Risk Management Workshop

1. Risk Management Workshop John Watt and Paul Popescu

2. A case study

3. The Challenge…. • Pre 2012 – The Athletes Village, to build the following: • Circa 350,000m2 residential (3,600 dwellings) • 3 storey town house, 8 - 12 storey apartments • 1,800 Students all age Academy • 20+ hectares public realm • Home to 16,000+ athletes during the games

4. From this….

5. To this by:2012..

6. Development of 2012 Olympic Park. • The development of London 2012 Olympic Games in East London is a project twice the size of Heathrow’s new Terminal 5 to be delivered in half the time. • The biggest construction site in Europe creating thousands of new jobs with a peak site workforce of 9,000. • Transforming previously contaminated land into 110ha of new open space in a benchmark 21st century urban environment and 4,000 new homes. • More than 30 new bridges, 20km of roads and 8kmTens of kilometres of new utilities networks providing electricity, heat, water, sewerage and gas to the legacy communities

7. Risk Architecture, Strategy and Protocols A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO 31000(IRM, AIRMIC and ALARM)

8. AV Governance Model Reporting Structure

9. Athlete’s Village Definition of Risk • “A risk is an uncertain event or set of circumstances that, should it or they occur would have an effect on the achievement of one or more of the project’s objectives… • Either positively (an opportunity) • Or a negatively (a threat)” • Things that will or have happened are not risks, they are problems or issues. They are included in the existing statements of work and not in the risk register.  • At any time during a venture we take stock of our situation. We normally look at progress and the targets that we face in the future. However, this does not give us a complete picture of our future.

10. Risk management framework A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO 31000(IRM, AIRMIC and ALARM)

11. Risk management process - Theory A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO 31000 (IRM, AIRMIC and ALARM)

12. The risk management process at Athletes Village It is a process of constant discovery, hence… ... this process is iterative!

13. Risk Management Plan Planning – The first stage! This Risk Management Plan is the first stage in the process and is the guideline document for running the process throughout the project lifecycle. It contains, or references, everything that a practitioner needs to know to effectively and efficiently play a part in managing risk. Throughout this Plan Threats and Opportunities are considered collectively under the title risk Each stage in the process will address its purpose, methodology, and outputs. In order to make the identification and management of risk more effective, the Predict! Risk Controller 4 risk management database together with Predict! Risk Analyser software has been mandated on the Athletes Village programme.

14. Identification – Open your mind! Risks are all in your imagination and as such sometimes difficult to define. In order to identify the risks to a project, a combination of techniques including workshops, structured interviews and questionnaires will be used. Team workshops are very effective in risk identification but need to be attended by the key personnel on the project. The workshop will draw upon the Project Team’s expertise and experience to identify and assess potential risks. Generic Risks As an aid to this, the first workshops were conducted to identify the generic risks to various levels of the project. The generic risk registers list scenarios that could be present on particular project areas and are intended as an aide memoire for all project personnel. When identifying specific project risk, the generic risks can be used as a basis for the specific description of a risk.

15. Generic Risks The relationship between Generic and specific risk can be illustrated with reference to the project framework, or hierarchy used as the structure for the risk database. There are three generic risk levels: Senior Risks – Business risks held and owned at upper management level Site Wide Risks – Infrastructure and overarching risk held at Site level Area Risks – Project risks held at Area level Senior Risks held at this level or higher Generic Site Wide Risks held at this level Generic Site Wide Risks developed into Specific Area Risks held at Area level Generic Area Risks held at this level Generic Area Risks developed into Specific Plot Risks held at plot level

16. Risk Ownership • – Risks without owners will never be managed! • Owners are people, NOT departments. • Risk Owners are people have the responsibility for managing the risks • Risk Owners need to have: • Understanding • Responsibility & Buy-in • Influence and control • Resources • Interest in the risk • They need to: • Be aware of the full consequences. • Drive the actionees

17. Pre-mitigation Assessment Think it through! The first assessment is thePre-mitigationassessment. It is made on the basis of theexistingsituation or controls only. The pre-mitigation value of a risk used to priorities both the risk and its subsequent mitigation strategy. The pre- mitigation assessment of risk will be qualitative, i.e. will use a judgemental assessment of both Probability and Impact.

18. Probability Estimation

19. Impact Estimation

20. Scoring System The scoring system in Predict! Risk Controller takes into account the level from which the risk is viewed. I.e. a risk that appears very high in a small project will not be similarly rated at, for example, the corporate level. The scoring system adapts the magnitude of the risk to the level from which it is viewed. The scoring system is summarised below: The system shows the magnitude of the risk both numerically and by ‘traffic light’ colours that are used to formulate reports.

21. Prioritisation • In prioritising risks it is important not just to consider further only the risks of high magnitude. There are other significant categories of risk. These are for risks that are: • Poorly understood • Reputational • Uncontrollable • Growing in magnitude • Of a management nature, not directly connected with your day to day project or job

22. Mitigation Strategy Plan it and do it! Mitigation strategies apply to both threats and opportunities. The rules for handling them are similar. Risk Management is about taking cost-effective action: To minimisethe probability and/or impact ofthreatsto an objective Tomaximise the probability and/or impact ofopportunitieson an objective

23. Mitigation actions If you can’t think of an adequate mitigation for a risk, is it really more than one risk? Try breaking it down into more than one risk and reiterating the process ... this process is iterative! If you still can’t control or affect it should you own it? If the answer is No – get help! Escalate it up to the Risk Leader so that it can be allocated to someone who can control it.

24. Fallback Planning If you can’t terminate or eliminate a risk, don’t forget Murphy’s Law! In spite of all the mitigation the risk could still happen. There fore it is important to plan Fallback strategy and consider when to engage them The fallback plans.These are plans that will be put into effect if the risk happens. These should address not just what the project has to do but also what the business or organisation needs to do. The trigger points. These are the points in the lifecycle of the risk that preparatory action needs implementing. The fallback plans may have a lead-time to implement. This should be addressed by establishing trigger points defined by suitable characteristics or precursors of the risk. It is not necessary to formulate fallback plans for every risk. Risk Leaders will decide which plans need advance consideration.

25. Monitoring & Reporting • Drive the Process! • The imaginary nature of risk means that it is not natural to give it the appropriate attention alongside all the other ‘real’ happenings in a venture. • If we are to avoid continuous ‘fire fighting’ it is essential to have a planned and continuous process to ensure that: • Existing risks are reviewed • New risks are identified • Risks are communicated • Dead risks are closed • Actions are carried out • Treatments are effective • Provisions are current

26. Stakeholder Involvement Civil society Actors Affected stakeholders Affected stakeholders External Scientists/ Researchers External Scientists/ Researchers External Scientists/ Researchers Regulatory bodies/industry experts Regulatory bodies/industry experts Regulatory bodies/industry experts Regulatory bodies/industry experts Use existing routines to assess risks and possible reduction measures Maximise the scientific knowledge of the risk and mitigation options Involve all affected stakeholders to collectively decide best way forward Societal debate about the risk and its underlying implications Type of participation Simple Complexity Uncertainty Ambiguity Dominantriskcharacteristic As the dominant characteristic changes, so also will the type of stakeholder involvement need to change After Bunting (2007). An introduction to the IRGC Risk Governance Framework

27. Risk Perception Map – What we think level of risk is Risk Map – What actually the risk (stakeholder engagement)

28. The Olympic Delivery Authority (ODA) and the UK Government recognizes that scientific analysis and professional judgement for traditional decision making strategies are insufficient for this unique development. • People with local knowledge and experience within the delivery teams but also from wider communities ( if available) in decision making process has been acknowledged by ODA as a potential and partial practical solution to challenging social and political problems. • This is done via public consultations with all interested stakeholders directly or indirectly related to this development by Government and ODA. • Mass media has also a very important role to play and keeping constant contact with public and highest priority for ODA and Government for informing all stakeholders.

29. Area relationship holders: GLA LOCOG ODA DLR LLC ODA LL R&C Excel centre JCP Local Press PDT ODA Parliament No.10 UK Sport GofL LGO LTGDC LVRPA LR London First GLA Trade contractors LDA BeOnSite National Press DfES Fire Brigade MI5 & MI6 Armed Forces ODA HSE Job shops WWF ODA GWTL Westfield LOCOG DCMS BLL LCR ODA Ambulance Service City airport Resident Associations LB of Newham, Hackney, Waltham Forest, Tower Hamlets Unions Metropolitan Police Local Boroughs Environment Agency DCMS East Thames GLA LCR Local Boroughs International Press Sales Agent Local Boroughs DfES Local Interest Groups Greenpeace First Base BTP Home Office ODA/CLM CTRL/Network Rail Minister for Olympics DfT DCLG/TGDU HM Treasury DoH WFS/EP First Thames Emergency Planners Industry Press ODA LuL Olympic Board BOA Minister for Olympics UK Sport TfL URN/CTRL Network Rail DLR IOC LOCOG Architectural Foundation Highways Agency Home Office DEFRA DRP LLC ERP SCAG ODA East Thames Ambulance Service FCO Consultants & designers NHBC (Warranty) Building control ELBA BRE(CodeforSustHomes) First East Design contractors Housing Corporation Minister for Housing Westfield WFS/ Skanska Thames Water EDF Fulcrum (Gas) ELYO SRP DCFS Westfield SL /ODA LB of Newham & Waltham Forest Met Police (Secure by design) Newham (Workplace) Local Resident & Community Groups Subcontractors Thames Gateway London Agency East Potential CTRL MP & LD of Newham ODA Client (intr&extr) & Client’s client Government CEO / DIRECTORS Construction directors Business unit heads Government agency/NGOs Neighbours Transport, Infrastructure & Utilities HR/ LEGAL / MARKETING /CEO Operational directors Media & Sales and Marketing Athletes Village Stakeholder Risk Communication Planning consent & Design Olympic Related Strategic planners Ceo / directors Emergency services & Security Environment (Sustainability) Environmental team SECURITY TEAM Employment & Training (Sustainability) Interest groups & Stakeholders in Delivery Project Managers HR / DIRECTORS

30. ODA LLC LCR GLA LL R&C LOCOG BLL Client (internal & external) & client’s client B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

31. Westfield/Skanska CTRL/Network Rail ODA/CLM 5 Boroughs Excel City Airport DLR Neighbours B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

32. Westfield/ODA URN/CTRL Fulcrum(Gas) ELYO EDF TfL Thames Water Network Rail Newham, Highways Ambulance Service LuL DLR Architectural Foundation Transport, Infrastructure & Utilities B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

33. ODA HSE Trade contractors Westfield Local Resident & Community Groups LDA CLM CTRL East Potential Thames Gateway Interest groups & Stakeholders in Delivery B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

34. First Thames Housing Corporation Local Boroughs Minister for Housing Minister for Olympics DCFS DCMS HM Treasury Various Gov agencies Various NGOs Government & NGOs B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

35. ODA LOCOG IOC BOA UK Sport Minister for Olympics Olympic Board Olympic related B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

36. ODA First base East Thames LOCOG LCR Local Boroughs Sales Agent Local Press Industry Press International Press Media and Marketing & Sales B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

37. ODA Local Boroughs LLC WWF Greenpeace GLA Environment Agency Local Interest Groups Resident Associations Environment (Sustainability) B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

38. DRP ODA ERP PDT First East SCAG Newham & WF Building Control NHBC BRE GLA Consultants & Designers Design Contractors Met Police Planning consent & design B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

39. ODA Home Office British Transport Police Metropolitan Police MI5 & MI6 (CPNI) Emergency Planners Ambulance Services Fire Brigade Armed Forces DCMS Emergency services & security B: Manage Closely A: Keep satisfied POWER C: Monitor D: Keep informed INTEREST Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) POWER: ….have power over the project INTEREST: …….interested in the project

40. Risk Management- Communication Security & Logistics / Health and Safety Environmental and Sustainability Vertical Development and construction activities, planning and execution Athletes Village Interfaces Development and Delivery of the Project Internal - External Stakeholders Information and Participation Interface Management planning, finance, procurement and commercial risks Construction of Infrastructure, planning and execution of works Development & Delivery

41. BLL- ODA – Government- N.G.O communication Regular Meetings -Some of questions asked: What are the biggest threats, opportunities and issues? (to include; social, commercial ,schedule, budget, staff). Opportunities must be well defined and do something with them ( be aware of risks attached to all those new opportunities) i.e. Site concrete batching plant, we secured price for concrete supply for all plots but We have created additional environmental issues such as; dust, noise, logistical issues in the area. Early warning notice issues. What is currently going wrong on the project now or in the future? BLL ODA Government N.G.O

42. Managing risk by exception : bad stuff or barriers in the way that stop us achieving desired outcome Bad stuff ; risks and threats are prioritised in order of potential occurrence. • Finance • Reputation • Planning • Environmental / Health and Safety • Social Some questions asked: What are the things are going to stop us ? When it happens ? How big is the risk ? How is going to affect us ? What can we do to prevent it? ( early warning notice ?)

43. IRGC’S RISK GOVERNANCE FRAMEWORK Risk assessment PLUS Concern assessment Getting a broad picture of the risk Deciding Understanding Pre-Assessment Management Communication Appraisal Is the risk tolerable, acceptable or unacceptable? Characterisation and Evaluation Categorising the knowledge about the risk Is the risk simple, complex, uncertain or ambiguous? Bunting (2007). An introduction to the IRGC Risk Governance Framework