10.30 Alastair Brown Valtech Val Jonas Risk Decisions Group Paul Bamforth Asta Development Plc 1.30 Kelvin Kirby EPM Consulting Group 2.30 Vince Hines Wellingstone Ltd Solutions Presentations Zone

Portfolio Risk Management – No Time to Waste Project Challenge 26 th March 2009 Val Jonas, CEO Risk Decisions

Agenda  The Management challenge  Multiple perspectives  Implementing Portfolio Risk Management  Summary & Conclusion

Portfolio Management – the challenge InterdependentCompetingStrategicSponsoredEvolving Project Z Project Y Project X Project E Project D Project A Project B Project C

Management & Communication Set objectives & context Create detailed delivery plans Raise concerns & assumptions Corporate/Strategic Business objectives Air gap

Senior managers risk management role  Understand the portfolio of business objectives  Set clear objectives for staff and the organisation  Set the context in which to manage risk (trade-offs & risk appetite)  Establish and manage risk management reserve  Ensure good communication takes place

Project Managers Risk Management Role  Understand business case and project context  Baseline the risk register  Oversee risk management activities  Embed risk thinking into project review meetings  Ensure risk response actions are carried out (threats, issues & opportunities)  Utilise risk management reserve efficiently  Manage stakeholder expectations  Deliver to time, cost and quality

Portfolio management - the challenge Shareholder / Stakeholder Value Project Deliverables Programme & Operational Benefits What are the risks? What are the risks? What are the risks?

Agenda  The Management challenge  Multiple perspectives  Implementing Portfolio Risk Management  Summary & Conclusion

Strategic Perspective GOVERNANCE (Risk, Controls & Compliance) STRATEGY (Objectives) ORGANISATION (Structure & Stakeholders) Shareholder /  stakeholder Value

Project Perspective COST (Budgets) SCHEDULE (NPV) QUALITY  Deliverables (Constraints & Assumptions)

Programme / Operational Perspective DEPENDENCIES ESCALATION / DELEGATION SCOPE & BUDGETS  Benefits

OGC risk perspectives © OGC, Management of Risk, 2007

Agenda  The Management challenge  Multiple perspectives  Implementing Portfolio Risk Management  Summary & Conclusion

Risk Management Process  Establish context and risk appetite  Identify risk events and uncertainties  Plan appropriate response actions  Assess required contingencies  Understand and manage exposure Same process for strategic, programme, operational and project risks

Timely risk management? Risk Management looks into the future to identify potential threats and opportunities Risks ? ProgressTargets Lessons learned Take appropriate action, before it is too late to influence the outcome Now

Perspective on Risk Management Actions  Strategic  Review / amend targets & scope  Mature approach to risk budgeting  Manage expectations  Programme / Operational  Reconcile dependencies & juggle resources  Manage systemic risks  Oversee risk escalation / delegation  Project  Optimal use of mitigation budget  Managed risk taking  Aggressive targets and use of schedule reserve

Management & Communication Set objectives & context Create detailed delivery plans Raise concerns & assumptions Corporate/Strategic Business objectives Air Gap

The Corporate Risk Tree Objectives Risk Appetite Priorities Strategic Mitigation Authorisation Behaviour Tactical Risks Significant Tactical Risks Corporate Risks Strategic Risks +

Portfolio risk management Executive Board OperationsProgrammes Functional ProjectsLogisticsContractors Supply chain Contractors Information Guidance Supply chain

Agenda  The Management challenge  Multiple perspectives  Implementing Portfolio Risk Management  Summary & Conclusion

Culture & Behaviours  For the benefits of risk management to be fully realised there needs to be:  a clear process with the interfaces across all levels clearly understood and responsibility for the process elements clearly defined  downward (not just upward) communication  improved access to data and co-operation between the practitioners (tools & processes)

Portfolio management is a risk to your project!  Business Case Approvals  Just one of many projects  Change of business context  Project inevitably has subjective view  Is excellent performance enough?  Each project must also deliver portfolio value

Conclusion  Risk management must work coherently at different levels to be fully effective Operational - Project – Programme - Strategic  Too often exercised independently, at different levels, by specialists working only within their area  The human aspect of achieving porfolio risk management must not be overlooked  Joining up risk management across the organisation is a challenging task, so start now, there’s no time to waste!

Conclusion!

‘Portfolio Risk Management – No time to waste’ White paper : - visit Risk Decisions at Stand Val Jonas, CEO Risk Decisions Group