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executive education

Risk Surveillance, Risk Monitoring and the Cassandra effect.

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Written by Mr Ken Hackshaw – Executive Director of the Trinidad and Tobago Risk Management Institute, Lead faculty of the Professional Certificate in Enterprise Risk Management

 

What concept from this Pandemic can decision-makers, leaders and risk practitioners lean into?

The answer is: Timely and effective surveillance…

The term “timely and effective surveillance” is applied (today) to the identification and tracking for pandemic risk events like a coronavirus (COVID-19). I am respectfully suggesting that we apply this concept for all Emerging risks.

So what is meant by timely and effective surveillance?

“Surveillance systems as it relates to the medical field is applied to generate data that help public health officials understand existing and emerging infectious and non-infectious diseases. Without a proper understanding of the health problem (etiology, distribution, and mechanism of infection), it will be difficult to ameliorate the health issue”….

Risk Monitoring;

This is the process that tracks and evaluates the levels of risk in an organization. The findings which are produced by risk monitoring processes can be used to help in all aspects of business operations including strategic planning and process improvements.

The Cassandra effect: 

The Cassandra metaphor (variously labeled the Cassandra “syndrome”, “complex”) occurs when one’s valid warnings or concerns are disbelieved by others. The term originates in Greek mythology. Cassandra was a daughter of Priam, the King of Troy. The Cassandra curse occurs when a valid warning is disbelieved, dismissed, or disregarded. Most notably, she is said to have warned the Trojans not to accept the wooden horse that famously led to their downfall.

Modern Cassandras warn us of potential issues that could cause big problems down the road.

Avoiding the Cassandra effect: Surveillance and risk monitoring

We submit that it is much easier to see a hazard when it’s right in front of you than it is to identify a risk. For example,  the dangers presented by hanging electrical wires or an oil leak are clear and immediate. It is much harder, however, to identify risks that can eventuate and impact your business that are days or months or even years into the future.

Steps in carrying out surveillance/Risk monitoring

  • Reporting: Someone has to record the data.
  • Data accumulation:  Someone has to be responsible for collecting the data from all the reporters and putting it all together.
  • Data analysis: Someone has to look at the data to determine and or calculate rates of probability, impact, and likelihood.
  • Decisions: decisions must be made but must be followed by action.

Some questions to move you forward:

  • Are you conducting surveillance of the risks/hazards that are impacting your international vendors and suppliers?
  • Are you conducting surveillance of risk/hazards being faced by other Caribbean territories?
  • Are you privy to or getting information that you are disregarding? (Cassandra effect)

Cliff Notes:

  • Surveillance: Horizon scanning, researching, information gathering, data mining to ascertain what risks are out there that have not yet reached your shores (territory, industry, home) but may.
  • Risk Monitoring: If the risk does reach your shore: identify, track and evaluate continuously
  • Cassandra effect: Don’t disregard information. Consider all possibilities and don’t be fooled by certainty (convergence of risk monitoring and surveillance)

We have to begin building a new tool box of agile and resilient processes to treat with the new complexities and uncertainties that lie ahead. There may not be time to respond to future risk events, for respond means the risk has already eventuated. You must ACT NOW.

Convergence of ERM, Future Credit ratings and the Corona Virus

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Ken Hackshaw, Enterprise Risk Management lecturer would like to proffer a prediction of sorts:

Given the Covid-19 outbreak and its impact on the global stock market, the global supply chain, health industry, airline industry etc. The role and value of Enterprise Risk Management will see a significant increase in use and applicability. Regulators therefore, will also increase its oversight, relevance and dependence on ERM. Additionally, international credit rating agencies, as part of its international rating criteria/methodology will put greater emphasis on the effectiveness of ERM at private and government agencies.

This prediction is predicated on the following:

  • post the financial crisis of 2008/2009, we saw a ramping up of the use and importance of risk management disciplines across the financial services industry.
  • The value of risk culture building and disaster preparedness after the Deepwater Horizon oil spills and other major disasters.
  • The role of Business Continuity planning after the Fukushima volcano and subsequent tsunami

That being said, we at the Trinidad and Tobago Risk Management Institute (TTRMI) have been preaching from the mountain tops about being proactive and anticipatory: about future proofing your business: about doing Horizon scanning to identify emerging risk and about improving the risk culture of your organization and yes about Business Continuity planning.

One may argue that Covid-19 outbreak is like a black swan, no one anticipated this risk event, and that maybe true but we  would have said many times: Risk management is a force multiplier and can be viewed as being similar to the the airbag in your vehicle, it will not prevent the accident from occurring but it will reduce the impact WHEN, not if, accidents occur.  I therefore agree that this risk of Covid-19 could not be planned for but I submit that institutions that had/have a robust and integrated ERM program will fear better than those who had nothing.

Currently many organizations in Trinidad and Tobago and elsewhere, are scrambling to put “things in place” as a result of the covid-19 outbreak, when they should have been “implementing contingency plans.” This would have been accomplished as part of the business impact analysis they would have conducted many moons ago, and as part of the risk assessments they would recently conducted or updated.

 

While strong risk management practises can’t stop the spread of Covid-19 or prevent other pandemic risk events, enterprise risk management processes can help organizations anticipate the impact of these kinds of unforeseen, extraordinary events.   

Note the following:

While ERM is not a new concept, its increasing influence on ratings and regulations cannot be ignored. As the methodologies employed by rating agencies and the reporting requirements set by regulators become more prospective in nature, ERM analysis as a leading indicator of a firm’s ability to operate within a controlled risk/reward framework becomes that much more influential on how a company is rated or regulated. 

 

We are living in a new VUCA world, of which Volatility and Uncertainty (V&U) will bring the most risks.

For more information on Enterprise Risk Management, Contact Umesh Sookoo at 299-0218 ext. 367 or email: u.sookoo@lokjackgsb.edu.tt

Procurement/Supply Chain Risk in Trinidad and Tobago: A case of life and Death?

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With African swine fever wiping out a quarter of the world’s pigs, primarily in China, doctors and drug makers around the world are sounding the alarm about a possible prolonged shortage of heparin, a critically important blood thinner. The drug, derived from pig intestines, is widely used to treat heart attacks and prevent deadly blood clots. China has been the primary source of the medicine, and the crisis there highlights a need to develop alternate supplies.  

So why was this “alternate supply” not identified (maybe as a “what if” scenario?) before this problem occurred?

What’s the supply like now? 

A U.S. congressional committee asked the Food and Drug Administration in July to monitor heparin supplies, noting a six-to-nine-month lag time before a shortage could affect the U.S. market. The agency said in October that there had been no impact. That might be because the outbreak caused a pig-killing frenzy that initially yielded plenty of heparin. However, as the number of hogs slaughtered in China falls, so too will the volume of the raw material. Drugmakers including Germany’s Fresenius SE and South Africa’s Aspen Pharmacare Holdings Ltd. have mentioned shortages linked to rising prices. Fresenius’s Kabi unit told its U.S. customers in July that it put heparin on a protective allocation list due to a potential shortage. Massachusetts General Hospital warned in August of an impending global shortage; the chief of its emergency preparedness team said stock levels were so low at one point that the Boston center was two weeks away from having to cancel lifesaving cardiac surgery.  (Bloomberg News)

Is the Ministry of Health monitoring this?

How effective are your procurement risk assessments?

Venezuela: Financial, Operational, Culture, Political Risk Eventuated

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Eighteen months ago I asked the following question of an executive working in the financial sector and a very senior police officer:

Are you guys considering hiring Bi-lingual employees?

I would respectfully submit that Trinidad and Tobago should have been more prepared to treat with what has been happening over the last 2 weeks (e.g. registration of Venezuelans), if the decision makers were employing more risk based decision making such as: scenario planning/analysis and being more proactive and anticipatory.

One did not need a “crystal ball” to see what the possible scenarios and risks would have been and still is, arising out of the Venezuelan crisis.

Having said that, there are opportunities in any given crisis. The following questions therefore arises:

  • Have you and your institution conducted a risk and opportunity assessment on Venezuela and the Venezuelan migration?
  • Do you need to revisit/update our strategic plans?
  • What about your risk profile/risk appetite?
  • Have you met with your risk teams to chat about any NEW risk and opportunities around financial risk, legal, compliance, operational risk, HSE, demand risk, culture risk, disaster recovery and BCP?
  • What about our social services, not immediately but one year from now?

Trinidad and Tobago and by extension your organization has been/will be disrupted. A determination must now be made as to what is the extent of this disruption and measure/quantify both the constructive disruption element and the negative disruptive potential. 

The velocity and complexity of the risks we are exposed to is rising. How prepared are you ?

Ken Hackshaw – Lead Faculty for Professional Certificate in Enterprise Risk Management. Find out more about our Professional Certificate in Enterprise Risk Management at 868-645-6700 ext. 367

How safe is your IT Infrastructure?

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“So there is no reason for us to be overly concerned about an intentional attack on data.” National Security Minister Stuart Young

I respectfully disagree with the Honorable Minister: Given these “little events” there is reason to have some concern with respect to your data.

  • Have your organization ever conducted threat and vulnerability assessments of your facility, infrastructure and operations inclusive of your information technology systems?
  • How much due diligence have you done on the vendor you engaged for your IT systems?
  • How secure are the systems/applications said vendor(s) are using ?
  • And is your BCP  tested?

Cyber security, like risk management are buzzwords that are bandied about and discussed but apparently not actioned.

A riddle for you:

There are five executives in a meeting discussing cyber security. 3 of them have decided to enhance their IT security. How many have not enhanced their IT security?,,,,,,,,,,NONE

Decisions and agreements if not operationalized/implemented is just that….decisions and agreements. 

Decisions must be followed by actions.

The recent “infiltration” or hacking of the websites of state entities demonstrate, in my humble opinion, that there are players out there that have the capability to attack the technology infrastructure of institutions in Trinidad and Tobago, and if one extrapolates these events, there is nothing that prevents them from doing or attempting to do the same to organizations in the private sector. That said, the assumption maybe that these private organizations have MORE integrated IT security employed to protect themselves than the public sector. And many do.

In the last 3 months some US cities , like Baltimore and Albany (NY), where Ransomware was employed by hackers, totally shut down many critical sites that serves the public and  these cities were asked to pay a “ransom” to be allowed to regain access to their systems. Are we there yet? (Ransomware attacks use malware to lock out users unless the hackers get paid)

Is your organization sleepwalking into one crisis after another?

Let’s be careful out there.

Ken Hackshaw – Lead Faculty for Professional Certificate in Enterprise Risk Management. For more information on this professional certificate 868-645-6700 ext. 367

UWI – ALJGSB launches Not – for – Profit Programme in collaboration with JB Fernandes Memorial Trust II

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The UWI – ALJGSB and the JB Fernandes Memorial Trust II welcomed the first cohort of participants into the Professional Certificate in Not – for – Profit Management programme which commenced on 22nd June 2019. A first of its kind in the region, the programme will equip participants will the skills and tools to navigate a sector that is demanding more professionalism, greater transparency, increased financial accountability, and a growing focus on measuring results. The JB Fernandes Memorial Trust II awarded five (5) scholarships for tuition into this intake of the programme. This 6-month programme will run once annually.

 

 

For more information on this programme contact our Executive Education team at 645-6700 ext. 286 or email: openenrolment@lokjackgsb.edu.tt

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