|
|
|
| Taking control of risks |
| |
Life is characterised by risk. Driving. Cycling.
Crossing the street. Buying a home. Studying for
an exam. Doing a presentation. These everyday affairs
all contain an element of risk, that is, there is
a probability of an occurrence or event that will
have an adverse impact upon the objectives we want
to achieve. Risk is therefore something that we
are exposed to on a daily basis. And we often manage
these risks subconsciously.
Take a moment now and think of the significant events
in the past few years. The collapse of Enron, the
911 terrorist attacks, SARS (Severe Acute Respiratory
Syndrome) outbreak and the tsunami disaster of December
2004 will no doubt come to mind.
What these events show is that threats can come
from any direction. They not only include terrorist
acts, financial disasters and natural catastrophes,
but also risks in the form of new technology or
marketplace shifts.
With increasing global connectivity and linkages,
the speed and scale of these risks are aggravated
and organisations increasingly need to learn to
manage risks.
Over the past few years, organisations have attempted
to create such a system more recently known as Integrated
Risk Management or Enterprise Risk Management (ERM).
One organisation where risk is a part of its everyday
vocabulary is the Ministry of Defence/ Singapore
Armed Forces (MINDEF/SAF).
As a contingency organisation dedicated to preventing
or responding to the risk of an external threat,
SAF needs to be able to identify as many risks it
may face and what it can do to respond adequately
to them.
The types of risks MINDEF/SAF faces can be grouped
into three categories — operational risks,
unexpected future risks and transformational/ change
implementation risks.
Risks such as accidents, technical or equipment
failure, losing training space and damage to the
reputation of MINDEF/SAF affect day-to-day operations.
Such risks need to be continually monitored for
changes to their likelihood of occurrence and their
assessed impact.
Future risks are more difficult and challenging
to identify. The SARS attack in 2003 is an example
of a risk that was not quite anticipated nor understood
even after it had occurred. It is a good example
of an unknown future risk. Fortunately, the capabilities
we already had in contact tracing and infectious
disease control in general enabled quick response
to the SARS threat.
To identify possible future risks, horizon scanning,
analysis and creativity are required. Various tools
such as Scenario Planning, Gaming and Simulation
can be used.
As the SAF enters the 3G (3rd Generation) transformation
phase, new operational concepts and technologies
will be involved. This is another area where risk
assessments will be relevant.
ERM (see diagrams) provides a platform for contemplating
the unforeseen by asking what can go wrong and considering
“wild card” scenarios. The identification
of interrelationships between strategic risks enables
coordinated and holistic management by risk owners.
Ultimately, resources and management attention can
be directed to the areas that bear the largest risks
to MINDEF/SAF.
Said Dr Tony Tan, Deputy Prime Minister and Coordinating
Minister for Security and Defence, Prime Minister’s
Office, in his speech at the National Security Seminar
on 26 June 2003: “Up to now, we have been
building capability and capacity in the obvious
areas. With limited resources, a risk management
model will help us focus our efforts and allocate
resources to areas where the risk
is greatest.”
MINDEF/SAF will focus on developing ERM as a business
discipline and building a risk culture. ERM cannot
be treated as just a system or a procedure to be
implemented. It involves a mindset/cultural change
to manage risks where they occur.
In addition, the risk profile is a “living”
document. Risk owners must therefore continually
monitor risk assessment in the light of dynamic
changes in the strategic environment.
Beyond risk management, we also need to gather some
sense of what may happen in the future. Risk sensing
to address this is currently being explored. |
|
| |
| |
| By
Office of MINDEF Systems, MINDEF Systems Organisation |
|
|
|
 |
DEVELOPING
ERM IN MINDEF/SAF
The need for MINDEF/SAF to embark on
ERM was championed by Mr Peter Ho, then
Permanent Secretary (Defence),
in 2003.
A taskforce chaired by Deputy Secretary
(Administration) Lim
Hup Seng was formed.
It comprised senior MINDEF/SAF officers.
The taskforce identified the key strategic
risks and the inter-relationships between
these risks.
An Enterprise Risk Management Review
Committee chaired by Permanent Secretary
(Defence) Chiang Chie Foo was set up
to enhance the strategic risk profile
and steer the ERM efforts.
Mr Lam Chuan Leong, Special Adviser
to MINDEF, has been providing invaluable
guidance and insights to the continual
development of ERM in MINDEF/SAF. |
|
|
| |
For queries
on Enterprise Risk Management, contact
Ms Jivarani Govindarajoo, Project Manager,
Office of MINDEF Systems, MINDEF Systems
Organisation, at
tel: 6373 1957 or
fax: 6275 4115. |
|
|
| |
|
|
