Knowledge management applied to enterprise risk management

Risk and knowledge are two concepts and components of business management which have so far been studied almost independently. This is especially true where risk management (RM) is conceived mainly in financial terms, as for example, in the financial institutions sector. Financial institutions are affected by internal and external changes with the consequent accommodation to new business models, new regulations and new global competition that includes new big players. These changes induce financial institutions to develop different methodologies for managing risk, such as the enterprise risk management (ERM) approach, in order to adopt a holistic view of risk management and, consequently, to deal with different types of risk, levels of risk appetite, and policies in risk management. However, the methodologies for analysing risk do not explicitly include knowledge management (KM). This research examines the potential relationships between KM and two RM concepts: perceived quality of risk control and perceived value of ERM. To fulfill the objective of identifying how KM concepts can have a positive influence on some RM concepts, a literature review of KM and its processes and RM and its processes was performed. From this literature review eight hypotheses were analysed using a classification into people, process and technology variables. The data for this research was gathered from a survey applied to risk management employees in financial institutions and 121 answers were analysed. The analysis of the data was based on multivariate techniques, more specifically stepwise regression analysis. The results showed that the perceived quality of risk control is significantly associated with the variables: perceived quality of risk knowledge sharing, perceived quality of communication among people, web channel functionality, and risk management information system functionality. However, the relationships of the KM variables to the perceived value of ERM are not identified because of the low performance of the models describing these relationships. The analysis reveals important insights into the potential KM support to RM such as: the better adoption of KM people and technology actions, the better the perceived quality of risk control. Equally, the results suggest that the quality of risk control and the benefits of ERM follow different patterns given that there is no correlation between both concepts and the distinct influence of the KM variables in each concept. The ERM scenario is different from that of risk control because ERM, as an answer to RM failures and adaptation to new regulation in financial institutions, has led organizations to adopt new processes, technologies, and governance models. Thus, the search for factors influencing the perceived value of ERM implementation needs additional analysis because what is improved in RM processes individually is not having the same effect on the perceived value of ERM. Based on these model results and the literature review the basis of the ERKMAS (Enterprise Risk Knowledge Management System) is presented.

Managing risk in information technology projects

There are several studies on managing risks in information technology (IT) projects. Most of the studies identify and prioritise risks through empirical research in order to suggest mitigating measures. Although they are important to clients for future projects, these studies fail to provide any framework for risk management from IT developers' perspective. Although a few studies introduced a framework of risk management in IT projects, most of them are presented from clients' perspectives and very little effort has been made to integrate this with the project management cycle. As IT developers absorb a considerable amount of risk, an integrated framework for managing risks in IT projects from developers' perspective is needed in order to ensure success in IT projects. The main objective of the paper is to develop a risk management framework for IT projects from the developers' perspective. This study uses a combined qualitative and quantitative technique with the active involvement of stakeholders in order to identify, analyse and respond to risks. The entire methodology has been explained using a case study on an information technology project in a public sector organisation in Barbados.

Multi-party risk management helps manage cement plant construction in Thailand

Several parties (stakeholders) are involved in a construction project. The conventional Risk Management Process (RMP) manages risks from a single party perspective, which does not give adequate consideration to the needs of others. The objective of multi-party risk management is to assist decision-makers in managing risk systematically and most efficiently in a multi-party environment. Multi-party Risk Management Processes (MRMP) consist of risk identification, structuring, analysis and developing responses from all party perspectives. The MRMP has been applied to a cement plant construction project in Thailand to demonstrate its effectiveness.

Project risk management in analytic framework

Risks and uncertainties are part and parcel of any project as projects are planned with many assumptions. Therefore, managing those risks is the key to project success. Although risk is present in all most all projects, large-scale construction projects are most vulnerable. Risk is by nature subjective. However, managing risk subjectively posses the danger of non-achievement of project goals. This study introduces an analytical framework for managing risk in projects. All the risk factors are identified, their effects are analyzed, and alternative responses are derived with cost implication for mitigating the identified risks. A decision-making framework is then formulated using decision tree. The expected monetary values are derived for each alternative. The responses, which require least cost is selected. The entire methodology has been explained through a case study of an oil pipeline project in India and its effectiveness in managing projects has been demonstrated. © INTERNATIONAL JOURNAL OF INDUSTRIAL ENGINEERING.

Risk management in oil and gas construction projects in Vietnam

Purpose - The purpose of the paper is to the identify risk factors, which affect oil and gas construction projects in Vietnam and derive risk responses. Design/methodology/approach - Questionnaire survey was conducted with the involvement of project executives of PetroVietnam and statistical analysis was carried out in order to identify the major project risks. Subsequently, mitigating measures were derived using informal interviews with the various levels of management of PetroVietnam. Findings - Bureaucratic government system and long project approval procedures, poor design, incompetence of project team, inadequate tendering practices, and late internal approval processes from the owner were identified as major risks. The executives suggested various strategies to mitigate the identified risks. Reforming the government system, effective partnership with foreign collaborators, training project executives, implementing contractor evaluation using multiple criteria decision-making technique, and enhancing authorities of project people were suggested as viable approaches. Practical implications - The improvement measures as derived in this study would improve chances of project success in the oil and gas industry in Vietnam. Originality/value - There are several risk management studies on managing projects in developing countries. However, as risk factors vary considerably across industry and countries, the study of risk management for successful projects in the oil and gas industry in Vietnam is unique and has tremendous importance for effective project management.

Risk management in build-operate-transfer projects

Construction projects are risky. A build-operate-transfer (BOT) project is recognised as one of the most risky project schemes. This scheme has been employed rather frequently in the past few decades, in both developed and developing countries. However, because of its risky nature, there have been failures as well as successes. Risk analysis in an appropriate way is desirable in implementing BOT projects. There are various tools and techniques applicable to risk analysis. The application of these risk analysis tools and techniques (RATTs) to BOT projects depends on an understanding of the contents and contexts of BOT projects, together with a thorough understanding of RATTs. This paper studies key points in their applications through reviews of relevant literatures and discusses the application of RATTs to BOT projects. The application to BOT projects is considered from the viewpoints of the major project participants, i.e. government, lenders and project companies. Discussion is also made with regard to political risks, which are very important in BOT projects. A flow chart has been introduced to select an appropriate tool for risk management in BOT projects. This study contributes to the establishment of a framework for systematic risk management in BOT projects.

Risk based decision support system for effective implementation of projects

Conventional project management techniques are not always sufficient to ensure time, cost and quality achievement of large-scale construction projects due to complexity in planning, design and implementation processes. The main reasons for project non-achievement are changes in scope and design, changes in government policies and regulations, unforeseen inflation, underestimation and improper estimation. Projects that are exposed to such an uncertain environment can be effectively managed with the application of risk management throughout the project's life cycle. However, the effectiveness of risk management depends on the technique through which the effects of risk factors are analysed/quantified. This study proposes the Analytic Hierarchy Process (AHP), a multiple attribute decision making technique, as a tool for risk analysis because it can handle subjective as well as objective factors in a decision model that are conflicting in nature. This provides a decision support system (DSS) to project management for making the right decision at the right time for ensuring project success in line with organisation policy, project objectives and a competitive business environment. The whole methodology is explained through a case application of a cross-country petroleum pipeline project in India and its effectiveness in project management is demonstrated.

Establishing a framework for dynamic risk management in 'intelligent' aero-engine control

The behaviour of control functions in safety critical software systems is typically bounded to prevent the occurrence of known system level hazards. These bounds are typically derived through safety analyses and can be implemented through the use of necessary design features. However, the unpredictability of real world problems can result in changes in the operating context that may invalidate the behavioural bounds themselves, for example, unexpected hazardous operating contexts as a result of failures or degradation. For highly complex problems it may be infeasible to determine the precise desired behavioural bounds of a function that addresses or minimises risk for hazardous operation cases prior to deployment. This paper presents an overview of the safety challenges associated with such a problem and how such problems might be addressed. A self-management framework is proposed that performs on-line risk management. The features of the framework are shown in context of employing intelligent adaptive controllers operating within complex and highly dynamic problem domains such as Gas-Turbine Aero Engine control. Safety assurance arguments enabled by the framework necessary for certification are also outlined.

Designing a safety management support system using open architecture databases: the requirements of information representation in the support of managers' risk-related decision-making

This research was conducted at the Space Research and Technology Centre o the European Space Agency at Noordvijk in the Netherlands. ESA is an international organisation that brings together a range of scientists, engineers and managers from 14 European member states. The motivation for the work was to enable decision-makers, in a culturally and technologically diverse organisation, to share information for the purpose of making decisions that are well informed about the risk-related aspects of the situations they seek to address. The research examined the use of decision support system DSS) technology to facilitate decision-making of this type. This involved identifying the technology available and its application to risk management. Decision-making is a complex activity that does not lend itself to exact measurement or precise understanding at a detailed level. In view of this, a prototype DSS was developed through which to understand the practical issues to be accommodated and to evaluate alternative approaches to supporting decision-making of this type. The problem of measuring the effect upon the quality of decisions has been approached through expert evaluation of the software developed. The practical orientation of this work was informed by a review of the relevant literature in decision-making, risk management, decision support and information technology. Communication and information technology unite the major the,es of this work. This allows correlation of the interests of the research with European public policy. The principles of communication were also considered in the topic of information visualisation - this emerging technology exploits flexible modes of human computer interaction (HCI) to improve the cognition of complex data. Risk management is itself an area characterised by complexity and risk visualisation is advocated for application in this field of endeavour. The thesis provides recommendations for future work in the fields of decision=making, DSS technology and risk management.

Psychological risk factors for chronic post-surgical pain after inguinal hernia repair surgery:a prospective cohort study.

A significant proportion of patients experience chronic post-surgical pain (CPSP) following inguinal hernia surgery. Psychological models are useful in predicting acute pain after surgery, and in predicting the transition from acute to chronic pain in non-surgical contexts. This is a prospective cohort study to investigate psychological (cognitive and emotional) risk factors for CPSP after inguinal hernia surgery. Participants were asked to complete questionnaires before surgery and 1 week and 4 months after surgery. Data collected before surgery and 1 week after surgery were used to predict pain at 4 months. Psychological risk factors assessed included anxiety, depression, fear-avoidance, activity avoidance, catastrophizing, worry about the operation, activity expectations, perceived pain control and optimism. The study included 135 participants; follow-up questionnaires were returned by 119 (88.1%) and 115 (85.2%) participants at 1 week and 4 months after surgery respectively. The incidence of CPSP (pain at 4 months) was 39.5%. After controlling for age, body mass index and surgical variables (e.g. anaesthetic, type of surgery and mesh type used), lower pre-operative optimism was an independent risk factor for CPSP at 4 months; lower pre-operative optimism and lower perceived control over pain at 1 week after surgery predicted higher pain intensity at 4 months. No emotional variables were independently predictive of CPSP. Further research should target these cognitive variables in pre-operative psychological preparation for surgery. © 2011 European Federation of International Association for the Study of Pain Chapters.

Advancing age and bleeding risk are the strongest barriers to anticoagulant prescription in atrial fibrillation

In clinical practice many patients with atrial fibrillation (AF) at high thromboembolic risk fail to receive adequate oral anticoagulation (OAC) [1]. The complex management of anticoagulant therapy [frequent international normalised ratio (INR) monitoring because of narrow therapeutic window, interaction with food and alcohol, concomitant medications and comorbities], the overestimation of bleeding risk and the underestimation of stroke risk, may partially explain physicians' reluctance to prescribe anticoagulation. In the current issue of Age and Ageing, Pugh and Mead [2] report a systematic review on physicians' attitudes concerning anticoagulant treatment among AF patients. Through surveys (questionnaire, clinical vignette and interview) on hypothetical case scenarios, they have identified the barriers to effective anticoagulant prescription, as follows: increasing age, bleeding risk or previous bleeding, fall risk, co-morbidities (e.g. chronic alcoholism or cognitive impairment) and lack of compliance. In particular, advanced age has been reported as the most striking reason for with-holding anticoagulation, while risk of falls and previous bleeding are also disproportionate barriers to warfarin prescription.

Concepts and methods of quantitative assessment of risk to groundwater resources

This work presents a two-dimensional approach of risk assessment method based on the quantification of the probability of the occurrence of contaminant source terms, as well as the assessment of the resultant impacts. The risk is calculated using Monte Carlo simulation methods whereby synthetic contaminant source terms were generated to the same distribution as historically occurring pollution events or a priori potential probability distribution. The spatial and temporal distributions of the generated contaminant concentrations at pre-defined monitoring points within the aquifer were then simulated from repeated realisations using integrated mathematical models. The number of times when user defined ranges of concentration magnitudes were exceeded is quantified as risk. The utilities of the method were demonstrated using hypothetical scenarios, and the risk of pollution from a number of sources all occurring by chance together was evaluated. The results are presented in the form of charts and spatial maps. The generated risk maps show the risk of pollution at each observation borehole, as well as the trends within the study area. This capability to generate synthetic pollution events from numerous potential sources of pollution based on historical frequency of their occurrence proved to be a great asset to the method, and a large benefit over the contemporary methods.

Filling knowledge gaps:knowledge sharing across inter-firm boundaries and occupational communities

This paper explores the micro-level processes of interaction across organisational boundaries and occupational communities. Based on a retrospective processual analysis, this study shows that in filling knowledge gaps, organisations put in place a series of knowledge mechanisms, which lead them to socially interact with their alliance partners. Both the deployment of existing knowledge and the creation of new knowledge are based on processes of interaction, which derive from the interplay between alliance actors. It is suggested that through both social interaction and the use of boundary objects, individuals are able to communicate, engage in problem-solving activities and share their ideas to fill knowledge gaps.