Ruth Murray-Webster: unlocking the potential performance from uncertainty and change
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Beyond the heat map - much change is needed

11/28/2014

1 Comment

 
It's long been understood in some sectors and scenarios that the 'heat map' (probability impact grid, risk assessment matrix, risk map or whatever term you may use for the 3 x 3 or 5 x 5 grid you use to prioritise risks) is not that useful.

It's only a prioritisation tool.

It doesn't help much in assessing the overall riskiness of the situation you are in, and 

It's such a subjective and biased process to put one together that you shouldn't really bet your company on one!

Douglas Hubbard's book - "The Failure of Risk Management - why it's broken and how to fix it" covers this in many more words than I have here.

Unfortunately it seems that either this isn't understood, or people don't know what to do differently.

Techniques for doing it differently exist - both numbers and stats based models - and words and relationships based approaches - and this blog is just a plea to open eyes and use them more.

In my last blog posting (ages ago - must do more!) I talked about the new requirements of the FRC corporate governance code for companies listed in London.  Directors must embrace risk-thinking to manage the company and provide reasonable information for investors.

If we look 'beyond the heat map' then it becomes much easier to do.
1 Comment
Miles R link
8/30/2021 08:31:10 pm

Nice post, thanks for sharing

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    ​The postings in this blog are my own personal views, not those of of any of my clients or associates, unless attributed.





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