined criteria. Risks are then ranked based on where they fall in the matrix.

Risk appetite

EVALUATE

This is a statement of the level of risk an organization is willing to accept. It allows the organization to prioritize the risks and make decisions based on their risk appetite.

Risk Tolerance

EVALUATE

This is the level of risk an individual or organization is willing to accept. It allows the organization to prioritize the risks and make decisions based on their risk tolerance.

Rare

Likelihood Definitions

May occur, but only in exceptional circumstances. It would be highly unexpected (i.e. not in the next 50 years.)

Unlikely

Likelihood Definitions

Could occur in some circumstances, but would be surprised if it happens (i.e. once in the next 11-50 years)

Possible

Likelihood Definitions

Might occur in some circumstances (i.e. once in the next 2-10 years)

Likely

Likelihood Definitions

Is expected to occur in most circumstances. Not surprised if it happens (i.e. at least annually and up to 10 times per year)

Almost Certain

Likelihood Definitions

Is expected to occur and is almost inevitable (i.e. more than 10 times per year)

Elimination

CONTROL

This involves removing the source of the risk entirely.

Substitution

CONTROL

This involves replacing the risk source with a less hazardous alternative.

Engineering controls

CONTROL

This involves designing systems, processes, or equipment to minimize the risk.

Administrative controls

CONTROL

This involves establishing procedures and policies to minimize the risk.

Personal Protective Equipment (PPE)

CONTROL

This involves providing workers with equipment to protect them from potential hazards.

Risk transfer

CONTROL

This involves transferring the risk to another party through insurance or contracts.

Contingency planning

CONTROL

This involves developing a plan to respond to the risk if it were to occur.

Ongoing assessment of risks

MONITOR

This involves regularly monitoring the likelihood and potential impact of identified risks and making any necessary adjustments to the risk management plan.

Review of risk management strategies

MONITOR

This involves regularly reviewing the risk management strategies in place to ensure that they are still effective and making any necessary adjustments.

Monitoring of risk control measures

MONITOR

This involves regularly monitoring the risk control measures in place to ensure that they are being implemented effectively and making any necessary adjustments.

Review of contingency plans

MONITOR

This involves regularly reviewing the contingency plans in place to ensure that they are still effective and making any necessary adjustments.

Regular reporting

MONITOR

This involves regularly reporting on the status of risks and the effectiveness of the risk management strategies in place.

Negligible

Impact/consequence definitions

illness or injury that doesn’t require medical attention. No adverse effect on environment and regulator notification not required.

Minor

Impact/consequence definitions

______ illness or injury requiring medical treatment (eg first aid) and/or minor effect on environment that can be cleaned up. Any potential damage remediation likely to cost less that $5,000. Regulator notification unlikely to be required.

Moderate

Impact/consequence definitions

injury requiring admission to hospital and/or effect on environment that may take 1-2 months to restore and cost up to $20,000. Regulator notification mandatory.

Major

Impact/consequence definitions

life threatening injury or multiple injuries requiring admission to hospital and/or significant effect on environment that may take up to a year to restore and cost up to $1,000,000. Regulator notification mandatory.

Catastrophic

Impact/consequence definitions

Death and/or catastrophic effect on environment that may take longer than a year to restore and cost more that $1,000,000. Regulator notification mandatory.