Identifying Waste in Risk Management

Risk Management often devolves into a check-the-box, non-valued activity in an organization. While many organizations ensure they have the right processes in place, they still end up not protecting themselves against risk effectively. A lot of our organizations struggle to understand risk and apply this mindset in productive ways.

As quality professionals we should be applying the same improvement tools to our risk management processes as we do anything else.

To improve a process, we first need to understand the value from the process. Risk management is the identification, evaluation, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.

Risk management then is an application of decision quality to reduce uncertainty on objectives. We can represent the process this way:

The risk evaluation is the step where the knowledge base is evaluated, and a summary judgment is reached on the risks and uncertainties involved in the case under investigation. This evaluation must take the values of the decision-makers into account and a careful understanding has to be had on just what the practical burden of proof is in the particular decision.

Does Risk Management then create value for those perceived by the stakeholders? Can we apply a value stream approach and look to reduce wastes?  Some common ones include:

Waste in Risk ManagementExampleReflects
Defective Information“The things that hurts you is never in a risk matrix”  “You have to deliver a risk matrix, but how you got there doesn’t matter”Missing stakeholder viewpoints, poor Risk Management process, lack of considering multiple sources of uncertainty, poor input data, lack of sharing information
Overproduction“if it is just a checklist sitting somewhere, then people don’t use it, and it becomes a wasted effort”Missing standardization, serial processing and creation of similar documents, reports are not used after creation
Stockpiling Information“we’re uncertain what are the effect of the risk as this early stage, I think it would make more sense to do after”Documented risk lay around unutilized during a project, change or operations
Unnecessary movement of people“It can be time consuming walking around to get information about risk”Lack of documentation, risks only retrievable by going around asking employees
Rework“Time spend in risk identification is always little in the beginning of a project because everybody wants to start and then do the first part as quickly as possible.”Low quality initial work, ‘tick the-box’ risk management
Information rot“Risk reports are always out of date”The documents were supposed to be updated and re-evaluated, but was not, thus becoming partially obsolete over time
Common wastes in Risk Management

Once we understand waste in risk management we can identify when it happens and engage in improvement activities. We should do this based on the principles of decision quality and very aware of the role uncertainty applies.

References

  • Anjum, Rani Lill, and Elena Rocca. “From Ideal to Real Risk: Philosophy of Causation Meets Risk Analysis.” Risk Analysis, vol. 39, no. 3, 19 Sept. 2018, pp. 729–740, 10.1111/risa.13187.
  • Hansson, Sven Ove, and Terje Aven. “Is Risk Analysis Scientific?” Risk Analysis, vol. 34, no. 7, 11 June 2014, pp. 1173–1183, 10.1111/risa.12230
  • Walker, Warren E., et al. “Deep Uncertainty.” Encyclopedia of Operations Research and Management Science, 2013, pp. 395–402, 10.1007/978-1-4419-1153-7_1140
  • Willumsen, Pelle, et al. “Value Creation through Project Risk Management.” International Journal of Project Management, Feb. 2019, 10.1016/j.ijproman.2019.01.007

Brainstorming usually sinks your ship

If you work in teams, chances are you use brainstorming, gathering face-to-face in groups so that everyone can share ideas. This technique has been around since the late 1930s and many in quality and excellence pursuits view it as an effective technique.

Unfortunately, the science I’ve read is not quite in agreement. A group of four people typically generates approximately half as many ideas as a nominal group of four does. Production blocking, and a few other problems, lead to some key deficiencies in brainstorming:

  •  When group members are waiting for turn-taking, there are high chances that they may forget the ideas that they had in mind, they may focus on remembering those ideas rather than listening, or they may decide their ideas are no longer relevant.
  • The competing demand for coming up with one’s own idea and listening to other’s ideas makes it difficult to build on the ideas of others.
  • As the size of the group increases, the participants might feel less identifiable or accountable which might lead to decreased social loafing or level of motivation.

Overcoming production blocking requires the use of additional tools, such as brainwriting. Brainwriting encompasses the sharing of ideas through pieces of paper – usually having people write their ideas out on post-it notes for example. This technique makes brainstorming effective by overcoming the problem of verbal brainstorming. Though their seems to be some worry here about social cues kicking in, and there may be more benefit in having folks write all their ideas on one piece of paper, or better yet on their own before the meeting.

Brain writing, to be truly effective, requires solid collaborative evaluation process to follow the idea generation phase this is the foundation of decision quality. The research seems to indicate we see results better than the norm with this combination.

This appears to be an area where more research is needed to examine different variations , the boundary conditions for demonstrating the superiority of brainwriting over nominal groups, the optimum size of the group, and the potential of mixing verbal and nonverbal brainstorming. If anyone knows of good studies in this area, please point me to them.

References

  • Coskun, H. (2005). Cognitive stimulation with convergent and divergent thinking exercises in brainwriting: Incubation, sequence priming, and group context. Small Group Research, 36, 466-498. doi:10.1177/1046496405276475
  • Cragan, J. F., Wright, D. W., & Kasch, C. R. (2009). Communication in small groups : theory, process, skills. Boston, MA: Cengage Learning – Academic and Professional Group.
  • West, M. A. (2012). Effective teamwork : practical lessons from organizational research. Wiley-Blackwell.