4_April Edward Devereux (G4S SS) Risk Mitigation SE

8/9/2019 4_April Edward Devereux (G4S SS) Risk Mitigation SE

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Group 4 Securicor

Risk Mitigation Strategies and Examples A Private Sector View


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“ Risk is defined as something happening

that may have an impact on theachievement of objectives as this is most

likely to affect the service delivery…it

includes risk as an opportunity as well as athreat”

NAO

“ Managing Risks to Improve Public Services”

Oct 04


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Mindset

Senior leadership buy-in Creating a culture

Training and practice

Checks and balances

Clear and defined SLAs


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Category of Risk

External Arising from the external environment, not

wholly within the organization's control but

where action can be taken to mitigate therisks

Operational Relating to existing operations – both current

delivery and building and maintainingcapacity and capability

Change Risk created by decisions to pursue new

endeavours


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Category of Risk

External Political, economic, socio-cultural, technological, legal,

environmental Operational

Capacity and capability, governance, reputational, delivery(service/product failure)

Human Resources Business Continuity

Security of physical assets and information

Change Change programme

New products

New policies


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Why Change?

Tangible Benefits

Deliver better services Improve efficiency

Make more reliable decisions

Support innovation

Stay ahead of the competition

“ The UK Government announced in the Spending Review inJuly 2004 its intention to achieve savings of £21.5bn a yearstaff reductions of 84,000 and asset sales of £30bn by 2010”

NAO


Oct 04


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Managing Risk

Identifying the risks and managing them is key:

Committed senior leadership

Identify and document the risks Evaluate the risks using an agreed methodology

Select the risks to work on

Determine ways of reducing the risks Review the risks regularly

“ Risk management means having in place a corporate and

systematic process for evaluating and addressing theimpact of risks in a cost effective way and having staff withthe appropriate skills to identify and assess the potentialfor risks to arise”

NAO


Oct 04


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What Next?

Acceptance in its entirety

Prevention/Reduction (minimizing the impact and

reduction of the likelihood of the risk occurring)

Transfer to an insurer or sub-contractor

Rejection of the risk as being unacceptable


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Experience

Two examples, not comparisons

MNC Off-Shore project

Risks not fully identified

Cost of risk mitigation

Secure Training Facility

Creation of SPV

Identification and allocation of risks.

"What is the cheapest to you now is l ikely to be the dearest

to you in the end."

John Ruskin (1819–1900)


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Off-Shore Relocation

An MNC relocated back-office operations and call centre from HongKong to three off-shore locations in India and China. The migrationtook 24 months to complete.

Failure to correctly measure existing delivery & costs

Benchmarking success became untenable

Failure to identify processes suitable for relocation Processes relocated to disparate geographies and needing

additional resources

Insufficient capability to deliver to existing service level

Increased management time spent answering customercomplaints

Negative impact on customers’ satisfaction

Initiative is unpopular; no benefit delivered to customer


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Off-Shore Relocation

Resilience low due to complicated BCP support

All sites require back-up

Staff issues

Training, turnover & background checksLoss of knowledge

Management team are disintermediated

Cost of compliance

Legal and Safety, Health & Environment

Operational Control

On-going project management, audit & monitoring

Security of information

Increased access

These lessons were learnt resulting in a happy ending


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Secure Training Centre

Milton Keynes

A PFI prison for 80 juveniles procured by the Youth Justice

Board (YJB) under a DCMF (design, construct, manage,finance) contract with a 25 year duration.

A ‘Special Purpose Vehicle’ (SPV) set up as the contracting

entity by the consortium partners (the construction

company, operating company and an equity investor)


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Secure Training Centre

PUBLIC SPECI L

CONSTRUCTION

OPER TIONS

SECT OR PURPOS E CO

COMP NY

COMP NY

DESIGN SUIT BILITY

CONSTRUCTION COST OVERRUN

DEL Y IN OPENING

VOLUME RISK

SERVICE F ILURE

SERVICE C OST OVERRUN

INSUR NCE RENEW L

LIFE C YCLE RENEW L

FUNDING

INFL TION

GENER L LEGISL TIVE CH NGE

SPEC IFIC LEGISL TIVE C H NGE

N TURE OF RISK


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Lessons Learnt

Innovation, especially in recruitment and deployment of

staff

Development of relevant SLAs

Decency agenda

Public sector service quality improvement

Competitive pricing affecting service delivery


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Summary

Outsourcing does work, but risks must be:

Made Explicit Quantified

Leadership commitment

Risk management culture

Partnership

= improved services


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“ An outsourcing agreement is not an

opportunity to cut a proportion of acompany’s cost base and offload it to

someone else. It is a partnership in which

both sides remain responsible for the

delivery of service.”

FT Article 24/8/05

British Airways’ lesson on how not to outsource

J. Fitzgerald

4_April Edward Devereux (G4S SS) Risk Mitigation SE

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