How to assess what factors influence risk in your organisation

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11b - IN - Key Factors

This is Part 2 of a two-part article, and proposes a solution to the problem of how to assess what factors influence risk in organisations. The proposed approach recognises that incidents are caused by a complex combination of events that do not happen in isolation. It enables organisations to understand what factors really influence risk.

In Part 1 of this article Why is it so difficult to assess what factors influence risk in your organisation, we identified the need for a different approach to allow us to assess what factors influence risk in our organisations. This raise the question: How can we identify and assess the mindsets and behaviours that influence risk in our organisations?

The complexity of organisational risk

Understanding and managing risk in organisations is made difficult by the facts that:

  • Most major incidents are caused by a complex combination of events
  • These events do not happen in isolation, but are part of a wider system of causal factors / influences
  • No one event can be viewed in isolation from its surrounding context

If we take a systems approach to this, we can identify four broad categories of influences on organisations.  These are shown in Exhibit 1 as a set of nested systems that influence the performance of organisations.

More detail is available in our report Do you understand what factors influence risk in your organisation?

Exhibit 1 – The categories of influences on an organisation

This article discusses why organisations’ susceptibility to risk is largely determined by the mindsets and behaviours of their staff and the difficulties this causes in assessing the factors that influence risk

The Influence Network technique offers a solution

I have been developing a technique over the last fifteen years known as the Influence Network.  The technique addresses the three bullet points listed above. It uses typical factors that influence risk in an organisation.  These factors are based on research and industrial experience (1). To model the factors that influence risk, the Influence Network contains four levels of factors that reflect the categories shown in Exhibit 1:

  • Direct performance factors – these directly influence the likelihood of an incident being caused
  • Organisational factors – these influence the direct factors and reflect the culture, procedures and behaviour within the organisation
  • Strategy factors – these reflect the expectations of the decision makers in the organisation and the organisations they interface with (e.g. clients, suppliers, subcontractors)
  • Environmental factors – these cover the wider political, regulatory, market, industry and social influences which impact the strategy factors

A typical Influence Network is shown in Exhibit 2.

Exhibit 2 – Generic Influence Network for organisational risk

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The technique has been used in over 30 workshops for the Health and Safety Executive in Great Britain, other regulators and businesses in a range of sectors including construction, agriculture, waste, rail, shipping and offshore oil and gas. It has been used to investigate risk management in the construction of London 2012 (2) and the implementation of the Construction (Design and Management) Regulations (3) (a set of regulations that focus on planning, managing, monitoring, coordinating and communicating).

How this technique is applied

The Influence Network can be customised for the particular organisation and risks under consideration.  I recommend starting from the generic Influence Network shown in Exhibit 2, as this has been proven to work with a wide range of industry sectors with only minor customisation. A workshop is held with 6 to 12 people with a range of roles to gain insight from their different perspectives.  The workshop allows participants to have a structured discussion about a range of possible factors that may or may not be influencing risk in a particular organisation.  Typically, participants find themselves being fairly open and candid and learn a lot from the day. The workshop participants are provided with briefing notes that define all of the relevant factors, and contain quality scales. Details of these factors and the quality scales are given in Reference 1 and in our free Organisational Risk Diagnostic Tool. The workshop participants discuss the factors and make an assessment of the:

  • Quality of each factor by comparing their organisation with behaviourally anchored ratings and scoring between 0 and 10 – this gives an indication of the current quality of these factors, the variation in that quality and the underlying reasons
  • Importance of each factor by weighting its influence on each factor on the level above on a 6-point scale from zero to high – this identifies those factors that have the most influence on risk

What organisations will get from this technique

This technique allows you to quickly assess your current ‘state of play’ using tried and tested criteria to:

  • Benchmark your current ‘state of play’ against best practice
  • See where the key gaps are
  • Assess how important an influence on risk each factors is
  • Identify which factors offer the greatest potential for improvement

Organisations should then focus their effort on improving those factors that have the most influence and the lowest or most variable quality. A second workshop can be used to:

  • Estimate the changes to overall risk level risk resulting from an initiative
  • Identify and appraise a range of initiatives to decide which offers the best return on investment

We also go into more detail in our free report Do you understand what factors influence risk in your organisation?

References

  1. BOMEL Limited: Improving health and safety in construction – Volume 6: Generic model for health and safety in construction, HSE Research Report 235, June 2004
  2. Frontline Consultants: London 2012: The Construction (Design and Management) Regulations 2007: Duty holder roles and impact, HSE Research Report 941, 2012
  3. Frontline Consultants: Evaluation of Construction (Design and Management) Regulations 2007, Part 1 Main Report and Part 2 Technical Annex, HSE Research Report 920 Part 1 and Part 2, 2012

Free download of MPW R&R Organisational Risk Report About the author:

Mike Webster specialises in risk and regulation, and is a chartered engineer with over 30 years’ experience.  He has led risk and regulatory projects in the UK, Europe, Far East and US, and has acted as an expert witness in the UK.

He founded MPW R&R to provide risk and regulatory solutions to regulators, businesses and litigants in construction and other high risk sectors.

If you would like free access to Mike’s report Do you understand what factors influence risk in your organisation? and the accompanying Organisational Risk Diagnostic Tool click here.

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Posted in Organisational risk, Risk management

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