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Brexit Impact Assessment Tool

10k? £1m?  £10m? More?

Even if it were not made explicit, when we voted eighteen months ago we knew Brexit would have a cost. However as we draw inexorably closer to March 2019 and the UKs exit from the EU we are, as a country, frankly none the wiser on what Brexit will look like, its implications, or its cost.

The negotiations have been described as ‘a staring contest’ where neither side can afford to blink first. Where nothing is decided until everything is decided. A government minister has put the odds of the UK ‘crashing out’ with no-deal at 60:40.  Even if the terms of divorce can be agreed, could all necessary arrangements be implemented within a two-year transition window?

Given the fog of uncertainty that persists what is business supposed to do? The short answers is everything possible.

Businesses have responsibilities to their workers, customers, communities and shareholders.  Businesses needs to act responsibly and take action on Brexit now.  They must make plans to ensure their business continues.  Not just those businesses responsible for keeping the lights on, food on the shelves and planes in the skies; business large and small have responsibilities to their stakeholders.

Given the seismic nature of Brexit you might expect those charged with representing business would step up and provide practical support and advice.  However the British Chamber of Commerce – which represents 75,000 businesses – has published just two guides on Brexit on its website. The first, titled ‘The answers businesses need’, is a poorly formatted table of questions with RAG ratings, and answers no practical business need.  The second – a ‘Business Brexit Checklist’ –consists of 22 actions across four catch-all sections.   Questions appears to be the BCCs modus operandi since these ‘actions’ consist entirely of questions.  Asking questions is good provided they elicit answers, so it seems the BCC is saying to business leaders – over to you.

So let’s ask, How much is Brexit going to cost your business? What is the impact?

You might wonder how can you answer when so much of detail remains unknown yet the process is relatively straightforward.  For example, the BCC checklist states, “With potential customs checks between the UK and the EU, there may be delays at the border. Do you need to increase your inventory and/or buy additional storage space?”  Well – do you?

If you’re business operates in a supply chain for non-perishable widgets then additional storage might help, but in order to know how much additional storage you need you need to explore how potential delays might arise and how long they might last.

Whatever your business the process is to identify the key sources of uncertainty for your business, estimate credible ranges of impacts and the probability of occurrence, evaluate, make risk-based decisions and where appropriate take proportionate action.

Given the breadth of Brexit related issues from maintaining your workforce to the legality of contracts, additional storage may not be the most pressing for many businesses however it serves to illustrate that estimating and evaluating uncertainty is a core management task. Brexit is a significant uncertainty facing UK business and business leaders need credible information with which to make decisions. Quantifying risk is essential; qualifying as ‘High, Medium, Low’ or scoring through a flawed risk matrix is not sufficient.

At Risk Insights we have developed Risk Insights Explorer, a risk tool specifically designed for undertaking first-pass evaluations of the sources of uncertainty, whether for a specific project objective, strategy decision or – in the case of Brexit – a model that can help business quantify Brexit risks. Risk Insights Explorer is focused on addressing uncertainty, risk elicitation, and quantification, allowing users to estimate and evaluate uncertainty, and to visually explore risk interconnectedness.

To learn how Risk Insights holistic approach can support your Brexit agenda, contact me today.

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Why Risk Connectivity is important

When the interconnectedness of events is cited as being at the root of many business failure, why are risks still largely analysed and managed independently or in isolation?

At Risk Insights we have developed a unique tool which can help you identify and assess the connections between risks. In doing so you can explore significant risk interrelations, identify influential risk events, and appreciate the ripple effects of decisions. Identifying and assessing interconnectedness promotes a broader and deeper understanding of the risks to your project or organisation.

Risk Insights Explorer uses network analysis – a branch of graph theory – to visualise connectivity and impact assessments, presenting the output in an intuitive, fully interactive, network graph.

Have you explored the interconnectedness of your risks?

How do you ensure your risk models engage the audience and elicit a varied range of views and perspectives?

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Identify Interconnections

The Risks Interconnections Map shows how all risks are connected to others and underlines the importance of dealing with risk in an holistic manner. The map visualises the strength of connection between individual risks – the most strongly connected risks could merit additional attention due to the multiple ways they affect or are affected by other risks.

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Change the conversation from risk to uncertainty management

Present use of the term ‘risk’ is ambiguous. Best practice regards risk as encompassing both threat and opportunity, but guidance often speaks in terms of threat management, and in common parlance risk is more usually synonymous with threat.  An obvious first step towards uncertainty management is to remove this ambiguity by using the term ‘uncertainty’ in the everyday sense of‘ lack of certainty’ as a starting point.

Risk management Uncertainty management
a downside risk a threat (giving rise to downside risk)
an upside risk an opportunity (giving rise to upside risk) a source of
uncertainty
a risk (upside or downside) a source of uncertainty
a (possible) source of risk a problem an issue
an impact a consequence/effect
a weakness an issue
a poor allocation inadequate an inappropriate/unclear allocation Inappropriate
avoid risk resolve uncertainty
mitigate modify
lack of shortage or surplus of
major risk significant uncertainty
absence of availability of
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Exploring Uncertainty: The Movie

Having fantastic artwork produced by the brilliant Mark Mitchell wasn’t enough for us here at Risk Insights.. we simply had to make Exploring Uncertainty: The Movie.

So grab yourself some popcorn, darken the room and settle back for the best 96 seconds of risk-management based entertainment you’ll see this side of The Donald, the FBI and a red button being in the same room.

Oscar darling, we’re coming for ya!

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Everything changes

Welcome to the first production change log.   We hope you enjoy the following new features:

  • Connectivity – For the influenced / influential score calculations, we now filter the risk by their parameter instead of category
  • Connectivity – increase the upper limit of the node size range
  • Connectivity – initially draw the map in the background in order to get a better layout
  • Landscape map – ignore and hide the parameter filter

We bought a cake to celebrate – but some bugs ate it.  So we squished them:

  • Connectivity – fix the hide/show labels on node hover
  • Node info – the label change was not saved successfully
  • Results Engine – the changes in the rounding of the values in the last line (Current estimate of … is … in the range … to …)
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Join us for a Party! R.S.V.P.

Your organisation is holding it’s annual summer party. This is a big event and management wants the risks assessing.

Here’s how one of the event planners sees the uncertainty around poor weather:

There is a good chance it’ll stay dry but if it rains then we will get really wet, however if it pours then we’re in for a right drenching. I think there is a 50:50 chance it’ll rain, and a 10% chance it will pour. And if it rains one-in-twenty attendees won’t show, but if it pours half those expected will cancel.

Yet here’s how some risk professionals translate that assessment using a risk matrix:

Okay, well I have ‘wet’ down here on the matrix as a 2 and ‘drenching’ down as a 4, so let’s say the impact is a 3 and the probability is what…10% you say…. that’s on the grid as a 2? Are you happy to say the risk is a 6? That’s low overall so nothing to worry about.

Yet the user has given enough information to quantify the risk into two scenarios, optimistic and pessimistic.

In the optimistic scenario: Impact = attendance -5%, Probability = 50%

In the pessimistic scenario: Impact = attendance -50%, Probability = 10%

Now we can calculate both scenarios:

Optimistic: (-0.05 * 0.5) = -0.25 plus Pessimistic: (-0.5 * 0.1)  = -0.05

And find the midpoint (-0.25 + -0.05) / 2 = -0.15

Now we can say:

Should the risk event (bad weather) happen, the expected impact will be a fall in attendance of 15%, in the range 5% to 50%.

If the company doesn’t have the appetite for up to 50% not attending there is an opportunity to take the decision, for example, to hire a venue with both indoor and outdoor space.

Party on dudes! 

Risk Insights Explorer is the only risk tool specifically designed for undertaking first-pass evaluations of uncertainty, whether for a specific project objective, strategy decision or a more insightful view of potential events over a longer time horizon. Critically it provides robust, transparent estimates and encourages a move away from matrix-based risk ratings.

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Risk Insights Connects: An introduction to risk connectivity

Traditional approaches to risk management view risks as an “Event”, characterised by a single feature.

At Risk Insights we take a Holistic view, seeing complex systems like economies, organisations, or major programmes of work, as a series of interconnected sources of uncertainty – driving dynamic risk behaviour. Effective management of risk therefore requires a new approach and new thinking, understanding how risks influence one another within a whole.

Using advanced graph algorithms and 4D analytics, Explorer makes it possible to see and make sense of the connections between risks within even the most complex project or organisation.