analytical software tool which provides unique insight for management teams. It enables another way to look at risks and
ACTIVE RISK MANAGER
Risk Connectivity Recent global crises – natural, geo-political and financial – highlight that often it is not the risks which appear the largest and most likely that can ultimately cause the greatest impact. The degree of connectedness of risks – even small risks – can be the decisive factor. Risks with high connectivity can act as catalysts for chain reactions which lead to surprising and monumental outcomes.How can your management team identify and act to mitigate such risks?
How can you go beyond the focus on ‘Top Ten Risk lists’ and find out where to apply management expertise and company resources to safeguard business performance, corporate reputation and shareholder value? Risk Connectivity from Active Risk takes complex risk and opportunity information and presents it in a very visual and easy to understand way. It highlights interconnected systems of risks, emerging risks and the areas to introduce ‘fire breaks’ to minimize knockon effects that stem from a risk occurrence. Risk Connectivity means management teams can quickly identify where to focus time and resources to have the greatest impact.
This image shows the major global risks documented by the Davos World Economic Forum 2011 displayed dynamically in the Risk Connectivity tool to highlight interconnections
Risk Connectivity
HOW CAN MANAGEMENT TEAMS QUICKLY IDENTIFY
HOW DOES RISK CONNECTIVITY WORK?
THE KEY RISK AREAS FACING THE BUSINESS?
Risk Connectivity uses sophisticated algorithms to analyze risk information to provide this alternative view. Risk Connectivity has been developed by Active Risk in conjunction with academics working with the Universities of Bath and Bristol.
The ability to understand complex risk and opportunity information is rapidly becoming a key management competency needed to safeguard business performance. Risk Connectivity from Active Risk is an analytical software tool which provides unique insight for management teams. It enables another way to look at risks and their likely impacts and provides a rapid decision support tool to show where to focus further investigation and investment. MOVE BEYOND THE TOP TEN RISK LIST
The best understanding of operational risks rests with those closest to day-to-day business processes. However, the ability to identify connections between risks is most effective at the top of projects, programs and organizations, where the widest view of the whole landscape is possible. Traditional risk management solutions have provided the bottom-up capabilities to collect, score and roll-up risks. Risk-mature organizations are increasingly adding a top-down strategic risk view. This approach is very important but can often lead to a simplistic, one dimensional ‘top ten risk’ focus. This is especially true at the highest levels of the business where time for analysis is most scarce. Risk Connectivity from Active Risk provides a unique and effective way to give senior management an alternative perspective on risk which, when taken together with traditional views, provides the complete three dimensional picture – a top-down strategic view, a bottom-up operational view and the risk connectivity across the whole business.
Detailed risk and opportunity data is collected throughout the organization, its partners and supply chain using Active Risk Manager (ARM), Active Risk’s leading Enterprise GRC tool. ARM provides a variety of ways to input this information: via rich web client; easy to use web and mobile data entry; or via risk workshop. Risks and opportunities are scored and assessed in ARM in the traditional way as they are reported up through the organization. Risk Connectivity adds the capability to re-score risks based on their degree of ‘interconnectedness’. It then presents this information in a visual, dynamic way to facilitate investigation and discussion. No software tool can replace management experience and insight, however Risk Connectivity will help highlight risk connections and consequences in a way that has not been possible before. The Risk Connectivity display makes clear the true picture of risk across the business: The size of a ‘risk node’ indicates the likelihood it will happen The depth of colour shows the size of its impact Risks with a common colour share a risk source or type The thickness of the lines indicates the level of connectivity
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BENEFITS OF RISK CONNECTIVITY
Provides a highly visual and dynamic view of risk and opportunity information Aids understanding of the inter-connectivity of risks and the likely consequences which could follow a risk occurrence Gives a different perspective which will help isolate ‘toxic risks’ that have a high degree of connectivity which can act as catalysts Takes the management team beyond a focus on static “Top Ten Risk Lists” Highlights where organizations should focus resources and further analysis Enables informed discussion and debate on the risks which can have the greatest impact on business performance
ACTIVE RISK MANAGER Active Risk Manager (ARM) enables the identification, communication, analysis and mitigation of risks and opportunities in both quantitative and qualitative formats. It covers project and portfolio risk, supply chain risk management, business continuity, reputational risk, health and safety, incident management, governance, compliance risks and more. ARM is used by major organizations around the globe and was awarded “Risk Application of the Year” in November, 2010 at the global Risk Management Awards run in conjunction with the Institute of Risk Management. Active Risk, formerly Strategic Thought Group, was founded in 1987 and is headquartered in the UK with its US operation, Active Risk Inc, based in Washington DC.
Identifying the link between one risk and its effect on others has been one of the most difficult risk management challenges – but it is becoming increasingly important to understand – as organizations try to prepare for the consequences of risks rather than just focusing on whether isolated risks will occur.
IN CONCLUSION Risk Connectivity from Active Risk provides a new way to visualize risks and opportunities to enable management teams to zero in on key risks and identify how they connect. This meets the increasing business need to focus on interconnections and the consequences of risks to help define where to direct expertise and resources.
Risk Connectivity
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FOR MORE INFORMATION, PLEASE CONTACT US:
[email protected] +44 (0)1628 582500 (EMEA) +1 703 673 9580 (Americas) www.activerisk.com
