Risk Analysis & Management – Procurement & Contracts

The aim of the workshop is to equip participants with a range of practical tools and techniques to identify, scale and treat risk in order to create an acceptable level of residual risk for their organisation.

Introduction

This workshop explores risk management from a process and supply chain point of view. The workshop will address traditional approaches to risk identification, scaling and treatment, and different ways of thinking about risk, such as scenario planning, contingency planning and Cynefin.

This course is designed for:

This course will benefit those who wish to think practically and holistically about how risk impacts upon their business objectives and how their organisation can address the risks faced in a balanced way.

Course structure

A practical one-day workshop consisting of nine session involving exercises, case studies, presentations and trainer-facilitated discussions. Each of the sessions will be led by an experienced facilitator and will feature the key principles and practical methods which may be used in the procurement process, together with practical case study sessions to maximise the transfer from the workshop to the workplace.

Benefits of attending

This workshop will help practitioners identify risks presented by the external supply market and ensure that the residual risk faced by their organisation is known and manageable.

As well as this delegates will gain three key benefits from attending:

• More capability in applying practical methods to identify risks which may affect procurement projects, including risks from the external environment and the supply chain
• More capability in applying practical methods to scale risks, including scaling the residual risk borne by the organisation after risk controls have been applied
• Less likelihood that the procurement process is affected by uncertainty and/or reduced consequence if the procurement process is affected by uncertainty

Key learning outcomes

• Design and implement a risk management process for a variety of risks, both internally and externally originated
• Conduct risk identification and scaling workshops in a way that creates a robust outcome enjoying the support of participants
• Facilitate alternative approaches such as scenario planning and Cynefin to risk identification and treatment, and combine traditional and contemporary perspectives
• Propose balanced risk treatment options for a risk, including risk acceptance, transfer and contingency planning as part of a coherent suite of potential treatment options

Course Content

Risk management in practice

• What’s new in risk management?
• Practical methods for risk identification
• The use of scenarios to aid risk identification
• Practical methods for risk scaling
• Practical methods for risk treatment
• Cynefin and dealing with different contexts
• Contingency planning and business continuity
• Corporate risk appetite and residual risk scaling
• Alternatives to rules-based risk management regimes

Practical methods for risk identification

• The limitations of risk registers
• Facilitating cross functional brainstorming
• The lessons from The Longford Gas Explosion
• The lessons from Deep Water Horizon
• The lessons from the Black Swan

The use of scenarios to aid risk identification

• The importance of a forward-looking perspective
• What is scenario planning?
• How scenario planning helps risk identification
• Generating trigger events
• Principles of conducting a scenario planning dialogue

Practical methods for risk scaling

• Traditional matrix based approaches
• Do market or environmental events fit in this framework?
• Practical mechanisms to facilitate a risk scaling workshop
• Promoting consensus using Delphi
• Scaling risk before controls and after controls

Practical methods for risk treatment

• Risk transfer through insurance
• Risk transfer through contractual clauses
• Liability, indemnity and warranty clauses
• Liquidated damages, calculating and capping
• Reducing likelihood in practice
• Reducing consequence in practice
• Avoidance and justifying the rationale
• Acceptance and scaling the residual risk taken

Cynefin and dealing with different contexts

• What is Cynefin?
• Sense making versus categorisation models
• Which contexts are simple in character?
• Which contexts are complicated in character?
• Which contexts are complex in character?
• Which contexts are chaotic in character?
• How Cynefin helps build better risk management

Contingency planning and business continuity

• What is contingency planning?
• Are disaster recovery and business continuity the same as contingency planning?
• Practical steps in contingency planning
• Defining leading indicators
• Developing appropriate responses
• Examples of contingency plans

Corporate risk appetite and residual risk scaling

• Defining corporate appetite for risk
• Most treated risks include some residual risk
• Scaling the risks
• Reporting residual risks
• What is the cost of reducing the residual risk?

Alternatives to rules-based risk management regimes

• Category one; preventable risks
• Category two; strategic risks
• Category one; external risks
• Matching the organisational controls to the risk portfolio
• What this means for the procurement function