Aon's one-day Risk Register Detox workshop, aimed at keeping risk assessments relevant within organisational objectives, has ensured that its staff are better prepared to identify potential problems before they spiral out of control, writes Louise Meeson.
While many organisations have implemented risk management systems that revolve around a risk register, some fail to deliver their full potential. In order to better understand this problem, Aon conducted a client survey last December in which risk managers identified 'improving risk culture' and 'keeping risk registers real and relevant' as the two biggest challenges for 2009.
In order to address these issues, Aon launched its Risk Register Detox, a one-day workshop for key decision makers designed to link risk assessments to organisational objectives. A key aim of the workshop is to ensure that attendees walk away with a clear idea of actions that need to be taken and a living, breathing risk register that clearly highlights risks that requiring ongoing attention.
Attendees are not required to do any significant preparation for the workshop except for providing suitable objectives" either strategic or operational" before the event.
The first stage of the process is to review these objectives. Aon realised that, while this may seem like an obvious step, many companies fall down on two key points: the production of specific, measurable, attainable, relevant, time-bound objectives and the cascade of this information down the management line.
Mastering the balancing act
During the workshop, the group examines each objective in turn. Key to the process is the innovative balance of assessing upside and downside risks for each objective, which is achieved using a simple, lateral thinking technique.
The attendees are split into two groups: a pessimist group that is tasked with producing all the reasons why the objective will not be achieved and an optimist group that will look at why it will succeed. Generally, the pessimists identify risks while the optimists identify opportunities and controls.
The groups swap roles after each objective so that attendees consider risk and opportunity both positively and negatively during the session. The two viewpoints are then discussed by the group as a whole, which helps to establish a common understanding of the issues, after which a vote is taken on the objective's achievability.
The workshop uses live voting software to quickly and efficiently collate the results, allowing attendees to contribute anonymously without the restrictions of the organisational hierarchy.
The output report contains a swingometer that shows the group's opinion of the objective's achievability; this is designed to provide useful management information. For example, a result that is very optimistic could indicate that the objectives are too soft, while divergent views in the group" given by the width of the swingometer's indicator needle" shows how aligned the attendees views are. Ideally, the indicator should be in the middle and have minimal width, indicating a tight distribution of opinion.
Following the vote, the facilitator extracts the active risks" the risks on the register that are relevant and subject to management action. This helps to keep the risk register real and relevant and enables risk management rather than list management.
The active risks are then framed and phrased against the achievement of objectives. Once all the objectives have been examined, the list of active risks is then quantified by using the voting software.
High priority task
When the Risk Register Detox was launched, Grant Foster, associate director of enterprise risk management at Aon Global Risk Consulting, said: "Companies know by now they need a risk register, yet are failing to create registers that are relevant to business outcomes and not devoting resources to ensuring the registers are updated on a regular basis."
The British Insurance Awards' judges realised that this solution not only keeps risk registers relevant for today but, by ensuring that key decision makers are aware of any smouldering hotspots before they turn into a full-blown fire, it is a project that helps the market look into the future.
- Top 100 Insurtech: Quarter four update
- Charles Taylor bolsters liability team by hiring senior sextet from Vericlaim
- Roundtable: Is a single customer view taking off in insurance?
- I work in insurance: Stephanie Horton, River Canal Rescue
- Insurtech diary: Getting stuck into insurance
- Analysis: The mystery of the missing Insurance Fraud Taskforce report
- Gallagher Bassett acquires claims management firm