Overcome Risk Using Process Management and Improvement

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Confidential and Proprietary © 2014 Robbins-Gioia, LLC
Overcome Risk Using Process Management
and Process Improvement

Goal
 Understand how strong Process Management &
Process Improvement disciplines can be leveraged to
overcome Risk Management challenges
2

Overview
 Establish definitions – Risk, Risk Management,
Process, Process Management and Process
Improvement
 StrategyTraceability
 A Portfolio Perspective
 Overcoming Risk via Process Management and
Improvement
3

Dictionary definition:
 (Exposure to) the possibility of loss, injury, or other adverse or unwelcome
circumstance; a chance or situation involving such a possibility.
The ISO definition:
 the 'effect of uncertainty on objectives'
Risk is related to probability and severity:
 “The probable frequency and probable magnitude of future loss”
A Threat is a risk with potential negative outcomes
An Opportunity is a risk with potential positive outcomes
What is Risk?
4

 Economic risk
 Business & Operational risk
 Financial risk
 Health, Safety & Environment (HSE) risk
 Information technology & security risk
 Examples
Types of Risk
5

Confidential and Proprietary © 2014 Robbins-Gioia, LLC6
Perceiving Risk
Perceived
through
science
Virtual
Directly
Perceived

Issue Management
Active Risk ManagementActive Risk Gathering
Identify and
Assess Risks
Triage Risks
Need
Mitigation /
Contingency
Plan
No Mitigation /
Contingency
Plan Needed
Develop and
Manage
Mitigation /
Contingency Plans
Program Start
(Stage 0)
Assess New
Risk
During life of
program
Risk Becomes
an Issue
Execute
Contingency
Plan
V
Take Steps to
Mitigate Risks
Formal Risk
Assessment
(Stage 1)
New Risk
Identified
For Each Risk
OR VOR
Revise or Add
Mitigation
Plans
Close /
Downgrade
Risk
Monitor Risks
& Reevaluate
as Needed
• Identify and Rate
Risks
• Create Risk
Management Plans
• Monitor Risks
• Identify and Rate New
Risks
• Execute Contingency
Plans for Risks that
have become Issues
End-to-End Risk Management

Common Risk Management Strategies
8
Risk
Management
Strategies

Process is…
 A process is a series of steps and decisions that
transform inputs into outputs in order to deliver a product
or service of value to customers while meeting the
business objectives of the organization
 Inputs can be material or information or both
 The fundamental expectation is to produce good results
for customers and the organization while managing
problems or unforeseeable events.
9
In our definition, Process includes what we traditionally think
of as ‘process,’ along with its enablers: People and Technology

Process Management is…
 Process management is the ensemble of activities of
planning, monitoring and controlling process
performance.
 Planning: defining, designing, building, testing, deploying
and measurement planning
 Monitoring: measuring, tracking & trending, analyzing and
interpreting
 Controlling: taking actions within the current-state process
to maintain process outcomes within the desired ranges
10

Process Management is…
…Complex
11
http://www.braincourt.de/Business-Process-Management.96.0.html

Process Improvement is…
12
“Not with inventions, but with improvements you create fortune.”
Henry Fordx
 Process Improvement is a series of actions taken to
define, analyze and improve existing processes within an
organization to meet goals and objectives.
 Adoption is necessary to realize the potential benefits.
 Sustainability is required for benefits to be ongoing.

Succeeding at Process Improvement
• The most successful process improvement effort is
one that concentrates on:
• Increasing value to the Customer
• Creating effective processes
• Reducing resource consumption by improving
process efficiency
13

Manage
Processes
Improve
Processes
Two Sides of the Same Process ‘Coin’…
14
Opportunities &
Threats
Changes to Process
& Measurements
There must be a balance between continual improvement
and ongoing management of processes

 Business Processes are the means by which
organizations achieve those aspects of their Strategy
that are realized through Operational Execution.
 Clarification of problems and opportunities for
improvement is integral to business analysis and process
management.
15
Guiding Principles – Strategy Realization

Traceability to Strategy

 Customers do not experience processes, they experience
a series of “moments of truth.”
 Process management oversees multiple improvements,
larger-scale transformations, and/or automation efforts
to manage overall performance within and across
processes.
 A strategic focus on process clarifies the underlying risk
management strategy for the whole organization.
17
The End-to-End, Portfolio Nature of PM & PI

Managing Uncertainty to Improve Outcomes
Hypothetical Example: Uncertainty about Likelihood of Success
versus Typical Program Spending Profile
Relative Uncertainty about
Success
Spending
Profile
Low
High
Gate 0
Program Start
Gate 1 Gate 2 Gate 3 Gate 4 Gate 5
Launch
0%
100%
RelativeUncertainty
%ofProgramSpend
fromGates0-5
50%

 This perspective increases understanding of
processes from a constricted efficiency focus, to a
more robust insight into risk mitigation and
opportunity realization.
 Maintaining a balanced focus on managing and
improving processes helps organizations address risk
in a structured manner
19
Where we are…

 This two-fold, balanced approach helps the
organization enhance its success by:
• Proactively addressing performance issues with
timely and informed decision making based on
business process data analysis
• Systematically managing a disciplined approach to
evaluate/improve effective control and governance
processes
• Maintaining a continual focus on risk within and
across all processes and change initiatives
20
Contributing to success

The Point of AllThis
 Risk Management is NOT separate from Process
Management
 Reframe Opportunities andThreats as upside and
downside Risks
 Not all types of risk may be in the scope of Process
Management & Process Improvement
21

Communication
“The two words ‘information’ and ‘communication’
are often used interchangeably, but they signify
quite different things. Information is giving out;
communication is getting through.”
- Sydney Harris
22
One of the biggest risks any organization faces is not
lack of information, it is lack of communication

In Conclusion
 Do not think about Risk Management as separate
and distinct from Process Management & PI
 Process Management provides an ongoing means
for identifying and managing risks
 Risk Management activities feed the Process
Improvement pipeline
 Create a culture of constant awareness of risk
 What’s changed about current risks? What new risks are there?
 What can we do about it? What will we do about it?
 Communicate with clarity and verify understanding
23

Questions?
Answers

 Contact Information:
Mark Barnett
mark.barnett@robbinsgioia.com
25

Overcome Risk Using Process Management and Improvement

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