Risk and Contingency Planning
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Transcript of Risk and Contingency Planning
Risk and Contingency
Planning
• Richard Farr
Contents
What is risk?
A ‘risk simulator’ you probably already own: Monopoly
Objectives(Just in case you’ve been on Mars since 1933...)
An expert explains...
Risk scenario...you are here what happens if you roll 6, 8 or 9?
The risk scenario
Dice rolls and probability
Probability distribution
Probability...
Reducing risk
Decisiontree...Mean cost of the ‘risk' strategy: £298.38Known cost of the ‘insurance' strategy: £330
The “meta-game”
Coping with risk:
The cost of jet fuel...
Options defined
Strategic risk:
Two views of the future
Losing their nerve?
Losing their nerve?
With the A350 and 747-8...
Coping with risk
Risk prioritisation
Problem Severity Likelihood Prioritised
Robbery 3 2 6
Building fire 5 1 5
Trip hazards 1 4 4
Corporate approaches
One last example
One last example
My blog: http://capacify.wordpress.comOn Twitter: @Capacified - Richard Farr
Tutor notesS.6: If your students think being a Monopoly champion sounds terribly nerdy, inform
them that the Monopoly final is played with real money, and the winner gets to keep it all.
S.10: You may not need this one, depending upon the background of your trainees.
S.15-20: Remember that airlines are very cash-positive businesses – passengers pay
long in advance, so hedging ought to be affordable. The hedging issue cost Ryanair
£92m; locking in fuel prices of $124 a barrel for 80% the airline’s fuel during the third
quarter, when the price of oil collapsed to a low of $33 a barrel.
S.26: Engineers use a three-stage risk prioritisation approach, adding a scale for the
probability of the hazard being detected.
S.28: Charles Darrow didn’t invent Monopoly; Elizabeth Magie created it in 1903, and it
was commercially published as early as 1923, as ‘The Landlords Game’. Charles Darrow
merely drew the board illustrations - some of which still appear in the modern game.