Quantitative Convergent ERM to Solve Real Life Problem

Quantitative Convergent ERM to Solve Real Life Problem

Oct 28th, 2020

Riskope presented at Infonex (https://infonex.com/ ) Quantitative Convergent ERM to Solve Real Life Problem. The conference was carried out on Zoom and the talks were, of course recorded.

What is ERM?

Quantitative Convergent ERM to Solve Real Life Problem

 Enterprise risk management (ERM) is a plan-based decision-making support. It allows its users to enhance their tactical and strategic planning and therefore to increase competitiveness. Indeed, it aims to identify, assess, and prepare a project, corporation to cope with threats and hazards. Threats and hazards can occur with different likelihoods and generate an array of consequences. Consequences are generally multi-dimensional, e.g.:

  • health and safety,
  • business interruption,
  • direct losses,
  • environmental,
  • reputational,
  • etc…

At inception, ERM requires to:

  • identify the system,
  • define success and failure,
  • identify the hazards and evaluate their probability and consequences, together with the inevitable uncertainties.

At Riskope, following the ORE flowchart we then facilitate the clients’ definition of their risk tolerance.

Finally, we produce ORE ERM dashboards which allow clients to prioritize their risks and design sustainable and balanced mitigative roadmaps. Once the roadmap is designed, tactical and strategic planning actions are implemented together with a transparent communication to all stakeholders.

ERM applications

Risk Management has considerably evolved in the last decades. Companies managed risks for the longest time by buying insurance to cover various losses. Nowadays, climate change and other issues, such as possible catastrophic environmental losses lead insurers to deny coverage, sometimes even to long-term clients.

ORE-ERM, which is a convergent discipline allows to get a 360-big picture understanding of the risk landscape. Thus, it makes it possible to delve into details if and when needed. This is particularly useful when dealing with horizontal issues, such as cyber, IT, where informational silos prove to be extremely detrimental. In addition, ORE-ERM allows to tackle climate change and other divergent exposures. Other areas where such an approach is paramount are, for example:

  • technology (particularly technological failures),
  • supply chains, and of course,
  • mergers and acquisitions.

At Riskope we have applied ORE-ERM to:

  • Acquisitions,
  • Projects, i.e. design, contracting and cost evaluation,
  • Multi-operation, multi-national corporations (natural resources, suppliers), and finally,
  • Supply chain, e.g. multimodal networks.

Highlights of Quantitative Convergent ERM to Solve Real Life Problem

The highlights of the talk are:

  • Studying success stories is of no, or very limited, use to increase success.
  • We are better off studying failures, as they teach us what not to do and they are by far more numerous than successes.
  • However, focusing on failures can lead to fear-induced paralysis. That is the reason why it is paramount to develop well balanced quantitative risk assessments.
  • Indeed, convergent quantitative, rational risk analysis allows us to use:
    • “past-failures” information
    • avoid fear-induced paralysis, and finally
    • avoid excessive audacity and thus increase the chances of success.

The talk included several examples and the review of real-life cases. As a result, it draws useful, general conclusions.

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Category: Consequences, Hazard, Mitigations, Optimum Risk Estimates, ORE2_Tailings, Probabilities, Risk analysis, Risk management

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