Strategic initiatives, no matter how well thought out, are risky; they are packed with opportunities and fraught with threats. Preemptis' commitment to supporting resilient strategies would be incomplete without a comprehensive framework for engaging risks-the Preemptis Risk Engagement Framework (PREF).
The crucial thing to understand about going into new territory is that neither the threats have never before been encountered nor have the opportunities that may arise been presented.
Risk gets a bum rap most of the time. It is almost always perceived as negative, e.g. risk vs. reward. In reality, risk always presents two options, threat vs. opportunity, that must be evaluated. Just looking at the negative side of the risk is a flawed approach and will inherently leave "money on the table." Real risk in novel or new situations, either the threat or the opportunity, will not be discovered in analyzing data from the past. Assessing probabilities from past data is courting disaster. Risks cannot be discovered by forecasting the future using data from the past. Insurance companies have done a good job of using demographic data, but they have to factor in wild-card assessments as well.
One of the most important things to remember is that risk always presents two options: at least one threat and at least one opportunity. It is our responsibility to ascertain and evaluate these options and remember that the worse case of the future, by definition, will be worse than any past worse case.
Preemptis takes risk engagement beyond the traditional risk register with it's simplified and practically useless two dimensional assessment of probability and impact. The Preemptis Risk Engagement Framework assesses both opportunities and threats in a comprehensive fashion and displays the results in a Impact Dashboard display format for executive review and decision making.
PREF starts with a Risk Roster, a continually updated list of threats and opportunities. Then, each risk is profiled in a 360 Risk Profile which looks a each risk's inherent opportunities and threats in depth, looking at both internal and external factors such as:
- Regulatory and Compliance
Opportunity ratings and Threat ratings in each category are compared to one another in a Risk Offset analysis that puts the relationships in perspective. Closer spreads receive more attention in later iterations.
To put the total risk framework into a corporate context for more effective decision making, we conduct a corporate Risk Threshold assessment with corporate executives. Threats that fall outside the Risk Threshold are tagged for special treatment as are opportunities that fall inside the Risk Threshold.
Threat Response Plans are constructed based on Predictability, Preventability and Likelihood Assessments. Opportunity Activation Plans are based on Predictability, Enable-ability and Likelihood Assessments. All Response and Activation Plans are subjected to periodic Readiness Audits.
The Preemptis Risk Engagement Framework (PREF) is especially well suited to Project, Change and Strategic initiatives wherein the risks have not been experienced operationally with any degree of familiarity or wherein the personnel involved have not worked together previously. Learn more here.