Corporate Risk Corporate Risk ManagementManagement

The Tube Lines ExperienceThe Tube Lines Experience

What is Tube Lines?What is Tube Lines?

On 31 December 2002, Tube Lines assumed On 31 December 2002, Tube Lines assumed responsibility for the maintenance and upgrade responsibility for the maintenance and upgrade of all the infrastructure on the Jubilee, Northern of all the infrastructure on the Jubilee, Northern and Piccadilly lines as part of the largest and Piccadilly lines as part of the largest improvement programme the Tube has ever improvement programme the Tube has ever seen. Tube Lines has a 30 year Public Private seen. Tube Lines has a 30 year Public Private Partnership (PPP) contract with London Partnership (PPP) contract with London Underground. The contract is output based, Underground. The contract is output based, meaning Tube Lines is rewarded for good meaning Tube Lines is rewarded for good performance and penalised for poor performance and penalised for poor performance. performance.

Risk ManagementRisk Management

During bid processDuring bid process Forced by regulationForced by regulation Forced by corporate governance rulesForced by corporate governance rules Ad Hoc on projectsAd Hoc on projects

Islands of ExcellenceIslands of Excellence

Safety Risk

Health & Safety

Strategic Risk

Project Risk

Operational Response

So What Was the Problem?So What Was the Problem?

• Different ApproachesDifferent Approaches

• How do you compare risk mitigations arrived at How do you compare risk mitigations arrived at and expressed in completely different ways and expressed in completely different ways and come to a spending decision?and come to a spending decision?

Why Does This Matter?Why Does This Matter?

• Allocation of restricted fundsAllocation of restricted funds

• Ultimately making a profit = SURVIVALUltimately making a profit = SURVIVAL

So What is the Solution?So What is the Solution?

• To try to look at all risks in the same To try to look at all risks in the same way.way.

• How?How?– Use a single overarching processUse a single overarching process– Use a single tool for the management of Use a single tool for the management of

all risksall risks

Risk Mitigation and Control

This includes reducing the likelihood of the risk being realised and/or reducingthe impact if it is realised.

Risk Assessment & Quantification

The extent and frequency for this depends on criticality.

The quantification includes probability and impact.

Risk Identification & Estimation of Criticality

If a risk is assessed as high criticality it is vital that it is communicated quicklyto Senior managers and Directors.

If a risk is identified as an interface risk it must be notified promptly to LUL.

Corporate Risk Strategy

Overall approach to risk management in Tube Lines

Monitoring & Periodic Review of Existing Risks

Detailed Sub-process

1

Detailed Sub-process

2

Detailed Sub-process

3

Detailed Sub-process

3

Proc

ess

Audi

t

Risk Management Process - Top Level View

Active Risk ManagerActive Risk Manager

Enterprise-wide risk management software Enterprise-wide risk management software solution which claims to be scalable and is solution which claims to be scalable and is web basedweb based

Built from a project management risk tool Built from a project management risk tool but now claiming to provide a complete but now claiming to provide a complete enterprise solutionenterprise solution

StatusStatus

Starting to Implement the ProcessStarting to Implement the Process Pilot departmentsPilot departments TrainingTraining AwarenessAwareness

Culture ChangeCulture Change

Potential Problems?Potential Problems?

Safety Critical Risk ManagementSafety Critical Risk Management

Marrying top down to bottom upMarrying top down to bottom up

ITIT

Universal buy inUniversal buy in

Comparison With The MilitaryComparison With The Military Operational reactionOperational reaction

StovepipesStovepipes

Top down meets bottom upTop down meets bottom up

Change in large hierarchical organisationsChange in large hierarchical organisations

Questions?Questions?

Ian FishIan FishSteelhenge Consulting LimitedSteelhenge Consulting Limited

Queen Anne’s ChambersQueen Anne’s Chambers

BroadwayBroadway

London SW1H 9JSLondon SW1H 9JS

Email: if@steelhenge.co.ukEmail: if@steelhenge.co.uk