Published by Danny Wong on
The business was excited about the opportunity of the new capabilities, but there was a real worry around the project considering the scale and criticality of the system and the various issues surrounding resilience, IP protection, complex integration challenges, the prospects of critical dependence to an external vendor, not to mention the nine figure price tag (in $) for the project were of immediate concern. Fortunately, the experienced CEO and Board were highly risk aware and demanded that the biggest risks were properly addressed.
A creative approach to risk management was instrumental as Danny advised the project from a risk management perspective.
“My approach has always been one of creative problem solving – challenging real risks with ideas that are useable and practical. The ‘magic’ that will provide a working solution to a seemingly unsolvable problem doesn’t come from a process – it evolves from the first spark of an idea during brainstorming sessions comprising diverse skills and grown into something truly innovative.”Danny Wong
Managing Consultant, Business Risk Practice, Barnett Waddingham
He recommended true mitigating solutions that transformed the shape of the project, including:
The company recognised the benefit of having professional project risk management expertise beyond a traditional risk register approach and so this large-scale project is currently ongoing, utilising the solutions that Danny recommended.
Even though the team behind the implementation of this major project were fully committed to the benefits of risk management, they still only employed simple, non-quantitative techniques. Although this approach did help reduce risk as illustrated above, it provided limited forward looking management information. The quote from Trevor Llanwarne in relation to the public sector typifies the challenges of many business leaders.
“The main reported concern expressed by public sector non-executives on managing board level risks is “Why do so many major issues seem to blow up in a big way and we have had no warning; if we did have warning, we may have been able to help out to mitigate or prevent.”Trevor Llanwarne
Former UK Government Actuary
Barnett Waddingham can significantly improve on traditional risk reporting approaches by highlighting potential issues before they occur and providing predictive management information. This can be achieved by combining the proactive risk management approach described in the previous section with quantitative analysis on the key risks associated with a project to provide risk adjusted forecasts of the project milestones, expected final completion timelines and budgets.
Barnett Waddingham could develop a financial model that provides a bottom up risk-adjusted forecast for the project. Our actuaries will work with the team to understand scenarios, decipher credible data sources and develop a model that better predicts the completion of the project. This model can be adjusted or sense-checked by qualitative judgements to derive a forecast that project teams fully support.
We will clearly communicate the methodology and assumptions behind the model but more importantly, can facilitate the discussion around business implications and potential actions to reduce last minute surprises.
Barnett Waddingham adopt a proportionate approach to providing quantitative risk analysis on the timescales and budgets for project milestones, which in turn provides new, useful, forward looking information for the project teams and steering boards that help to inform difficult decisions earlier.