procedures
Jon Johansson Jane Nilsson
Abstract
The aim of this report is to investigate, on the basis of two consult agencies perspectives, what the possibilities and obstacles are to integrate the work with antagonistic and accident related risks. The report is based on two consult agencies where each agency’s work procedure is represented by a risk management method. The work with accident related and antagonistic risks is analysed and evaluated compared to four different components. The components are risk management process (IEC’s and FEMA’s model), driving forces, education and competence, and resources to control risk management with COSO’s ERM framework. On the basis of the components the authors discuss the possibilities and obstacles concerning the integration.
The results from the analysis are compared with the result from interviews with people working with risk management: The interviewed people were asked how they regard the possibilities and obstacles concerning integration of risk management methods.
Introduction
Antagonistic risks, i.e. risks related to actions made by intent, contribute to the Enterprise-wide portfolio of risk. The attitude to antagonistic risks has been changed since e.g. the attack on USA, 11 September 2001. This change results in a
growing interest to include antagonistic risks when working with risk management. The authors expectations are that a coordinated management of accident related and antagonistic risks will lead to saved resources in a company.
The report is based on two consultant agencies perspectives. The two agencies are AB Ångpanneföreningen that manages accident related risks and SecMentor A/S that manages antagonistic risks. These two agencies are used as external participants to help companies in their risk management work.
Method
To be able to identify what the possibilities and obstacles are concerning integration of the two work procedures, the authors have made an analysis where the process of managing each risk are compared to each other.The analysis is based on comparison with a couple of components that the authors consider affect a company’s risk management work. The components are:
• Risk management process, where AB Ångpanneföreningen’s work procedure is represented by IEC’s model to manage accident related risks and SecMentor A/S work procedure is represented by FEMA’s model to manage antagonistic risks.
• Driving forces – the reasons why a company works with risk management.
• Education and competence – the education and competence of the employees working with risk management.
• Resources to control risk management using COSO’s Enterprise Risk Management framework.
In the analysis the risk areas are compared, component by component, to make it possible for to the authors to discuss the possibilities and obstacles concerning integration of antagonistic and accident related risks.
Analysis
The analysis shows that there are some possibilities to integrate the work with accident related and antagonistic risks. The authors advocate that the course of events in a certain extent is the same between the two risks. Due to this fact they conclude that some parts of the estimation of consequence and the risk response, from IEC’s and FEMA’s models, are possible to integrate. The authors have however also identified some obstacles, where they believe that the work procedures, between the two risks, are too different to be integrated. For example they consider that the way of performing probability assessment is too different between antagonistic and accident related risks to be able to use the same methods. The problem with the probability assessment results in a couple of new obstacles: e.g. it can be hard to use the same measure of risk if the probability is not calculated in the same way.
Interviews
To be able to strengthen the analysis, a few phone interviews were made. The interviews were carried out with people working with risk management to find out how they regard the possibilities and problems concerning integration of the work with antagonistic and accident related risks. The interviews were also used to confirm that the components used in the analysis were essential and if the overall conclusions were reasonable.
The result from the interviews shows that the interviewed persons in a great extent are unanimous. All of them argued that there are possibilities to integrate the estimation of consequence and the risk response, in the risk management process. They also thought that all risks in a company must be managed in the same risk management system, to give the management an overall portfolio of risks. They however considered, like the authors, that the probability assessment is too different between antagonistic and accident related risks to be able to integrate the work. The validation of the components, which were used in the analysis, shows that the components considered can be regarded as essential.
Discussion
AB Ångpanneföreningen and SecMentor A/S The objective of the report was to find integration possibilities that can lead to cooperation between the consult agencies AB Ångpanneföreningen and SecMentor A/S and their different risk management processes. The authors mean that there are possibilities for the agencies to cooperate i.e. can the consequence analysis that AB Ångpanneföreningen uses also be used by SecMentor A/S, to avoid doing one of their own. This would result in a profit in time and maybe also enhanced quality on the analysis compared to doing it by themselves.
Each agency may also be able to develop their analysis by learning from each other and the way people think and work in the other area.
The result of cooperation between the agencies would result in a wider product portfolio offered to their customers with more risks considered when making a risk analysis.
A risk management framework
To be able to gather all the risks in a company and create an overall view of them, the authors recommend that all risk management should be done with the same risk management system. An overall view of the company’s risks makes it possible for the decision makers to have better prestudies which help them to make better decisions because of a better foundation. In the report the COSO enterprise risk management framework have been studied.
This framework was taken into consideration because this is an overall risk management system and the authors think that it’s so flexible that it may be able to include both antagonistic and accident related risks.
Conclusions
When comparing the result from the analysis with the interviews some similarities and differences are detected. The authors and the interviewed people shared the same opinions about the estimation of consequence, risk response, and the
Possibilities and obstacles to integrate the work with antagonistic and accident related risks
probability assessment. There are however some differences between the analysis and the result of the interviews. An example of this is that the authors considered the driving forces to be something that might cause problems while the interviewed people did not think of it as a problem.