Risk Revolution. Catastrophe Killer.

The BP blow out is the best recent example of the impact of a low probability, catastrophic impact risk.  Quarkside was asked to investigate this aspect of risk management twelve years ago by the Nationwide Building Society.  It was interesting to open the eyes of directors to the unthinkable risk of blowing out their business.

Quarkside can’t claim any credit, but it is noteworthy that they survived the dash to de-mutualisation and the recent credit crunch.  They must have studied a range of catastophic scenarios and taken avoiding action in good time.

The methods used were published in a paper given to the Institute of Mechanical Engineers in 2002.  Perhaps of interest to psychologists, the method was called Confidence Management – as the reverse of risk management.  It is much easier to approach a senior manager with “What is your confidence level of achieving success?” than, “What is the risk of failure?”.  Very simple, but it worked in practice.

The elegance of the method means that confidence (or risk) can be consolidated across projects, programmes and enterprises.  It is scalable across district councils, unitaries, county councils, government departments and UK plc.  The objective is to ensure that the chief executive, at whatever level, can see the most important objectives at risk – whether it is profit, reputation or society outcomes. This is explained more fully as the Risk dimension of the 7-Dimensional Information Governance (7DIG) Framework.

The Structural Reform Plan is perhaps the most significant change programme for a generation.   The investment is minimal, the benefits in avoiding catastophes may save a government.

Why not give it a try?