Welcome to the second installment of the Risk Awareness monthly newsletter. Today I wanted to share another career changing video from RAW, practical steps on implementing risk-based decision making, an important article on risk management and one of my favourite books on RM2. Watch, read, listen should be the moto for this newsletter. It’s full valuable risk management content and built on my work experience as a CRO.
The value of a project, investment, company, etc. is critical for making good business decisions, yet all too often we rely on kind of “esoteric” methods for valuation. In this talk, Torsten will describe a logical, systematic—and very practical—approach to put a risk-adjusted value to any kind of project, investment, etc. using simple Monte Carlo simulation. He will demonstrate how easy it is to get rid of the guesswork of arbitrary “risk premium” and use the risk information you already have in your model.
When implementing RM2 start with the key decisions. Develop a specific risk analysis methodology for each key decision type – the organisation should implement risk management by:
- identifying where, when and how different types of decisions are made across the organisation, and by whom;
- modifying the applicable decision-making processes where necessary by applying some of risk analysis techniques to the actual decision making process. This will help decision makers make informed and intelligent decisions based on proper risk analysis. Which techniques work and which don’t? I have an article on that.
- ensuring that the organisation’s arrangements for managing risk are clearly understood and practised.
One of the biggest issues in the risk management profession is that many, way too many, people who have the title of risk manager are not really qualified to do the job. Many don’t even have the minimum required education. Imagine a doctor who vaguely remembers doing biology in year 9 high school. Well that’s your average risk manager trying to remember how probability theory works. 5 red flags 🚩when hiring a risk manager.
The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty. A must-read for anyone who makes business decisions that have a major financial impact. Sam uncovers the science behind the flaws in modern strategic planning, budgeting and forecasting and how risk analysis can help overcome the problems. Find out why plans based on averages and on average wrong.
RAW2022 is scheduled for October. Now is your chance to nominate speakers or topics. Simply comment below. Also, if you are aware of any RM2 events coming up do let me know and I will include in the next newsletter.
Winter risk awareness day is happening today, this Friday. Only available in Russian. https://winter.riskawarenessweek.com/
3000+ risk practitioners have completed our online risk management and decision making courses, check them out https://www.udemy.com/user/alexsidorenko/
What’s next? What would you like to see in the next months newsletter?
Check out other risk management books
RISK-ACADEMY offers online courses
Informed Risk Taking
Learn 15 practical steps on integrating risk management into decision making, business processes, organizational culture and other activities!
ISO31000 Integrating Risk Management
Alex Sidorenko, known for his risk management blog http://www.riskacademy.blog, has created a 25-step program to integrate risk management into decision making, core business processes and the overall culture of the organization.
Advanced Risk Governance
This course gives guidance, motivation, critical information, and practical case studies to move beyond traditional risk governance, helping ensure risk management is not a stand-alone process but a change driver for business.
