SPF 50+ and risk management

Those of you with a very fair skin leaving on holiday to sunny climates should know what “SPF 50” is.  In European countries, it is the highest factor protection that manufacturers are allowed to claim for sun cream.  It is generally creamy and white, and when plastered over your body gives you the appearance of a ghost on the beach.

Skin cancer is a very serious illness and one that it would seem wise to take all necessary precautions against.  However, sun creams and the ‘SPF’ rating system are controversial.  Do all creams work equally effectively for different people and in different situations?  Do they work at all?  Does wearing a sun screen encourage people to spend more time in the sun than is good for them?  Should we all be covering ourselves in SPF 50+ in the event that we might be touched by a harmful amount of sun?  Maybe we should just stay at home, away from the sun altogether?

This month’s Red Thread is about risk management.  We want to know if too much of a focus on risk is a bad thing, likely to slow our way out of the downturn.  Is the priority being given in many organisations to risk management actually leading to risk aversion? Conversely we want to know if there is good practice in Risk Management that could lead to organisational effectiveness.  We talked to several of our members who practice risk management in order to find out.  Read this month’s member case on DNV and Unirisc, and the interview with Matt Fisher of Ricoh to learn what they told us.

Writing this in a month when we celebrate the success of one of the biggest projects of modern times: the Apollo 11 lunar landing, we thought it might be inspirational to learn how NASA looks at risk management.  In 2009 NASA published their “new risk management paradigm” that has interesting parallels to the Excellence Model and RADAR.  Read about it in our core article of the month.

Enjoy your reading.

Melissa Rancourt
Director of Membership & Communication
EFQM

2009 Finalists named for EFQM Excellence Award

Brussels, 21 July 2009 – Fourteen finalists for the EFQM Excellence Award 2009 have been announced.  From this list of nominees, the award and prize winners will be named on 28 September in the Plaza Hotel at EFQM’s Celebration Award dinner in Brussels.  These organisations, listed below, represent diverse industries from educational bodies and healthcare in the public sector to energy, pharmaceutical, electronics, port & logistics, metals and automotive industries in the private sector.

2009 Finalists (listed alphabetically) 

• Bilim Ilac A.S., Turkey
• Bradstow School, UK
• Colegio Sagrado Corazón Carmelitas, Spain
• EDF DCECL EST, France
• EiTB, Media, Local & regional Governments, Spain
• Fondation François-Elisabeth Hôpital Kirchberg, Luxembourg
• Liverpool John Moore’s University, UK
• Luka Koper d.d., Slovenia
• NXP Sound Solutions Austria, Austria
• pom+Consulting AG, Switzerland
• Robert Bosch S.A.S, France
• St. Colmans College , UK
• Umicore Precious Metals Refining, Belgium
• Volkswagen Motor Polska Sp. z o.o., Poland

Feel free to register to the EFQM Forum, 28-29 September in Brussels, which includes the celebration dinner where we will announce the annual winners of the EFQM Excellence Award.

Click here to read the official press release. 

Space for safety: NASA’s “new risk management paradigm“

In July 2009 we celebrate ‘mankind’s greatest adventure’, the day forty years ago when Neil Armstrong stepped onto the moon.  The media coverage of this anniversary has been extensive, reminding us of the size of the achievement and the individual bravery of those involved.  The successful Apollo 11 lunar landing was also the story of project management on a massive scale: the culmination of an 8 year project, and the work of around 400,000 people.  NASA continued with the Apollo programme and made six more successful lunar landings until the final Apollo mission, number 17, in 1972.  In the following decades the agency refocused its reduced resources onto deep space exploration and the Space Shuttle programme.  Despite setbacks, notably the Challenger disaster in 1986, NASA commands considerable authority in the US for its capability to manage large, technically complex projects.

At the beginning of 2009 NASA unveiled its new approach to risk management, ‘NASA Procedural Requirement (NPR) 8000.4A’, released by the Office of Safety and Mission Assurance.  The group defines ‘risk’ with a very broad mandate: the “potential for performance shortfalls, which may be realized in the future, with respect to achieving explicitly established and stated Performance Requirements”.  “Performance shortfalls” may be related to safety, technical, cost or scheduling issues.  A further risk, particularly acute to public organisations is political support or what the authors refer to as “institutional support for mission execution”.

NASA’s decisions for managing risk involve the evaluation of three basic components:

1. Scenarios leading to “degraded performance” (involving injury, fatality, destruction of key cost overruns;  or schedule slippage);
   
2. The probability (quantitative or qualitative) of those scenarios
   
3. The consequences that would result if the scenarios were to occur.
   

Although the agency makes clear that risk management has always been an important component of its project management, it reveals that no formalised process was in place before the mid 1990’s (documented in 2002).  Before the new approach published this year, risk management was directed toward projects or programmes only and failed to consider broader risks such as those ‘cutting across’ the organisation.  The focus was also on continuous reduction of operational risk, rather than the proactive study and evaluation of risks. 

The new protocol seeks to address these anomalies by taking a systems approach to risk management, proactive involvement in decision making and in improving controls in “complex institutional relationships” (between programmes, projects, centres and external contractors).  Two complementary processes are introduced: “Risk-Informed Decision-Making” (RIDM) and “Continuous Risk Management” (CRM) (not to be confused with the commercial world acronym of ‘customer relationship management’).  RIDM aims to improve prior decision making about projects: it starts with a consideration of the alternatives, both in terms of their value but also risk, before an “informed selection” takes place.  This is contrasted with Continuous Risk Management, which is an ongoing process (with a RADAR-like structure) that NASA describes as “Identify, Analyze, Plan, Track and Control” (and a review step is included as an input back to ‘identify’).

In the earlier way of working (before ‘NPR 8000.4A’), the Safety and Mission Assurance team believe that risk management was equated with Continuous Risk Management.  The team believes that adding Risk Informed Decision making is such a fundamental change to working methods within the agency that they are prepared to call it a “new paradigm”.

The implementation of the new procedure shows another similarity to RADAR inspired thinking: the authors wish to integrate risk as a key element in overall agency decision making process: “that programme and project requirements should be directly coupled to Agency strategic goals”.

Brakes help you to go faster

How EFQM members, Unirisc and DNV work with clients to better manage risks

Unirisc
Unirisc is market leader within its home market of west Switzerland in the insurance brokerage and risk management services, employs seventy people across three offices and had 2008 revenues of CHF14 million.  Since January 1st 2008 it is a requirement for all Swiss companies to have risk management procedures that are covered in the annual audit of accounts.  Unirisc helps its clients build risk maps to help management decision making: defining actions that mitigate risk, or explicitly defining insurance for the residual risk in the business. The first task of Unirisc’s consultants is to ensure the correct level of information sharing across the business, so that risks identified in functional areas such as IT (data security) or Human Resources (safety) can be visible and accounted for in Finance. 
“Our clients know their risks better than we do,” explains Christophe Barman, who runs Unrisc’s Risk and Outsourcing services “so our contribution is to provide structure on how to collect and capitalise on the company’s own expertise, and to implement procedures which help them to better manage risk”.

“We try to put risks that are not always comparable into a common evaluation.  Impacts are considered in relation to four areas: people safety, company liability, financial and reputational risk.  Of course, these four scales cannot be traded off against one another, it is a question of company culture as to which carries more weight.”  All possible forms of risk are identified and rated according to their frequency, gravity and the mitigation measures which are in place.  Risks which are of higher probability, greater impact and where internal procedures are insufficient will receive the highest attention.

The output is both a system which rates different kinds of risk within a common framework, and an agreed set of simple principles which allow the organisation to take action.  Once a year the risk management process is assessed and updated, and risks re-evaluated.

DNV
DNV (Det Norske Veritas) is an independent foundation “with the purpose of safeguarding life, property, and the environment”. Its history goes back to 1864, founded to evaluate the technical condition of Norwegian merchant vessels, and today its 9,000 employees in 300 offices identify, assess, and advise clients on how to manage risk.

DNV uses the EFQM Excellence Model to guide the latest risk management developments.  For example, DNV has worked with ALARM (the Association of Local Authority Risk Managers) (www.alarm- uk.org) to develop a rigorous benchmarking protocol which will form the basis of Alarm's Risk Management Benchmarking Programme (for the public sector), due to be launched in 2010.  The protocol has around 150 scored questions, with supporting assessor guidance and instructions.  This benchmarking protocol was developed to assess organisations against the 'Alarm National Performance Model for Risk Management', which was launched in June 2009, to determine how good risk management is in the public sector.   The framework was developed by Alarm's Benchmarking Special Interest Group and has the same high-level structure as the UK HM Treasury Risk Management Framework, which has the same five Enabler criteria as the EFQM Excellence Model but simpler Results criteria.

Also in 2009, DNV carried out an Enterprise Risk Management benchmarking exercise within the private sector, again using the structure of the EFQM Excellence model.  This benchmark compared the risk management of ten large organisations, such as British Telecom, Nestlé, Rio Tinto and Rolls-Royce.

Is this increase in activity in risk management coming after the crisis has already arrived?  Is this a case of “shutting the barn door after the horse has bolted"? Shouldn’t risks have been reduced two years ago, not now in the middle of an economic downturn?  Richard Archer, a Senior Consultant who specialises in Enterprise Risk Management, comments:“Companies should have been thinking about risk management from the start.  The recent economic crisis has shown that this was not always taken seriously: many companies took too much risk, either intentionally or unintentionally, and many of those are no longer trading.  For past losses, it is too late to remake related decisions. Moving forward, organisations need to ask themselves when making investments not only if the cost for the expected reward is attractive, but also if they are willing and have capacity to shoulder the risks. Effective risk management is important in today's environment, as there is less capacity to take losses.”

But does an increased focus on risk management actually limit a company’s potential to gain from improved market conditions?
“I don't think risk management is limiting the recovery - in fact the opposite.  Question: Why do cars have brakes?  Answer: To make them go faster (otherwise we would have to drive very slowly!).  Risk management is like the brakes - it permits what would otherwise be unacceptable risk.  Without the assurance that risks are being managed effectively the natural tendency is to be risk averse, investments tend to be lower and the effect is to limit the speed of recovery and opportunities to take part in future market growth.”

For more information on the EFQM Risk Management Framework, a top-level framework designed to help organisations achieve excellence in their management of all categories of risk - Click here.

The power of a connected world

EFQM Forum - 28 & 29 September 2009 - Brussels, Belgium

Taking a closer look at the EFQM Forum venues, you will find hereafter a few historical insights on the Crowne Plaza Brussels...

In view of the World Exhibition in 1910 in Brussels, Les Grands Hôtels Belges S .A. launched a contest in 1908 for the construction of a deluxe hotel. The winner was the architect Adhémar Lener, assisted by the young Antoine Pompe. The first building of concrete in Belgium with a height of 35 meters, was built on a surface of 35 acres in record time of 11 months. This was an impressive achievement, considering the enormous problems they encounter during the construction. Due to the marshy ground, a new method for Belgium was applied the skeleton of 7 stories high concrete was built on 1800 piles.   

The Hotel Palace, owned by Georges Marquet, opened its doors on the 1st of September 1910 and counted 400 rooms with individual bathrooms. In 1911, the Hotel Palace promoted with 500 rooms, fully equipped with bathroom, toilet and telephone with an outside line, as of 7,5 FB per room, « lightening and service charges included ».

In the «Belle Epoque », the Hotel Palace was a renowned deluxe hotel. In 1930, in a special jubilee edition of the magazine « La Belgique Hôtelière », the Hotel Palace was referred to as one of the three « Grands Hotels Belges S.A. » and was described as follows: « It is worldwide renowned for the formula : 500 rooms, 500 baths, 500 telephones and unanimously appreciated for its luxury, its fine comfort and impeccable service ».

Nowadays, Crowne Plaza Brussels combines in perfect harmony the charm of the early part of this century with today’s comfort. Its wide windows are giving you a magnificent view over the Botanical Garden and Place Rogier.   Recently the guest rooms have been fully refurbished. The architect, Karin Espinosa Morel, turned to the Art Nouveau lines and curls of Gustav Klimt (1862-1918) for inspiration, echoing Le Palace’s (1908) original turn-of-the-century style. She combined this with a cool modern touch and the latest comforts. So stay in the very heart of Brussels, just a short walk from the tourist centre Grand Place and the train station.

The programme in more detail is available on the Forum website. The registration is available online at http://www.efqmforum.org.

Should you have any queries related to the EFQM Forum 2009, feel free to contact Vinciane Beauduin (vinciane.beauduin@efqm.org or +32 2 775 3510).

We are looking forward to welcoming you to Brussels!

EFQM model renewal – call for volunteers

In our last Redthread, we announced the review of the EFQM Excellence Model. You can now visit our FAQ (Frequently Asked Questions) on the EFQM website. We will update this list on an ongoing basis. Do not hesitate to send the next question.

Also there is much more than a model to update. We will need new case studies for different sectors, new tools, new presentation kits and many other things that will help to make EFQM model something simple and useful for all organisations.

The core team in charge of reviewing the model and the EFQM team will be focusing their effort on making this launch seamless and appealing. There are also opportunities for many other people to participate in such developments.

So should you feel like volunteering, just let us know and contact Hervé Legenvre via email at herve.legenvre@efqm.org.

On the wings of Pegasus

Backstage at the recent Schenker Deutschland AG assignment, with James Howe

When we were working on the Pact project with Solvay, we struggled to agree the right name for the new leadership development programme. It was to be aimed at high potential employees, to give them practice in researching and delivering feedback to a senior audience otherwise difficult to learn from classroom study. Initially we called it the “HiPo” programme, but were concerned that the idea of ‘high potential’ can be seen as divisive in many companies. “HiPo” could also be mispronounced as a (badly spelled) form of African wildlife, the type that likes to wallow in mud. We also tried various acronyms, but some market research quickly showed us that every possible acronym was in use, and would probably confuse our audience.

Why not give the new training course a proper name, like ‘Henry’ or ‘Marie-Claire’? People would feel warmer towards it, and possibly want to learn more about it (not to mention take it home and be kind to it). We then had the idea of using a name understood in Europe, probably from Latin or Greek and associated with principles of high performance. We settled on Greek mythology and chose ‘Pegasus’: a winged horse, symbol of achieving power and vision from on high. “Add wings to your career”.

Last week, I had the opportunity to see if I could “dig myself out of the mud”, completing the site visit and feedback module of the Pegasus programme with a team of seven ‘hippopotami’ from AGC Flatglass, Belgian Post, Grundfos, KPN, Philips and Solvay. Our hosts were Schenker Deutschland AG, the highly regarded German transportation and logistics arm of the Deutschebahn. Our mission would be to understand the strategic challenges and key performance measures of this €3 billion-plus turnover business, headquartered in Kelsterbach near Frankfurt, and to lead a change workshop with the management board and senior functional leaders.

My fellow participants were certainly ‘heavyweights’ in terms of the experience they had achieved in their careers: managing significant teams, or highly visible within their companies. Our first week in Brussels had already generated a lot of potential questions and areas for review on site at the company. We were fortunate to have had two members of the Vorstand (Management Board) brief us prior to the visit and to suggest the right people to talk to. After two days of back-to-back meetings, with the Pegasus team divided into four work streams, we had spoken to over thirty managers in the company, all who offered open and well structured insights.

Our challenge was not so much of gathering enough information: it was to make sense of all the exhibits and interview notes that we had collected. We locked ourselves away in a hotel meeting room, overseen by our coaches Chris Webbley and Mia Goetvinck, and began the process of drawing the most effective insights from it all.

Half way through the morning, one of our team suggested that we walk in the woods to clear our heads. Clearly a new and brilliant management technique: when we came back, the ideas all flowed into consensus around four key issues. For the rest of the day we worked to tidy up all of our collective observations into useful insights and recommendations, confident that we did have a story to tell. As midnight came round, we finished the work and toasted our success, while the coach worked with the hotel’s printers.

On the final day, all wearing our best suits and ties, we presented to the CEO, board members and management team what we had found out about their company, and how we would recommend tracking its performance. Our presentation was well received, and a lively exchange was prompted with the Schenker Deutschland team. Part of the Pegasus process is to go beyond the scope of a traditional assessment to recommend changes, so the team then facilitated three parallel ‘workshops’ with the Schenker executives. Half an hour later, several concrete change propositions were enthusiastically presented by members of the host company.

It was certainly a valuable and fun week shared with a lively and engaged set of people – both from Schenker and among the participants. A group of HiPo’s, given wings.