Business Risk and Simulation Modelling in Practice: Using Excel, VBA and @RISK

CHAPTER 5 Organisational Challenges Relating to Risk Modelling

In Chapter 1, we discussed some general contextual challenges in the implementation of robust decision-making processes, including:

• The presence of motivational, political, cognitive or structural biases.
• Challenges in achieving an appropriate balance of rationality and intuition.

This chapter discusses some additional challenges in the implementation of full risk modelling activities, focusing especially on issues relating to organisational structure, processes and culture. These include:

• Beliefs that sufficient risk assessment is already being done.
• The approaches may have been tried previously but were not found to be useful.
• Beliefs that results of the models will not be useful, or that implementing the processes and models will create too much extra work.
• Issues relating to the integration and alignment with existing processes, incentive systems, culture, decision accountability, organisational structures, level of centralisation and general change management issues.

5.1 “We Are Doing It Already”

Risk assessment and management is already widely used in many organisations, at least to some extent. For example:

• Many base plans often include some consideration of risks and mitigation measures, especially when projects have some aspects that are well understood from similar previous cases.
• Cross-functional teams are often brought together to identify risks, develop and assess mitigation actions, and assign ...