David Harris
Student at West Virginia University
dharris1@mix.wvu.edu

I am adding a few texts to help out for those who are interested in reading about this. I used to have an entire library of books on the topic, but they went with the job and now I only keep a few.

One of the better books is "Overcoming Organizational Defenses" by Chris Argyris at Harvard University. There are also a series of good dissertations run through the Center for Entrepreneurial Studies and Development through the Industrial Engineering Department at West Virginia University on risk based management of large scale projects and risk based scheduling. Last time I heard they were developing software to schedule projects based on risk.

I will look for a good paper on the bathtub curve. There was an excellent one in either IEEE's primary journal or in the management SIG journal.

The observations on equilibrium contracts comes out of basic economics, however there have been psychologists who have been very successfully using this observation to transform groups. If you can find the marginal actors then you have found the point where leverage can be applied to change the whole system. Again, there is literature but when I went to get a PhD I gave up a wealth of written knowledge on shelves at my prior employer.

Finally, there is of course the wealth of writing that comes from W Edwards Deming and the quality movement that followed. In particular the structured programs like Six Sigma or the one at Carnegie Mellon's Software Engineering Institute the Capability Maturity Model are more valuable as teaching tools than as programs. (I am sure they would strongly disagree). The reason I say that is that a good quality program has to be executable by management and most of these programs fail because the changes are too large for senior staff to manage. Such programs are supposed to change how managers manage not how workers work. By changing how managers manage, workers change their work. That is harder to do than it sounds. We behave as we do because we are satisfied and avoid contrary behaviors. If the behaviors are unsuccessful that does not mean we will change, it just means we have unsuccessful behaviors.

_________________________________________________

From: Matthew Leitch [mailto:m.leitch1@ntlworld.com]
Sent: 11 December 2008 16:08
To: Gavin Lawrence
Subject: Re: [riskanal] Pertaining to Risk based Cost Contingency

An excellent post. In addition to your sample of workshop problems I would add that I find it deeply depressing to see good ideas I have worked out (at considerable personal effort) misquoted on a flipchart, "mixed and mangled into useless oblivion" along with the dross. The quote is from my book, or at least a draft of it.

The tendency towards seeking consensus might be reduced slightly by saying early on that disagreement will be taken as a signal of uncertainty and uncertainties will be noted and responded to, not squeezed out in an attempt to reach agreement. That would go along with trying to get a view from everyone who is informed enough to hold on on an issue. Risk 'ratings' are estimates and some are supported by more evidence than others. Disagreement indicates that the ratings are likely to be flaky and we should think about finding out more.

Prediction markets could be a better way to get the inputs of lots of people on uncertain quantities. I suspect the software already exists and some clever schemes have been worked out so that even if you need lots of probabilities you can still make it work.

Matthew

_________________________________________________

LinkedIn
Date: 12/09/2008

Subject RE: Reasons for Risk Workshops failing to deliver accurate quantitative information

Group: Enterprise Risk Management Association

Rakesh Dighe wrote:

Hi

I have used Risk Workshops for over 12 years in an Oil Company setting. There are some important pre requisites to obtaining a successful outcome e.g.

Prepare a strawman in advance using a Subject Matter Expert
Lay down Big Rules for the workshop
Define clearly the risk scoring criteria
One single person to document output
Not a good idea in some cultures to have the Big Boss present at the workshop as it stifles discussion or aggressively leads it in a certain dominant direction

Rgds

Rakesh
CEO
Risk Quotient

_________________________________________________

November 28, 2008

I'm impressed with your proposals on why risk workshops may be defective. I would add the obvious point that risk management is more science and less subjective than most other management disciplines. Thus, methodology becomes a matter of importance to the analysis process. And of course, with methodology come the issues of reliability and validity. All of these concepts are unwieldly, and so many learners lose interest in the presentation points of the given workshop. I'm still wrestling with this myself in front of my learners, but it does seem to detract from workshop success at times, depending on the participants and their backgrounds. Good luck!

William McKibbin
Consulting Financial Engineer & Risk Analyst
wjmc@mckibbinusa.com
____________________________________________________

My view is that workshops are great to bring out ideas about risk issues. However, they are hopeless at getting quantitative info. For that, I believe the 1 to 1 interview is better, and then compare estimates. Delphi method suck.

Also a workshop can be a place where people don’t really speak their mind, but will do (more often) if the 1 to 1 is anonymous.

Best wishes
David Vose, Senior partner, Vose Consulting Group.
david@voseconsulting.com

____________________________________________________

While the specifics of risk identification are tenuous, the more important element is what management does once a risk is observed. Mitigating or minimizing risk is a dynamic of business life. Yet, in the present economy, and the prior few years, the facts indicate that beneficial, post-recognition activity is non-existent.

I suggest that the risk training should also include some discussion and elevation of decision processes and their down-stream impacts. This would be analogous to both designing fire exits in an office building (risk assessment) and then actually constructing them for use (decision processes).

Greg Chenevert,
Independent Business Consultant, Manchester NH, USA

____________________________________________________

RE: Reasons for Risk Workshops failing to deliver accurate quantitative information
From:Larry Cosgrove
Date:November 27, 2008
To: Gavin Lawrence
Group:Catastrophe Risk Modeling Group
Status:Pending
Gavin

I suspect that many of your comments are dead on. I do know that the "people translation" to those not familiar with numerical modeling and statistics is the critical issue here. If you know information to be incorrect, it is best to stand up and make the point. Remember that to those making decisions, sometimes the terminology (especially acronyms) and methodology can prove to be very boring when placed in an open discussion.

In weather prediction methods, I find it best to act as the "translator" while doing my best to overcome the perceived "risk of ridicule". For instance, if the numerical models point to a cold period and vendor forecasts are far warmer and/or calmer, I always provide pictorial proof of what I am describing.

So if I were to give advice for increasing the value or a risk workshop, I would offer these suggestions:

1) Keep the discussion lively; use expressions to go along with the data and engage questions or comments after your initial arguments

2) Graphics that exclaim will do the job far better than charts that induce sleep

3) Always end with a firm conclusion, not a nebulous correlation

Best Regards,
Larry Cosgrove
Chief Meteorologist at Avant Capital Management/Irish Exchange LP
Owner at WEATHERAmerica
Chief Meteorologist at WWJM-FM

____________________________________________________

RE: Reasons for Risk Workshops failing to deliver accurate quantitative information
From:David Harris
Date:December 2, 2008
To: Gavin Lawrence
Group:Risk Economics
Status:Pending
My post may appear critical and I have never been to the UK or used the risk groups there, but the failures are the failures to engineer a poorly controlled and undesigned device (humans and human groups) into the process. No one would design humans as we really exist. Human groups and humans as individuals would be, if we had been engineered, an embarrasment to the designer and never make it to market. Rather than fail at an exponential rate, like all intelligently designed systems, we experience "bath-tub" curve failures. Groups do not like to design around the "bath-tub" curve because we are all intelligent, caring, ethical and well meaning. Such a thing would imply something might be wrong with "us," and that is very threatening. If something is wrong with "us" we might lose our jobs. Being human is very difficult as it is, failing to design around our in built failures is process failure. Facillitators and managers, being human, share these faults. Process should work around this unforgivable fault in managers and facillitators so that the process is better than human, even if the defective machines implementing it are human.

____________________________________________________