Risk Management

Integrating risk perspectives in our business decisions

The business environment is getting increasingly more complex. Via social media, the public demands hyper transparency, often with a very coloured lens, creating fast and powerful forces with significantly more volatility. The non-technical risks are often difficult to identify and quantify.

Global corporations strive for resilience. However, their risk management processes are still very static and insufficiently integrated. Effective risk management is not a stand-alone activity but an integral part of opportunity management and the decision-making process.

We believe that excellence in risk management will increasingly become a key differentiator to drive long-term success and shareholder value. We also regard CO2 and environmental performance as high probability and high-impact risks, that need proper business attention and resolution.

Shareholders reward predictability and competitiveness. In DAREL we realise that risk management is keeping many executive leadership teams awake at night. Good risk management starts with risk identification, prioritisation and scenario analysis

The scenario analysis helps to evaluate resilience and guides the leadership conversation towards the more extreme outcomes, and the important exploration on how the project -or business case would be able to “rebound” from that.

Decision analysis in high risk environment helps to quantify the outcomes and places emotional biases in perspective. A holistic analysis starts with the case mapping sessions, where the scenarios are translated into event trees and credible probabilities assigned.

Typically, decision-makers have difficulty dealing with uncertainty and risks, especially when making their key investment decisions. We have been shaping the risk conversations and have developed powerful visuals to get to the right conversations and understanding.

Risk management

Effective and integrated Risk management help to navigate volatility and uncertainty

Effective and integrated risk management helps to navigate volatility and uncertainty.

The business environment has become more demanding and competitive. Stakeholders demand hyper transparency around business, environmental and social performance. Shareholders reward predictability and competitiveness.

In DAREL we realise that risk management is keeping many executive leadership teams awake at night. Good risk management starts with risk identification, prioritisation and scenario analysis. For the prioritisation, a reasonable assessment of risk probability and impact is needed. The scenario analysis helps to understand correlations, by combining risk events into plausible scenarios. The scenarios are very useful for stress testing and response evaluation.

Risk -and uncertainty management are both needed to maximise decision quality and overall business performance. Not all risks should be treated. Risk profiling and risk tolerance identification are key to avoid overreaction. Our executive team has been managing complex projects in high risk environment, and in doing so has developed experience and (scalable) tools for adequate, selective and efficient risk management.

Scenario analysis and resilience

Improving the business resilience and the predictability of the promises set

Improving the business resilience and the predictability of the promises set.

Resilience is best tested against scenarios. The natural tendency from leadership teams is to focus on the base case, and there is often little curiosity to explore for extremities.

The scenario analysis helps to evaluate resilience and guides the leadership conversation towards the more extreme outcomes, and the important exploration on how the project -or business case would be able to “rebound” from that. The discussions that follow from this are inevitably very insightful, creating a sort of safe “war-gaming” environment where deep alignment, priorities and crisis response can really be tested.

The DAREL executive team can facilitate workshops around scenario identification, quantification and response modelling. This can also be combined with “role-play” to make the scenarios even more content life and create deeper emotional learning.

Decision Risk analysis

Decision analysis is critical in high risk environment

Decision analysis is critical in high risk environment

Decision analysis in high risk environment may require proper risk quantification and decision tree -or Monte Carlo analysis. The DAREL team facilitates the case mapping sessions that are required to set up such a more holistic analysis, or can also run the full probabilistic analysis for the client. This ranges from the relatively one-dimensional cost & schedule analysis, to more complex multidimensional Decision risk analysis.

The executive team doesn’t stop at the analysis, but uses this as the vehicle for having the right conversations, to distill insights and make recommendations for interventions and strategy adjustment. In consultation with the client, in DAREL we even prefer to take full “project management” control for the implementation of the agreed recommendations and decisions, in order to deliver the desired outcomes.

Risked Economic evaluations

Incorporating uncertainty and risks in the key investment decisions.

Incorporating uncertainty and risks in the key investment decisions.

In industry, we tend to focus on the base case. But if there’s one thing we can be sure about, it is that the base case will not become the reality. Typically, decision-makers have difficulty dealing with uncertainty and risks, especially when making their key investment decisions. However, at the same time, most will accept that the project risk profile impact on the acceptable investment return criteria, the required project management approach, and even the “tightness” of the associated control and governance framework.

Creating a common language around “risk” proves difficult.

In DAREL we have been shaping the risk conversations in our organisations over many years and have developed powerful visuals and good practices that help the decision executives to get to the right conversations and understanding. We have experience in setting up the economic models as the “collaboration” tool, supporting the decision analysis, ensuring that all parties understand the relative impacts, interfaces and risk escalation. In that way we can help optimize the “expected” economic outcomes rather than the base case.

Capital stewardship

Setting up governance processes for capital investment and capital stewardship

Setting up governance processes for capital investment and capital stewardship

The DAREL executives have helped to set up governance processes for capital investment and capital stewardship. These were truly end-to-end processes. It starts the value tracking from the outset, ensuring rigourous change management and trending analysis during the subsequent maturation stages and project execution. The process is concluded with an independent value look back and learning capture during the post investment review, after project start-up.

The governance framework can include decision review boards, change boards and capital investment committees. We have experience operating with different frameworks, often in a risk scaled manner. We understand the importance of clear accountability and staff continuity for the delivery of excellent capital stewardship.

DAREL would be delighted to help develop and implement the optimal capital stewardship for your organisation

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