Convergent risk assessments
Jan 20th, 2021
Convergent risk assessments integrate areas that are significant to an organization, such as operational risk generated by various hazards or compliance, within a single framework. In the meantime, convergent risk assessments suppress informational siloes and therefore tend to explicitly tackle systemic interdependencies.
Convergent risk assessment
A convergent risk assessment looks at a silos-free system where:
- geographical, and finally
risk information converge in a single platform.
Convergent risk assessments have to be holistic by definition. We discuss the definitions in the next section.
Holistic risk assessment
Holistic means that the assessment looks at all hazards impinging on any element of the system. We oftentimes use the term “multi-hazard” as a synonym of holistic.
For instance, a holistic risk assessment will look at an element, say a processor in a chemical plant and examine all the hazards that may affect it, for example:
- Human error,
- IT and finally
And all their potential consequences dimensions, i.e.:
- Business interruption and finally
As a result, it is possible to perform a holistic risk assessment of a product, a production line, or the IT system but that holistic risk assessment is likely developed in a silo. It is indeed difficult to prepare a true convergent risk assessment on a single product, or production line or a isolated system.
Closing the circle of convergent risk assessment
The holistic risk assessment will become convergent when all products, production lines, operations, IT, corporate are merged together in a unique silos-free platform and thus we consider their interdependencies.
Incidentally, we know of Enterprise Risk Management models that are not convergent, and some sad ones that not even holistic. Think about all the companies where they perform IT risk assessments, environmental risk assessments, operational risk assessments of each operation and then attempt to put a ERM on top of the whole. You can bet there will be double or treble counting of risks, there are undetected exposures and, of course, they miss many interdependencies! The result: squandering of resources, loss of time, confusion.
The goal of convergent risk assessments
The goal of convergent risk assessments is to provide a holistic view of risk for the organization eliminating informational siloes and fostering a 360°-view of the risk landscape surrounding the organization.
This increased visibility fosters the ability to manage sometimes competing goals and interests.
Convergent assessment means that all hazards potentially present (technical, man-made, natural, etc.) are present in the aggregate risk evaluations and include interdependencies.
Tagged with: convergent ERM, Convergent risk assessments, glossary, holistic risk assessment, information silo
Category: Consequences, Hazard, Mitigations, Probabilities, Risk analysis, Risk management