Discussions at an IRM infrastructure special interest group meeting have highlighted hot topics for the sector, including embedding risk management across an organisation, dealing with uncertainty and differing levels of complexity, and the use of key risk indicators (KRIs).
The February event brought together risk professionals from across major rail, road, public utility and aviation projects, and while the debate was focused on their specific industry, many of the key points will resonate with risk management professionals across the board.
Integration is key
In order to see maximum return on investment, risk management processes at all levels need to be thoroughly embedded and integrated into the way an organisation operates. Whatever the industry, risk managers should be looking at how well senior management promotes and undertakes good risk management activities and whether the risk team is integrated into the decision-making process. Where organisational culture has a healthy attitude to risk management, the risk team should be involved not just procedurally, but with a process that’s built into the way the company operates.
When it comes to discussing risk, practitioners should encourage organisation to be open and help to ensure understanding of risk is consistent at all levels of seniority. Bad news or mistakes should be discussed freely and in a way that encourages learning.
This open mindset applies equally to dealing with uncertainty; risk managers should be moving away from simply seeking to understand and manage what they know and instead working to capture, understand, estimate and manage what they do not yet know about a project.
Use the right tools for the job
Risk managers can provide real value in identifying the appropriate frameworks and scenarios for a particular project. If complex analysis isn’t necessary, then risk managers can implement a simpler and equally effective solution to aid decision-making. If the situation requires more intricate risk models then the role is likely to include an element of human judgement alongside quantitative analysis.
Done well, KRIs can help teams to better anticipate risks, improve awareness, adapt to disruptors and seize opportunities. It can be all too easy, however, to design metrics which look impressive but don’t contribute to good decision-making. KRIs should be used sparingly, with emphasis on a few important indicators to help teams spot early warning signs, take action in advance and guard against potential damage.
Three of the most important competencies for risk practitioners are creative skills, the capacity to challenge constructively and the ability to ‘join the dots’. Impartiality and objectivity are also essential. However, unless directed by management, sector-specific knowledge is not. While still desirable, there are plenty of examples of fast-learning practitioners moving sectors and applying different industry knowledge successfully.
The IRM’s infrastructure special interest group is intended for individuals interested in all aspects of infrastructure risk as it relates to design, construction, management, funding, insurance, technology advances and resilience. For more information about the group and other forthcoming events visit www.theirm.org/events/special-interest-groups/infrastructure-risk.aspx.