From Risk Mitigation to Maximising the Opportunities. A Case Study. Anne Maddock. Manager Clinical Governance RMIA Risk Manager of the Year 2005

Transcription

1 From Risk Mitigation to Maximising the Opportunities A Case Study Anne Maddock Manager Clinical Governance RMIA Risk Manager of the Year 2005

2 Purpose of the presentation Share my learning in the following areas: Enterprise Risk Management Strategy for RDNS SA RMIA Risk Manager of the Year 2005 Clinical Governance Framework for RDNS SA SA Safety and Quality Framework and Strategy 2006 Opportunity Risk Management Framework for the Maternity Services Ministerial Committee QLD Publications in Enterprise Wide Risk Management and Clinical Governance Presentations across Australia and Overseas in 2006 Interactive discussion on your experience, challenges and learning

3 Presentation content 1. What is Risk Management? 2. Health care is Risky Business 3. The evolution of risk management 4. Why are organisations risky? 5. Beyond the basics: 5.1 Enterprise Wide Risk Management - drivers to success 5.2 Opportunity Risk Management 6. The tools 6.1 Risk Domains 6.2 Integrated Governance 6.3 Risk and opportunity assessment 6.4 Risk Culture

4 What is risk management? The culture, processes and structures that are directed towards realising potential opportunities whilst managing (actual or potential ) adverse effects AS/NZS 4360:2004

5 What is risk management? So what about the opportunities? Source: CPA Australia Information Centre

6 Why you want to, why you should and why you have to implement risk management? The greatest risk is complacency EJ Smith was the captain of the Titanic Collapse of many corporate entities due to their failure to implement sound risk management strategies Pat Barrett AO Auditor General 2003

7 The Evolution of Risk Management Opportunity Risk Scope of Risks Co onsidered Strategic Operational Financial Hazard Only Silo Management Partial Integration Full Integration Close Alignment Some Alignment Minimal Alignment Degree of Cross-functional Integration

8 The Healthcare Sector Risk Statistics Risks in the Hospital Sector Alone 1995 Each year related to medical error 18,000 Australians die 50,000 permanent disability Preventable deaths - 13 Jumbo jet crashes 2 billion dollars wasted 80 90% of error is system related (AQC 1996)

9 Health Care 100,000 Driving 10,000 Dangerous (>1/1K) Regulated Ultra-safe (<1/100K) 1, Bungee Jumping Mountain Climbing Chartered Flights Chemical Manufacturing Scheduled Airlines European Railroads Nuclear Power K 10K 100K 1M 10M Number of encounters for each fatality

10 When a chief executive puts their head on the pillow at night they will be worrying about two things : the financial position of the organisation and its performance targets They are not worrying yet about the safety of their organisation. Professor Liam Donaldson 2005

11 Why is health care risky? The hard and soft sides Multiple interrelated core processes Multiple funding methods, processes and regulations Multiple governance interfaces Rapidly advancing bodies of knowledge, drowning in information and starving for knowledge Functioning within limited resources Culture of workarounds Culture of blame or secrecy High customer expectations Professional territorialism Ambiguities between roles and functions, departments and/or organisation directions Rapid decision making requirements Varying stakeholder requirements Therefore the need for a balance between the soft and hard approaches to Risk Management

12 Balancing the hard and soft side of risk management Hard side Measuring and reporting Risk oversight committee Policies and procedures Risk limits Audit processes Systems Soft side Risk awareness People Skills Integrity Incentives Culture and values Trust and communication James Lam and Associates 2005

13 Enterprise Risk Management Explore the array of risks and opportunities Look for interrelatedness Map across functions and departments Share learning's across the organisation, breaking down the silo approach Integrate into business and decision making processes Minimise the probability and consequences of negative events Proactive approach to ensuring the probability of a positive impact Risk and opportunity are inextricably linked

14 Opportunity Risk Management The greatest enterprise risk is not pursuing enterprise opportunities White, B.E A risk with a positive impact Uncertainties that have a positive impact Events or occurrences that assist in achieving the organisations objectives Opposite of a threat The measure of probability of a positive desired change and the positive impact of that event Minimising the probability and consequences of negative events Need to treat risk and opportunity as dual entities: Fewer risks and more opportunities Mitigate each single risk and stimulate each single opportunity Pursue opportunities to achieve outcomes aggressively

15 Success on The HARD side Success on the HARD side

16 Opportunity and risk management are team sports Proactive Management and a common risk management process

17 RDNS SA Risk Assessment and Management Tool Risk Assessment OBTAIN THE TOTAL RISK SCORE (All individual scores must be multiplied) ACTION TIMETABLE Risk rating of 0.5 < 15 is an Acceptable Risk Damage Consequence Current Control Measures Probability Exposure Frequency Score Priority Action 4 People/ RDNS 4 Critical 1 No control 4 Almost certain 4 Frequently 175 < 256 Urgent Stop the process immediately or control with interim measures immediately 3 Environment 3 Serious 0.75 Partly controlled 3 Possible 3 Daily 95 < 174 High Take action to control with interim measures immediately. Plan to remove or reduce the risk within a week 2 Building 2 Moderate 0.35 Mostly controlled 2 Unlikely 2 Weekly 16 < 94 Med Take action to remove or reduce the risk or control with interim measures and have plan in place in a month 1 Equipment 1 Minor 0.05 Fully controlled 1 Rare 1 Monthly or less 0.5 < 15 Low Take action to remove or reduce the risk within 6 weeks or monitor (acceptable risk, may choose to take no action) D x C x CCM x P x EF = S (Modified from AON Risk Consultants 2000, AS/NZS: 4360, MAB/MIAC 1995)

18 RDNS SA Multiple Risk Assessment Tool Identified Risk / Source Damage Consequence Current Control Measures Probability Exposure Frequency T How to manage the potential impact by eliminating or minimising the risk utilising the Hierarchy of controls Action By Whom & When* How will you monitor and review the actions Initial score x x x x x Review score x x x x x Initial score x x x x x Review score x x x x x SUMMARY OF THE DECISION/S OR RECOMMENDATION/S MADE:

19 Risk & Performance Domains Technical & Corporate Governance CUSTOMERS clients, partnerships, stakeholders and community How do customers view us? Continuous Improvement INTERNAL OPERATIONS CAPABILITIES What must we comply with, excel at and assure? Mission, Vision, Values and Strategy FINANCIAL How do our funders and insurers see us? Internal & External Environment EMPLOYEES How do our staff view us? Will we attract, satisfy and retain them? INNOVATION LEARNING & GROWTH What is our ability to improve, change and create added value? Internal & External Audit & Review Opportunity, threat or error

20 Maddock 2007 in press Predictor

21 Success on the SOFT side

22 Success on the Soft Side Everyone having confidence in the process - A safe and just culture Oh really what is the root cause? Everyone seeing the add value Everybody's business Commitment accountability, responsibility and ownership Top-down and bottom-up Assimilate into daily job functions Leadership at all levels supporting and encouraging staff Supportive change management strategies Training and development program Mentoring program sponsor or champion Working in partnership Support from the experts don t forget the silent lambs The glory and challenge of the gold standard Taking the sceptics on the appropriate journey Selling success stories

23 Thought leaders How different people measure success Quantifiable Problem and creative solutions On-time completion Learning, help and happiness Ann Herrmann-Nehdi, CEO Herrmann International (2003)

24 Challenges to communication, behaviours, culture and change Herrmann Brain Dominance Profiling Herrmann International

25 Enterprise Wide and Opportunity What is Integrated Governance? Risk Management needs to be seen as a continuous process, a journey, not a destination. (Maddock 2007 in press ) Anne.MADDOCK@svhm.org.au