Working In Uncertainty

1. Working In Uncertainty A simpler, easier approach to risk management and internal control.

2. The simple idea • The objective of the programme is to make incremental changes to core management activities and basic business processes so that they perform better in uncertainty. • Ideas for improvements can come from learning about what people think usually works well, and from thinking about where we most want to perform well. • This can be done in a way that meets the expectations people have of risk management and internal control programmes, but it’s simpler and more natural. • It uses traditional terminology but avoids several ‘risk’ related terms to help people focus on changing the way they work instead of trying to add risk registers everywhere.

3. Origins of Working In Uncertainty • Suggested by Matthew Leitch • Author, educator, consultant, and researcher • Former auditor and consultant with PricewaterhouseCoopers • Co-author of the British Standard on Risk Management • Working In Uncertainty was developed as a next stage in the evolution of ‘risk management’, where all traces of a separate activity are removed and simplification is emphasized.

4. The terminology • We can do all we need to do with old fashioned phrases like: • Value • Uncertain, unknown • Chance, probability, distribution • Outcomes, events, forecast, range • Procedure, tool, way of working • We don’t need phrases like: • Risk appetite, risk tolerance, risk attitude • Risk propinquity, risk velocity • Risk criteria • Risk profile • Control, risk response, risk treatment

5. The terminology • We should try to avoid phrases that suggest some management activity that separately deals with uncertainty, such as: • Risk management process, internal control system • Risk response, risk treatment, risk response planning • Risk register, risk identification, risks • We should also try to avoid phrases that suggest a wholly negative view: • Risk, control, mitigation

6. Mental blinkers • Typical human nature is to: • Make narrow predictions about the future • Be too confident that those predictions are right • Think we can control the future more than in fact we can • Explain surprises so that we still think we are good forecasters! • This is institutionalised in organizations, e.g.: • Working to detailed plans and targets held fixed long after they are obsolete • Starting big bang projects that could have been delivered incrementally, more easily and with less stress • Evaluating performance by comparing results against initial expectations regardless of how conditions differed from those initially anticipated

7. Suggested approach • A limited trial • Select an area to look at e.g. • suggestion #1 • suggestion #2 • suggestion #3 • With guidance and support from XXXXXXX. • Spend XX days thinking of improvements • And XX days implementing and rethinking them • Then see if you want to try some more.