International Diploma in Risk Management

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International Diploma in Risk Management
Dr Phil Kelly

• Risk Decisions

Maximise your personal effectiveness studying
the International Diploma module 3
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Module 3 overview

• This module will
• Provide a comprehensive understanding of the
  issues, methods and challenges in risk data
  analysis, to help students become competent
  consumers of risk information
• Examine the conceptual and managerial challenges
  in gathering and effectively communicating and
  using risk data to be able to lead teams and work
  with technical specialists on risk data gathering
  
• Examine the various methods for analysing both
  qualitative and quantitative data in order to
  make consistent managerial decisions
• Provide a critical understanding of how risk
  information and knowledge is created and used to
  support tactical risk decision making

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Agenda Outcomes

• To outline the module
• Module aims
• Learning outcomes
• Structure Content
• Assessment
• Resources
• To answer concerns Prepare you for the exam

To meet network with other students, learn from
examiners, educationalists, practitioners others
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Module Aims

• To provide a critical overview of
• how risk information knowledge is created
  used to support risk-problem-structuring in
  support of tactical risk-decision-making, and
• identify factors impacting the quality of
  risk-decision-making within organizations

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Module Learning Outcomes

• Understand concepts related to problem solving
  and decision making Distinguish the main
  business risk decisions made in contemporary
  organizations
• Examine how decision-maker characteristics may
  impact risk-decision-making within the
  organization
• Explain the role of technology in support of the
  risk information and knowledge creation process
• Identify how technology may support risk problem
  solving and the risk-decision-making Process
• Identify the different steps in the problem
  solving process and evaluate the role of risk
  information and risk knowledge in support of
  corporate risk decisions
• Compare and contrast methods used to generate
  risk information and risk knowledge

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Study units

• Decision Making
• Introduction
• Decision Makers
• Risk thinking and decision making
• Risk problem structuring and the creation of risk
  information and knowledge
• Using technology to support risk decision making
• Critical risk thinking and improved corporate
  risk decision making

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5 Critical Thinking

Judgement 2 DECISION-MAKER(S) Values
4 TECHNOLOGY
3 Qualitative Analysis Quantitative
Analysis
Experience
RPS
Choice
INPUTS
OUTPUTS
1.DM Theory
Risks identified/ Risks estimated Risks selected
for treatment Treatments (options) selected
Data
1. Normative decision models Classic/ rational
decision making theory contrast subjective/
intuitive and objective/ scientific decision
making Decision types single proposals,
mutually and non mutually exclusive uncertainty
use of data and experience in decision making
contextual factors.
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5 Critical Thinking

Judgement 2 DECISION-MAKER(S) Values
4 TECHNOLOGY
3 Qualitative Analysis Quantitative
Analysis
Experience
RPS
Choice
INPUTS
OUTPUTS
1.DM Theory
Risks identified/ Risks estimated Risks selected
for treatment Treatments (options) selected
Data
2. Decision maker strategies pareto, prospect/
utility theory, predispositions (age, gender,
experience, attitudes, beliefs, values, culture,
personality) judgement, heuristics, perception,
selective attention, perceptual organization,
valuing etc
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5 Critical Thinking

Judgement 2 DECISION-MAKER(S) Values
4 TECHNOLOGY
3 Qualitative Analysis Quantitative
Analysis
Experience
RPS
Choice
INPUTS
OUTPUTS
1.DM Theory
Risks identified/ Risks estimated Risks selected
for treatment Treatments (options) selected
Data
3. Qualitative techniques (differentiate those
that are used for problem structuring, those for
making choices and both (see Delphi, expert
estimates, step ladder, heuristics, physical
inspection, checklists, flow charts, fault tress,
brainstorming etc, decision tables, voting etc,
mathematical models, statistics, simulation
modelling, NPV, IRR, ROI, CBA, RRL, etc
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• The Risk Management Risks
• 1. Control strategies out of context needs
• 2. Failure to identify significant risks
• 3. Biased judgement (assessment)
• 4. Biased judgement (treatment strategy)
• 5. Process centralisation bias
• 6. Discrete approach
• 7. Limited scope

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methods of gathering information

• Physical inspection.
• Check lists.
• Organisational charts and systems.
• Hazard and operability studies hazard indices.
• Analysis of contracts.
• Brainstorming workshops.
• Questionnaires.
• Process flow diagrams.
• Benchmarking.
• Scenario analysis.
• Incident investigation.
• Audit and inspection.

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5 Critical Thinking

Judgement 2 DECISION-MAKER(S) Values
4 TECHNOLOGY
3 Qualitative Analysis Quantitative
Analysis
Experience
RPS
Choice
INPUTS
OUTPUTS
1.DM Theory
Risks identified/ Risks estimated Risks selected
for treatment Treatments (options) selected
Data
4. See Databases, DSS, Data mining, Models,
Spreadsheets, Specific applications etc, identify
how they are used for RPS Choices.
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Who what are outputs (risk information/
knowledge/ choices) for? How is information
presented communicated (risk descriptions,
profiles, registers, priorities)
5 Critical Thinking

Judgement 2 DECISION-MAKER(S) Values
4 TECHNOLOGY
3 Qualitative Analysis Quantitative
Analysis
Experience
RPS
Choice
INPUTS
OUTPUTS
1.DM Theory
Risks identified/ Risks estimated Risks selected
for treatment Treatments (options) selected
Data
5. Evaluating assumptions, evidence, data,
questioning, well formed conclusions based on
reasons
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The risk register

• Risk number (unique within register).
• Risk type.
• Author (who raised it)/Risk Owner.
• Date identified.
• Date last updated.
• Description.
• Likelihood/Probability.
• Interdependencies with other sources of risk.
• Expected impact Cost if it materialises.
• Bearer of risk.
• Countermeasures Possible response actions.
• Chosen action(s).
• Action owner / custodian (if differs from risk
  owner).
• Target date.
• Closure date.
• Cross references to plans and associated risks
  and may also include.
• Risk status and Risk Action Status.

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Reading
Maximise your personal effectiveness Understand
information sources, note taking how to
critique literature
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Reading Room
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Core texts
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Additional reading

• Albright, S., Winston, W., Zappe, C. (2006),
  'Data Analysis Decision Making - with Microsoft
  Excel', Ed 3, South Western.
• Evans, J. (2007), 'Statistics, Data Analysis, and
  Decision Modeling and Student', Ed 3, Prentice
  Hall.
• Gross, D., Akaiwa, F., Nordquist, K. (2006),
  'Succeeding in Business with Microsoft office
  Excel 2003 a problem solving approach', Thomson.

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Examinations
Maximise your personal effectiveness Understand
what the examiner is looking for
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Examination Design
What will be on the exam?

• six questions (100 marks per question)
• attempt to complete four within a three hour time
  period.
• four questions/subject areas of equal value
  should engage the students for approximately
  forty-five minutes each

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Examination Policy
50 Comprehension and effective communication of
information 50 Application and critical thinking
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Examination

• Assesses that you have attained the learning
  outcomes
• Based on understanding core reading and wider
  reading
• Similar to last risk analysis exam but some
  differences
• Do the activities
• Do the practice paper

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Revision
Decision Making Types Models Strategies
Decision Makers Personality/ Attitudes Perceptio
n Heuristics Behaviour/ Culture RMP/RMR
Critical thinking Question CBA Communications
RPS Risk Identification Risk description Estimati
on/ Qual Register Quants NPV Monte Carlo
Technology Back ground theory Data concepts BIS
DM
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Any Questions?
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International Diploma in Risk Management
Dr Phil Kelly

• Risk Decisions

Maximise your personal effectiveness studying
the International Diploma