Posted by Real-time Risk for the Operations Environment
Risk Track
RS06_Presentation_RealTimeRiskOperationsEnviron_Teal
Abstract:
Traditional risk management and cost risk analysis is an important and evolving field, but many analysts admit that it is as much of an art as a science. Although quantitative in nature, assessing the likelihood and impact of risks is generally a series of predictive guesses made by subject matter experts. When successful, the recipients of risk reports embrace the process and make use of risk reports; in other programs the process of tracking risks is regarded as an academic exercise, which often relegates analysts to the back-office, out of sight and out of touch with real-world production and operations. Ideally, the risk management process should provide users quantitative, objective, timely and relevant risk information.
As always, advances in software and systems present risk managers an increased ability to identify and quantify risks in order to control cost growth. While simulation tools have gained significant popularity, the use of Enterprise Resource Planning systems and Business Intelligence tools as a risk information sources is not widespread within the Department of Defense – although the capability exists. Business intelligence software provides risk analysts with real-time status of operational processes, and careful tracking of leading indicators puts the risk analyst in a data-rich position. Risk managers should use these tools to measure and report on the status of leading indicators that measure cost, timeliness, workload, quality, and productions levels within operations.
This paper will propose methods of quantitative risk analysis that rely on real-time indicators to identify and assess risks in production and operations environments. The goal of this real-time risk process is to improve organizational performance and control unexpected increases in production and operational costs due to risk. Topics include an explanation of real-time risk analysis, frameworks for implementing a real-time risk process, financial monitoring, explanation of leading and lagging risk indicators, methods for setting real-time risk thresholds, dashboard reporting, and proposed roles for Risk Review Boards in a real-time environment.
This concept was developed an implemented at a DoD fee-for-service agency and is applicable to many operational and maintenance environments.
Author:
John Teal
Booz Allen Hamilton
John Teal is a Lead Associate with Booz Allen Hamilton in Columbus, Ohio and lately has been focused on business modeling for the Defense Finance and Accounting Service (DFAS). Prior to this, his cost and finance experience had centered on space and aircraft programs for the Air Force, intelligence agencies, DoD joint programs, and NASA. Additionally, from 2006 though 2009 years he served as the Program Chair for the Pikes Peak SCEA chapter. He has an MBA from Regis University and a Bachelor of Science degree from the United States Military Academy at West Point. Mr. Teal is a Certified Cost Estimator/Analyst (CCE/A) and a Project Management Professional (PMP).