This post discusses what organisations can gain from undertaking risk diagnostic and benchmarking studies.
We have made a version of our risk diagnostic and benchmarking tool available for free download so that you can can identify the gaps in your organisation and benchmark your organisation against best practice.
The need for a risk diagnostic and benchmarking tool
Some organisations manage risk successfully – they represent ‘best practice’ in risk management. If the majority of organisations could raise their performance to the levels of their high-performing peers it could lead to significant improvements in areas as diverse as patient safety, financial services, major projects and workers’ health and safety.
In a recent post, I summarised five characteristics that I had observed over the years in organisations with best practice in risk management.
However, diagnosing risk management practices is far more complex than assessing how close you are to those five characteristics. We need to systematically assess a comprehensive range of factors that influence risk in an organisation (see Exhibit 1). This includes the range of mindsets and behaviours that influence risk.
What a risk diagnostic and benchmarking tool can do
To do this, we have developed a diagnostic and benchmarking tool. This tool allows you to quickly assess your current ‘state of play’ using tried and tested criteria to:
- Benchmark your current ‘state of play’ against key indicators and best practice
- Diagnose where the key gaps are
- Make evidence-based decisions to improve effectiveness and efficiency
The risk diagnostic process allows organisations to answer the following questions:
- Which factors have the most influence on risk?
- How does our organisation compare with best practice organisations?
- Which factors offer the greatest potential for improvement?
- Where should we focus our intervention efforts?
- What changes to overall risk level will we get from making changes?
- Which interventions offer the best return on investment?
A free version of our Tool is available – it provides an initial diagnostic of the current ‘state of play’ of an organisation, focusing only on the quality of the factors and not their importance.
What risk factors do we diagnose and benchmark against
The Influence Network provides a useful means of identifying and assessing the factors influence risk in an organisation.
Exhibit 1: Influence Network for the typical factors that influence risk in an organisation
The Influence Network contains four levels of factors:
- 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
Each of these factors can be assessed in a workshop to give 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
Output from the risk diagnostic and benchmarking tool uses this data to diagnose and benchmark organisational risk.
Free download of our risk diagnostic and benchmarking tool
Dr 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.
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 Benchmarking Tool click here.
If you would like to discuss this further, drop Mike a line at email@example.com or give him a call on +44 (0) 7969 957471.