Risk Management Workshop John Watt and Paul Popescu

A case study

The Challenge…. Pre 2012 – The Athletes Village, to build the following: Circa 350,000m2 residential (3,600 dwellings) 3 storey town house, storey apartments 1,800 Students all age Academy 20+ hectares public realm Home to 16,000+ athletes during the games

From this….

To this by:2012..

The development of London 2012 Olympic Games in East London is a project twice the size of Heathrow’s new Terminal 5 to be delivered in half the time. The biggest construction site in Europe creating thousands of new jobs with a peak site workforce of 9,000. Transforming previously contaminated land into 110ha of new open space in a benchmark 21st century urban environment and 4,000 new homes. More than 30 new bridges, 20km of roads and 8kmTens of kilometres of new utilities networks providing electricity, heat, water, sewerage and gas to the legacy communities Development of 2012 Olympic Park.

Risk Architecture, Strategy and Protocols A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO (IRM, AIRMIC and ALARM)

AV Governance Model Reporting Structure

Athlete’s Village Definition of Risk “A risk is an uncertain event or set of circumstances that, should it or they occur would have an effect on the achievement of one or more of the project’s objectives… Either positively (an opportunity) Or a negatively (a threat)” Things that will or have happened are not risks, they are problems or issues. They are included in the existing statements of work and not in the risk register. At any time during a venture we take stock of our situation. We normally look at progress and the targets that we face in the future. However, this does not give us a complete picture of our future.

Risk management framework A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO (IRM, AIRMIC and ALARM)

Risk management process - Theory A structured approach to Enterprise Risk Management (ERM) and the requirements of ISO (IRM, AIRMIC and ALARM)

The risk management process at Athletes Village It is a process of constant discovery, hence…

Risk Management Plan Planning – The first stage! This Risk Management Plan is the first stage in the process and is the guideline document for running the process throughout the project lifecycle. It contains, or references, everything that a practitioner needs to know to effectively and efficiently play a part in managing risk. Throughout this Plan Threats and Opportunities are considered collectively under the title risk Each stage in the process will address its purpose, methodology, and outputs. In order to make the identification and management of risk more effective, the Predict! Risk Controller 4 risk management database together with Predict! Risk Analyser software has been mandated on the Athletes Village programme.

Identification – Open your mind! Risks are all in your imagination and as such sometimes difficult to define. In order to identify the risks to a project, a combination of techniques including workshops, structured interviews and questionnaires will be used. Team workshops are very effective in risk identification but need to be attended by the key personnel on the project. The workshop will draw upon the Project Team’s expertise and experience to identify and assess potential risks. Generic Risks As an aid to this, the first workshops were conducted to identify the generic risks to various levels of the project. The generic risk registers list scenarios that could be present on particular project areas and are intended as an aide memoire for all project personnel. When identifying specific project risk, the generic risks can be used as a basis for the specific description of a risk.

Generic Site Wide Risks held at this level Generic Area Risks developed into Specific Plot Risks held at plot level Generic Area Risks held at this level Generic Site Wide Risks developed into Specific Area Risks held at Area level Senior Risks held at this level or higher There are three generic risk levels: Senior Risks – Business risks held and owned at upper management level Site Wide Risks – Infrastructure and overarching risk held at Site level Area Risks – Project risks held at Area level The relationship between Generic and specific risk can be illustrated with reference to the project framework, or hierarchy used as the structure for the risk database. Generic Risks

Risk Ownership – Risks without owners will never be managed! Owners are people, NOT departments. Risk Owners are people have the responsibility for managing the risks Risk Owners need to have: Understanding Responsibility & Buy-in Influence and control Resources Interest in the risk They need to: Be aware of the full consequences. Drive the actionees

Pre-mitigation Assessment Think it through! The first assessment is the Pre- mitigation assessment. It is made on the basis of the existing situation or controls only. The pre-mitigation value of a risk used to priorities both the risk and its subsequent mitigation strategy. The pre- mitigation assessment of risk will be qualitative, i.e. will use a judgemental assessment of both Probability and Impact.

Probability Estimation

Impact Estimation

Scoring System The scoring system in Predict! Risk Controller takes into account the level from which the risk is viewed. I.e. a risk that appears very high in a small project will not be similarly rated at, for example, the corporate level. The scoring system adapts the magnitude of the risk to the level from which it is viewed. The scoring system is summarised below: The system shows the magnitude of the risk both numerically and by ‘traffic light’ colours that are used to formulate reports.

Prioritisation In prioritising risks it is important not just to consider further only the risks of high magnitude. There are other significant categories of risk. These are for risks that are: Poorly understood Reputational Uncontrollable Growing in magnitude Of a management nature, not directly connected with your day to day project or job

Mitigation Strategy Plan it and do it! Mitigation strategies apply to both threats and opportunities. The rules for handling them are similar. Risk Management is about taking cost-effective action: To minimise the probability and/or impact of threats to an objective To maximise the probability and/or impact of opportunities on an objective

Mitigation actions If you can’t think of an adequate mitigation for a risk, is it really more than one risk? Try breaking it down into more than one risk and reiterating the process If you still can’t control or affect it should you own it? If the answer is No – get help! Escalate it up to the Risk Leader so that it can be allocated to someone who can control it.

Fallback Planning If you can’t terminate or eliminate a risk, don’t forget Murphy’s Law! In spite of all the mitigation the risk could still happen. There fore it is important to plan Fallback strategy and consider when to engage them The fallback plans. These are plans that will be put into effect if the risk happens. These should address not just what the project has to do but also what the business or organisation needs to do. The trigger points. These are the points in the lifecycle of the risk that preparatory action needs implementing. The fallback plans may have a lead-time to implement. This should be addressed by establishing trigger points defined by suitable characteristics or precursors of the risk. It is not necessary to formulate fallback plans for every risk. Risk Leaders will decide which plans need advance consideration.

Monitoring & Reporting Drive the Process! The imaginary nature of risk means that it is not natural to give it the appropriate attention alongside all the other ‘real’ happenings in a venture. If we are to avoid continuous ‘fire fighting’ it is essential to have a planned and continuous process to ensure that: Existing risks are reviewed New risks are identified Risks are communicated Dead risks are closed Actions are carried out Treatments are effective Provisions are current

Complexity Maximise the scientific knowledge of the risk and mitigation options Uncertainty Involve all affected stakeholders to collectively decide best way forward Ambiguity Societal debate about the risk and its underlying implications Simple Use existing routines to assess risks and possible reduction measures Dominant risk characteristic Type of participation Actors Stakeholder Involvement As the dominant characteristic changes, so also will the type of stakeholder involvement need to change Regulatory bodies/industry experts External Scientists/ Researchers Affected stakeholders Civil society Regulatory bodies/industry experts External Scientists/ Researchers Affected stakeholders After Bunting (2007). An introduction to the IRGC Risk Governance Framework

Risk Map – What actually the risk (stakeholder engagement) Risk Perception Map – What we think level of risk is

The Olympic Delivery Authority (ODA) and the UK Government recognizes that scientific analysis and professional judgement for traditional decision making strategies are insufficient for this unique development. People with local knowledge and experience within the delivery teams but also from wider communities ( if available) in decision making process has been acknowledged by ODA as a potential and partial practical solution to challenging social and political problems. This is done via public consultations with all interested stakeholders directly or indirectly related to this development by Government and ODA. Mass media has also a very important role to play and keeping constant contact with public and highest priority for ODA and Government for informing all stakeholders.

WFS/EP Athletes Village Stakeholder Risk Communication Client (intr&extr) & Client’s client Neighbours Transport, Infrastructure & Utilities Planning consent & Design Environment (Sustainability) Interest groups & Stakeholders in Delivery Employment & Training (Sustainability) Emergency services & Security Olympic Related Media & Sales and Marketing Government agency/NGOs Government ODA LOCOG WWF LL R&C First East ODA LLC DLR ODA LB of Newham & Waltham Forest GLA LB of Newham, Hackney, Waltham Forest, Tower Hamlets GLA Environment Agency LDA Thames Gateway London Agency East Potential BeOnSite JCP Unions LOCOG National Press Met Police (Secure by design) Building control MP & LD of Newham Subcontractors Trade contractors Consultants & designers CTRL Excel centre City airport Resident Associations ODA Ambulance Service Fire Brigade MI5 & MI6 Armed Forces ODA HSE Job shops DfES Local Resident & Community Groups Westfield Metropolitan Police DCMS BLL LCR NHBC (Warranty) Design contractors BRE(CodeforSustHomes) PDT DRP ERP SCAG ODA Newham (Workplace) East Thames ODA Industry Press First Base East Thames Local Press LCR Local Boroughs International Press Sales Agent LLC Local Boroughs Local Interest Groups Greenpeace BTP Emergency Planners Home Office HR/ LEGAL / MARKETING /CEO Ceo / directors Strategic planners Business unit heads SECURITY TEAM HR / DIRECTORS Environmental team Project Managers Construction directors CEO / DIRECTORS Operational directors ODA/CLM CTRL/Network Rail Westfield WFS/ Skanska Minister for Olympics DfT DCLG/TGDU HM Treasury DoH DfES DEFRA FCO Home Office Parliament No.10 UK Sport Minister for Housing GofL Housing Corporation LGO LTGDC LVRPA LR ELBA London First GWTL Local Boroughs First Thames DCMS DCFS SRP ODA IOC LOCOG Olympic Board BOA Minister for Olympics UK Sport TfL URN/CTRL Network Rail DLR LuL Architectural Foundation Ambulance Service Highways Agency Westfield SL /ODA ELYO Fulcrum (Gas) EDF Thames Water GLA ODA

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST OD A Client (internal & external) & client’s client LLC LL R&C BLL LCR LOCOG GLA

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST Neighbours Westfield/Skanska DLR CTRL/Network Rail ODA/CLM Excel 5 Boroughs City Airport

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST Transport, Infrastructure & Utilities Westfield/ODA DLR URN/CTRL Newham, Highways Ambulanc e Service Network Rail Thames Water TfL EDF ELYO Fulcrum(Gas) LuL Architectural Foundation

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST Interest groups & Stakeholders in Delivery OD A CLM HSE Trade contractors Local Resident & Community Groups CTRL East Potential Thames Gateway LDA Westfield

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST Government & NGOs First Thames Various NGOs Local Boroughs Housing Corporatio n DCMS DCFS Minister for Olympics Minister for Housing HM Treasury Various Gov agencies

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST Olympic related ODA IOC LOCOG UK Sport Minister for Olympics Olympic Board BOA

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST Media and Marketing & Sales OD A First base Local Boroughs LOCOG Industry Press Local Press Sales Agent East Thames LCR International Press

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST Environment (Sustainability) OD A LLC WWF GLA Local Interest Groups Environment Agency Local Boroughs Greenpeace Resident Associations

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST OD A Planning consent & design PDT DRP ERP SCA G Newham & WF First East GLA BRE Building Control NHB C Met Police Design Contractors Consultants & Designers

POWER: ….have power over the project INTEREST: …….interested in the project Q1: Where are they on the matrix? Q2: What level of relationship we require? 1 to 10 (1 poor - 10 excellent) B: Manage Closely C: Monitor A: Keep satisfied D: Keep informed POWER INTEREST OD A Emergency services & security Home Office Fire Brigade British Transport Police MI5 & MI6 (CPNI) Metropolitan Police Ambulance Services Emergency Planners DCMS Armed Forces

Security & Logistics / Health and Safety Environmental and Sustainability Risk Management- Communication Vertical Development and construction activities, planning and execution Construction of Infrastructure, planning and execution of works Athletes Village Interfaces Development and Delivery of the Project Interface Internal - External Stakeholders Information and Participation Management planning, finance, procurement and commercial risks Development & Delivery

BLL- ODA – Government- N.G.O communication Regular Meetings -Some of questions asked: What are the biggest threats, opportunities and issues? (to include; social, commercial,schedule, budget, staff). Opportunities must be well defined and do something with them ( be aware of risks attached to all those new opportunities) i.e. Site concrete batching plant, we secured price for concrete supply for all plots but We have created additional environmental issues such as; dust, noise, logistical issues in the area. Early warning notice issues. What is currently going wrong on the project now or in the future? BLL ODA Government N.G.O

Managing risk by exception : bad stuff or barriers in the way that stop us achieving desired outcome Bad stuff ; risks and threats are prioritised in order of potential occurrence. -Finance -Reputation -Planning -Environmental / Health and Safety -Social Some questions asked: What are the things are going to stop us ? When it happens ? How big is the risk ? How is going to affect us ? What can we do to prevent it? ( early warning notice ?)

IRGC’S RISK GOVERNANCE FRAMEWORK Pre-Assessment Characterisation and Evaluation AppraisalManagementCommunication Categorising the knowledge about the risk UnderstandingDeciding Getting a broad picture of the risk Is the risk tolerable, acceptable or unacceptable? Risk assessment PLUS Concern assessment Is the risk simple, complex, uncertain or ambiguous? Bunting (2007). An introduction to the IRGC Risk Governance Framework