Risk management

The Management Panel’s risk agenda covers four areas:

  • The totality of the risks an organisation faces - enterprise risk management - colloquially known as ERM
  • management of a business’s strategic risks - colloquially known as STRATrisk
  • The management of a business’s project risks - colloquially known as RAMP (Risk Analysis and Management for Projects)
  • The management of a business’s operational risks - colloquially known as OPrisk

Enterprise risk management (ERM)

The ERM group is a combined expert panel with members from the ICE and the Actuarial profession, holistically looking at strategic, operational and project risk. The members of the group consist of people who work, or have worked, in the arena of risk at the senior level.

It seeks to find new insights into ERM which are of general application. The group is developing a generic practical framework for enterprise risk management which builds on the work carried out in the other three risk areas, to enable an organisation to assess whether the overall risk it is carrying is consistent with its risk appetite. In 2011 the group created the “Handling Uncertainties – the key to truly effective risk management document” this document was then consulted upon with key industry figures to understand what further work needs to be done in this area.

The following guide was developed jointly with the Faculty of Acturies in the summer of 2011. It is a high level guide that outlines some newer ways of addressing risk management. It is partly based on the more comprehensive ERM Guide that the ICE and the Actuarial Profession developed in recent years as well learning from recent experience and discussion with a number of experienced practitioners. The aim of the new ERM Guide is to raise awareness of some newer ideas and to encourage people to think differently about the issues involved. In this context, please note that the guide is not intended to be comprehensive or to provide detailed technical examples. Similarly, in the ERM area definitions of risk-related subjects are not uniformly agreed globally and as a result readers should note that some definitions used in the guide may not align fully with those used by other practitioners in risk management. Accordingly, the guide should be considered work-in-progress which we hope to develop further - we welcome any feedback on the guide and additional practical insights that we may develop and share.

Strategic risk

Strategic risks are the system of future opportunities and threats that are so significant that they could materially impact the enterprise's achievement of its main purpose or even survival. It's the biggst risk, including the risk that an organisation may undertake the wrong projects to achieve its strategic objectives.

ICE is involved in the STRATrisk Group. STRATrisk is a site dedicated to understanding and managing strategic risks and associated opportunities. The STRATrisk Group, chaired by ICE member Mike Nichols of Nichols Group, has produced Strategic Risk: A Guide for Directors. The guide and CD sets out a recommended approach to the management of strategic risk, STRATrisk, and an explanation of how to apply the approach.

Project risk

Project risk includes all the risks that are within the projects that are still being managed separately by the rest of the business/organisation.

ICE and the Actuarial Profession have been co-operating on risk management issues for over 10 years. Both professions are currently working together under the RAMP (Risk Analysis and Management for Projects) Working Party. The working party is updating the RAMP Handbook, a guide which shows how RAMP can enable one to identify, analyse, and respond to risks, and place financial values on them. The group recently conducted an online survey to gauge the effectiveness of the handbook and to look at ways to improve the publication.

The RAMP Working Party has recently commissioned research on the social and environmental aspsects of major projects. 'Incorporating Principles of Sustainable Development within the Design and Delivery of Major Projects: An International Study with Particular Reference to Mega Urban Transport Projects' is being carried out by the Omega Centre based at University College London.

http://www.omegacentre.bartlett.ucl.ac.uk/about_us/news/20110802_RAMP_REPORT.pdf

The The project outcomes can be found in the Executive Summary and the final report.

Operational risk

Operational risk includes all the other risks of an ongoing business. These include the risks which arise from projects undertaken in the past that are now in their operational phases and are no longer being managed as separate projects but as part of the main ongoing business.

OPrisk recently had a project funded by ICE's Research & Development Enabling Fund, supporting the detailed scoping of a project in order to produce best practice guidance on managing operational risk. The report can be found here.