Forward Terrain

An organization faces a diversity of risks throughout its operations. Risks threaten and can erode an organization’s value through a variety of disruptions, delays, legal and regulatory situations, incidents, accidents, etc. The potential for even greater erosion of future performance has increased in today’s complex and dynamic business environments.

The challenge for organizations is not just measuring and understanding the few ‘major’ risks its faces. The ‘smaller’ risks are often more significant. Though individually, the smaller risks do not have a large impact on the organization overall, collectively, these many 100s to 1000s of smaller risks are a significant burden on the organization and can lead to substantial impact on its future performance.

Furthermore, organizations need to also consider the links between capability and risk when attempting to manage risk effectively. Capability and risk are closely related and together will determine an organization’s future performance.

To date there has been no reliable, comprehensive and practical solution for organizations to address these challenges. This is because current practices have;

• Limited ability to measure risk: There is an inability to measure the inherent uncertainty (subjectivity) that is always there in risk and provide a simple meaningful representation for decision-making and actions: The level of subjectivity is a critical component which can change the level of risk, and therefore needs to be properly represented in the overall measurement.
• No model for linking capability and risk: There is no clear model to represent the linkages between capability and risk in a robust and practical way.

To reliably measure and manage thousands of risks across an organization requires a fundamentally different approach to current practices. The solution required needs to be a robust enterprise system that can work effectively at a local work group level, sharing information, tracking, communicating and alerting, while simultaneously integrating and collating high-level management and executive views for analysis and reporting. Only a specialized enterprise application can perform this function.

Managing the Drivers and Threats
to Performance:

• Managing Capability
• Managing Risk