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Enterprise Risk Management

There have been a number of high profile incidents over the last few years where companies encountered difficulties by failing to understand and to manage the risks facing them. For good business reasons and to meet the requirements of future legislation many forward-thinking companies are investing in some form of Enterprise Risk Management (ERM). Most companies operate some form of risk management already but often it is ineffective due to lack of clearly documentd and efficiently implemented policies and procedures.

EPCONSULT has the necessary systems and software to help our clients put in place an efficient Enterprise Risk Management system.

EPCONSULT is a leading medium sized consultancy for Enterprise Risk Management. Our team is dynamic, creative, aggressive and results focused. Our goal is to help our clients make optimum decisions on risk management. "Optimum" means striking a delicate balance between reducing risk and seizing opportunities.

We have a comprehensive methodology for helping our clients to develop and implement customized Enterprise Risk Management system within their companies.

Specifically, we provide services in:

  • ERM consulting
  • ERM implementation
  • ERM training
  • ERM software

Unlike project risk management or business risk management, enterprise risk management deals with the risk affecting a company as a whole rather than focusing on one particular project or area.

Risks that threaten a company at corporate level fall into a number of categories:

  • Strategic
  • Financial
  • Commercial
  • Operational
  • Organisational
  • Political
  • Legal
  • Technical
  • Others

EPCONSULT has experienced personnel with business and risk management experience who provide consultancy and facilitate risk workshops where brain storming sessions are conducted in order to expose latent risks that can adversely affect a company's profitability or even its very existence.

EPCONSULT works with its clients to develop a comprehensive risk management framework customized to meet the client's needs. EPCONSULT's will work to embed the principles of risk management into the client's day to day business process and culture.

Risk management is not a one-off solution. Risk management must be continuous with existing risks monitored and re-assessed periodically and with new risks added and studied, as and when they are identified. Risk control and mitigation actions must be carried out, tracked and monitored. This requires either a dedicated function within the company staffed by personnel with the necessary expertise, backed up by robust procedures and transparent reporting, or ongoing support from an expert risk consultancy organization. Above all, senior management must be actively involve and show their commitment to integrated risk management throughout the organization. Personnel must be aware of the risk management procedures and some personnel must be trained and made focal point for risk management.

By implementing an adequate enterprise risk management structure companies can derive substantial financial benefits from optimized handling of risk.

In providing enterprise risk management services, EPConsult uses its proprietary software EPRisk. This is a program for capture, validation and assessment of risk both inside and outside the workshop environment. The EPRisk program also allow for the input, monitoring and status reporting of risk control and mitigation actions, and for the production of a full range of reports with extensive filtering and sorting options. The tool can be customised to suit individual client's requirements. The program is easy to use with a very intuitive interface but, in any case, EPConsult can provide full training and support for client's personnel. EPRisk can also be purchased as a standalone tool if the full range of services is not required.

Please contact us to discuss how we can help you establish enterprise risk management within your organisation. Whether it is full implementation, software requirement or training, we are here to support.

Project Risk Management

EPCONSULT is expert in identifying, assessing, mitigating and managing risk. We have developed an efficient risk management framework which is applied when we are commissioned by our clients to help manage business and project implementation risk.

Our business risk management service is effective at any stage of the project cycle. To maximize the benefits from business risk assessment, we recommend conducting a risk workshop and risk assessment a few weeks into each new project phase. This is in addition to using risk management as a project control tool throughout a project. An assessment could typically be carried out at the conceptual engineering stage and towards completion of FEED, before sanction, in order to secure that the project has been "risked", giving confidence to stakeholders, shareholders and partners.

Business risk management

Business risk is usually managed qualitatively in the earlier stages of an assessment, and this is normally initiated with discussions, document review and a business risk workshop facilitated by EPCONSULT. Beyond the early stages, business risk may be managed qualitatively or quantitatively. EPCONSULT divides risks into the following main categories:

  • Technical risks (safety, environmental, asset, availability, technology, etc.)
  • Economic risks (CAPEX, OPEX, financial, schedule, asset, etc.)
  • Commercial risks (alliances, contractual, stake holder, etc.)
  • Organizational risks (organizational structure, resources, skills, management, quality, IT, etc.)
  • Political risks (legislation, governmental, reputation, community, sabotage, etc.)

Typically, clients want specific areas of the above to be analyzed. However, to establish a complete understanding of business risk, all the above risks should be considered. Moreover, technical risks such as safety and environmental risks would usually be covered by specific studies such as HSE Studies and QRA.

Economic Risk

Economic risk can be carried out on a life cycle cost model by estimating uncertainties in the schedule, CAPEX, OPEX, interest rates, etc. The risks would be expressed in terms of e.g. P10, P50, P90 on the net present value (NPV) or other financial indicators.

Economic risk can also focus on Project Execution, i.e. the capital project. Risks are then expressed in terms of project milestone completion (P10, P50, P90, etc) and project expenditure (P10, P50, P90, etc). Our calculations are made on the basis of educated estimates of the uncertainties in durations for completing specific project activities and the associated uncertainties in the cost of project tasks. We use Monte Carlo simulation to carry out schedule and economic risk assessment.

Other Risks

Commercial, organizational and political risks will usually be identified in the risk workshop, during documents review and also on the basis of past experience. These risks would be covered qualitatively by, for example, using a risk matrix to present the estimated likelihood and consequences of different events. Mitigating risks from this group would typically be associated with cost initiatives, schedule initiatives and/or organizational recommendations.

Having identified risks and assessed their level, the Boston Square approach is an efficient tool to help prioritize risks, not only on the basis of level of risk but also with regards to manageability. It is necessary to establish adequate mitigation measures and put in place strong control mechanisms which are the next crucial elements in a Business Risk Assessment.

Please contact us to discuss how we can help you assess and manage business risks within your projects.


 
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