Begin: Operations Research in Disaster Risk Management

I have joined a research group here in the Ateneo, and we are focusing on (1) operations research and (2) disaster risk management. Basically, we will look into how management science can contribute to management of disaster relief operations.

Some definitions:

Operations Research -  as defined by the European Operations Research Societies is "the scientific approach to the solution of problems in the management of complex systems". (Altay and Green, 2006)

Disaster Operations - "the set of activities that are performed before, during and after a disaster with the goal of preventing loss of human life, reducing impact in economy and returning to a state of normalcy". (Altay and Green, 2006)

I am quite excited with this research area as it is something of great relevance here in the Philippines! Also, I think I can bring in contributions based on my knowledge in project management and risk management.

I have a lot to read though, specially to catch up with my colleagues on Operations Research and System Dynamics!

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References: Altay, N., & Green, W. G. (2006). OR/MS research in disaster operations management. European Journal of Operational Research, 175(1), 475–493.

Late Night Library Musings

Been cracking my head on a research issue... Been here in the library all day, skimming through documents, coding, thinking and panicking. Did not even notice that time flew so fast! So night time falls and I decided to try draw the picture of my situation.

So this is a glimpse of how my brain looks like (I'm sure the jumbled thoughts in my head must be amplified by a 1000x). Pictures are a bit blurred but I need a form of reference of my musings. 

At this rate... I'm getting really worried. But I don't think I'll get anything more done for tonight... so off to home now...

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Just in case you are interested in what I'm fussing about:

My research question is: To what extent does programme risk management practice contribute to achieving UNDP programme outcomes?

My research method is designed to be unobtrusive; thus I am heavily depending on using UN documents that have been already created and published. Using these documents  I am trying to infer the extent of (1) how UNDP country programmes uses/perceives  programme risk management and (2) how programme risk management is valued in the process of achieving programme outcomes.

Through my research so far I have been able to:

• Trim down my study's target population to 15 countries within the Europe and CIS region.
• Set the time-frame of the programme cycles to be within the years 2005-2011; the rationale being, so that the outcomes are already evident.
• Gather, complete and read the top 3 country programme documents (UNDAF, CPD and CPAP) of the 15 countries; where the documents have narrated how the programmes are supposed to be managed (but only some includes a risk management aspect)
• Skim through the ERC website, where the documents can give me inferences of the outcomes of the programmes.

What is causing me to worry is: so far I hardly see any explicit risk management aspect in the documents that I have. In addition, I've also gathered that the UN system has proposed and implemented an enterprise risk management framework; but I have realised that the framework was introduced in 2008, mid-way through the programme cycle (therefore will not be evident in the documents that I have).

Wei Ji

I remember a discussion with a friend from the Philippines about risk; he pointed out to me that risk in Chinese is known as Wei Ji:

When I opened a book by Hillson, I saw these two characters in his introduction!

I found the Chinese version of risk quite interesting. It is composed of two characters, the first one meaning danger and the second one meaning opportunity. This reflects the true nature of risk; that it can be negative as well as it can be positive. In the context of programme and project management, most often than not when we talk about risk management we almost always mean about managing the impacts of unpleasant events.  Reading through his book, however, Hillson always put risk on a higher note by always emphasising the optimisation of opportunity risks.

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Source:
HILLSON, D. 2010. Exploiting future uncertainty : creating value from risk, Farnham, Surrey, England ; Burlington, Vt., Gower.

The Risk Variable in Value Optimisation

“Value is grounded in reality.” Stewart emphasises that value is not defined by price but rather in utility. An innovation may have a set price, but its utility depends on the perspective of the owners. The absolute cost of a product may be fixed; but its value may differ depending on the perception of the end users.

Stewart's book 'Value optimization for Project and Performance Management' looks at value from the project point of view.  He defines value in four variables: time, cost, performance and risk. The time-cost-performance triangle is the standard dimension in measuring success in project management, but Stewart adds the risk variable in his value function.  

 or simply...

Risk should be incorporated in measuring value; the impact of uncertainty to achieving project objectives must be considered. This is because if the management of risk is neglected, it can damage the overall value of the project.

"Maximising the relationship between these [four] elements is important to satisfying the customer and optimising valure"

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Source:
STEWART, R. B. 2010. Value optimization for project and performance management, Hoboken, N.J., Wiley.

Translation Please!

I found this definition in an interesting article about programme risk management... it would be very helpful if I could understand this portion fully. My maths are a bit rusty, I understand the first portion a bit, but need confirmation for the meaning of (2).

Any help would be appreciated. :)

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The article:

KWAN, T. W. & LEUNG, H. K. N. Measuring Risks within a Program Consisting of Multiple Interdependent Projects. 2009. IEEE, 1-7.

Sources of Programme Risk

According to Hillson, there are four sources of programme risk:

1. Escalated project risks - some project risks can affect a programme; project risks within a set threshold can be escalated as a programme risk.
2. Aggregated project risks - compilation of numerous project risks that can threaten the achievement of programme objectives.
3. Overall programme risks
4. Non-project risks - risks from non-project components

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HILLSON, D. 2008. Towards programme risk management
URL:http://www.risk-doctor.com/pdf-files/ADV11.pdf

Measuring an Organisation's Risk Appetite

One of the questions I need to answer in my dissertation is: What is UNDP's risk appetite?

Initial reading from Gambir Bhatta's "Don't do something, stand there! Revisiting the Issue of Risks in Innovation in the Public Sector":

Each organization’s appetite or tolerance for risks is unique and will vary according to any one (or combination) of several variables but may be conceived of as in: the extent of its legal mandate including any fuzzy boundaries around it; the intractability of the problem it is dealing with; the strategy(ies) it pursues to meet the mandate; its degree of access to relevant information; its organizational culture; the management style of its leaders although it could be argued that over time, this will tend to settle at a level that is determined by the organizational culture rather than the leaders’ styles); the responsible minister’s own risk appetite; and the organization’s age.

Notationally, this could be framed as:

Departmental Risk Appetite

{RAd = f(M1, M2, S, Ia, OC, MS, MRAt-1, OA, e}

where M1 is organizational mandate, M2 is degree of problem intractability, S is strategy, Ia is degree of access to relevant information, OC is organizational culture, MS is manager’s style, MRAt-1 is minister’s risk appetite (which itself is also a function of the collective risk appetite of government, and of the perception of severity of risk but lagged because it generally takes time to diffuse to departmental level), OA is age of organization, and e is the error term.

Link: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.174.4005&rep=rep1&type=pdf.

Re-acquaintance with Risk Management

'Not having enough knowledge on risk management' is one of my biggest risk for my thesis. Interestingly, I had a little discussion with Alec and Dennis whether this is a worry, issue or risk... (which is really confusing me right now!).

To manage this worry/issue/risk (of not having sufficient knowledge) I realise I need to read about risk management on a deeper level. I have read some books on risk management process for my module assignments, but this is the first time I'm approaching a book to understand the underlying philosophy of risk management.

To start with, I picked up a small undaunting thin book entitled "Exploiting Future Uncertainty: Creating Value from Risk" by David Hillson.
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A question on the first chapter directly caught my attention:

Can we prove a link between risk management practice and improved bottom-line outcomes? (Hillson, 2010)

This directly relates to the question I am trying to answer for my thesis:

How can UNDP improve its risk management practice to contribute towards achieving (country) programme outcomes?

Before I can correlate risk management practice and outcomes in the UNDP context, I need to know first if it is possible to relate risk management to results! Well, at least Hillson is convinced so. These are some insights from the first chapter of the book:

• "If we track performance, we should be able to see if there is any link between our ability to manage risk and success rate."
• From experience over time, it can be demonstrated that as risk management maturity and competence increases, so does success.
• It cannot be ascertained that investing in risk management correlates with lack of problems. But it can be measure how successful risk management creates additional value through maximising opportunities.

Sounds promising, I'm excited to read on!

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HILLSON, D. 2010. Exploiting future uncertainty : creating value from risk, Farnham, Surrey, England ; Burlington, Vt., Gower.

RBM Results Chain + Risk Management

In relation to my previous post, this diagram may help clarify the difference on outputs, outcomes, impact and results:

(UNDP, 2011)

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UPDATE (30 Jan 2012 6:40PM):
A results chain spin-off  incorporating risk management:

(Cobo et al., 2010)