Risk Management

Risk Management In Openreach

April 2016

risk • noun 1 probability x impact 2 the effect of uncertainty on objectives (both threats and positive opportunities)

…and when it goes right

Risk is big news, both when it goes wrong…

Risk and reward are different sides of the same coin; if we don’t take risk it’s unlikely we’ll realise any reward. Recognising the need to take risk doesn’t mean doing so blindly though; we should do whatever we can to tip the odds of achieving a positive outcome in our favour. After all, as one of our LoB CEOs recently pointed out, ‘Hope’s not a strategy’.

Why is Risk Important?

When it comes to Openreach everyone is affected by risk every day. In an increasingly uncertain business environment it is therefore important that we understand the risks and reward trade-offs of our decisions. It could be the way we prioritise our work, how we deal with customers, or our personal safety. It’s based on a simple idea. We think about the threats and opportunities we face each day and try our best to manage them.

The Benefits of Risk Management

Successfully managing risk brings with it a wealth of benefits, including but not limited to:

 Increased chance of meeting objectives

 Increased growth rates and commercial success e.g. revenue, EBITDA, margin growth etc.

 Increased employee remuneration and job security

 Promoting an innovative, challenging dynamic culture that fosters creativity

 Engendering a sense of pride in employees

So, what exactly is risk management?

Well, a risk refers to the effect of uncertainty on what we do and what we are trying to achieve.

Can you give me some examples?

Sure, some real life examples might include:

Choosing a builder. Do you accept a cheap quote with the risk of shoddy work?

Buying premier league sports rights. Will we attract enough customers to make the desired profits?

So it’s mostly about eliminating risk?

Not exactly, it’s more about taking on the right risks for the right benefits and returns. You can also focus on reducing the uncertainty around events, giving decision makers more accurate and comprehensive information that helps them increase the likelihood of achieving the desired outcome.

That sounds pretty complex and technical.

Initially it might do, however we practice it every day, both at home and work without consciously realising it. Let’s take a look at the process of risk management through a real life example.

How can I make the desirable outcomes more likely?

How can I make the desirable outcomes more likely?

What am I uncertain about?

What could happen & how likely is it?

What could happen & how likely is it?

How do I know I’m reducing the uncertainty?

What am I uncertain about?

How do I know I’m reducing the uncertainty?

Identify

Evaluate

The next step of risk management is to try and estimate how likely it is that an event could happen and the impact if it did. We inherently have a feel for how much risk we’re comfortable with and this tells us whether we’re going to need to act or not. When formally assessing a risk we should look to estimate the chance of something happening (e.g. 10% equating to a 1 in 10 year likelihood of occurrence) and financial impact on the Group.

No one likes nasty surprises, so identifying potential issues before they happen is a critical first step in effectively managing risk.

Risk can come from a number of places, so its best to think in terms of what we want to achieve and what could stop us from achieving those results and goals.

Much of what can go wrong in our services is about ensuring a match between the customer’s expectations of service and our capability (whether process, systems or resources) to deliver it.

What’s really important is to make sure you raise any uncertainties you see so that it could be effectively managed.

Various tools are available to help structure this process. Click on the image to the right to see an example of a risk matrix.

Can I park?

What are the outcomes?

For a real life example of working through the risk management process, let’s look at parking a van during a customer install. Stopping near a parking space and recognising that there is risk in parking between two other vehicles is identifying a risk issue.

So your risk has been identified as parking between two vehicles, but what could happen as a result of it?

You could park perfectly with no issues. You might notices that there is a problem whilst parking and stop or you could try to park but damage a vehicle. You’ve just evaluated the risk.

How can I make the desirable outcomes more likely?

How can I make the desirable outcomes more likely?

How do I know I’m reducing the uncertainty?

What am I uncertain about?

What could happen & how likely is it?

How do I know I’m reducing the uncertainty?

What am I uncertain about?

What could happen & how likely is it?

Respond

Monitor

Now it's time to respond to the risk. You can see the four most common ways of responding by clicking on the image to the left.

With business moving faster than ever, monitoring risks for changes and tracking the continued effectiveness of our actions is important to avoid being blindsided by undesirable events. Whenever practical, we should look to monitor indicators that provide insight as to what’s likely to happen in the future. Increased employee churn in our contact centres, for example, may be indicative of an imminent deterioration in customer satisfaction due to declines in service quality. Reporting that provides a view as to how well our activities are controlling our risks is important to help those responsible for managing them to derive the necessary comfort that everything’s under control.

Some activities will be more effective than others at managing specific risks and to ensure we get the best ‘bang for our buck’ we should consider this when deciding what we’re going to do.

We’ve already noted that eliminating risk is rarely the best option, as it will likely eliminate the reward too; as such, how far we reduce the risk is an important question and one generally best answered by the person accountable for the outcome.

To ensure things get done with no problems, delivery accountability and responsibility should be assigned to specific individuals and associated milestones defined.

Improving the odds

Is it working?

You know what your ideal outcome is: park between the vehicles with no issues, now you want to increase your chances of success. Before starting the parking manoeuvre you ask someone to help guide you into the space. You’ve just responded to the risk by making success more likely.

Although we have implemented something to reduce the risk we need to make sure it’s working through real time feedback and monitoring. We’re going to ask the person guiding us to shout directions and let us know if we’re getting too close to a vehicle whilst parking, giving us real time feedback.

We all play a part in delivering Britain’s Connected Future. However, there could be uncertainties to delivering our plans and achieving our goals. Applying Risk Management practices during your working day will help you to identify potential roadblocks to these goals and implement strategies to deal with them.

Lets take a look at how everyone adopting good risk management techniques could affect our network and how we build Britain’s Connected Future.

DP Investment made in the right areas

OR Building Correct risks being taken for right reasons

Exchange Less ad-hoc, unplanned work

End User Less interruption to end user service

Vans More effective jobs being completed

Why Does Risk Management Matter To Me?

Hints and Tips

Remember, risk management’s all about improving our chances of success.

Don’t be afraid of raising risks; what’s the worst that can happen!

Don’t be afraid to accept risks you’re comfortable with – risk management’s about getting to the point where we can do so.

Keeping things proportional will help ensure any additional work to better manage risk is minimal; risk management should just be part of what we do.

Get others involved. Risk doesn’t respect organisational boundaries and we need to work together to better see and understand the bigger picture.

Write it down so you know what you’ve done and what we still have to do; after all, the palest ink trounces the sharpest memory. Documenting things in risk registers, for example, also makes reporting and sharing of information much easier.

Click here to try the online risk management training or check out the Group Risk Team intranet for helpful guidance and tools.

Don’t be a stranger – the Risk Advisers in each of the LoBs and in the Central Risk Team are approachable and are on hand to provide support and guidance where required. You can find out more by clicking here .

It’s always great to share ideas. If you have any useful hints and tips make sure to share them with the risk management community.

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