Conference summary - Richard Bendall-Jones
This article is a summary and commentary of the speakers and topics covered at this event, organised by the Institute of Risk Management’s Innovation Special Interest Group, in partnership with:
IDA: Danish Society of Engineers
IRM India Regional Interest Group
Nodes & Links
First up, Gregory M Carroll discussed how Artificial Intelligence can transform risk management, which happens to be the title of his book ‘Risk Intelligence: How Artificial Intelligence can Transform Risk Management’, due for release on 5th October 2021. Gregory explored the difference between Bayesian and Frequentist statistics and the role this plays in the precision of risk assessment, as well as AI as an augmentation to human intelligence, rather than a replacement of it. This included a discussion of the different AI approaches that can be applied to risk problems today, ranging from Predictive Analytics using Big Data to Probabilistic Modelling using Bayesian Inference.
Prabha Thomas, Chief Risk and Compliance Officer at Tata Consulting spoke about a ‘Machine FirstTM’ approach to Risk Management. This involves leveraging digital technologies to deliver better business outcomes, which includes embracing risk to empower decision makers with hindsight, insights and predictive foresight. Prabha emphasised the opportunities of these innovative approaches to capture opportunities that wouldn’t be exploited using only traditional methods. This included using digital twins, Machine Learning and Big Data to modernise risk models, as well as implementing Advanced Analytics for operational resilience.
Debra Watson, Managing Director, Satarla brought into focus the challenge of ESG (Environmental, Social and Governance) risk in the mining sector. The adoption of innovative technologies, such as blockchain, to create an audit trail and assure the ethical extraction of minerals such as cobalt, which is present in many of our everyday items. Furthermore, the use of Virtual Reality tools can either help train people to work in hazardous work environments or remove the hazard by removing humans from hazardous work environments. Examples of this include virtual site inductions, rather than physical walkthroughs, or the use of LIDAR surveys to remove the need to place surveyors physically in mines to undertake their work. In these ways, digital innovation can actively reduce safety risk. However, it should always be left to humans to make the decisions!
Greg Lawton, Co-founder and & CEO at Nodes & Links, explored the use of AI and cloud technology in capital and infrastructure projects, and ‘democratising the understanding’ of their schedules and consequently risks. This will enable project professionals to use their creativity and experience to identify and exploitation of opportunities on their projects, so that they can realise benefits more effectively and sustainably (including their profit margin!), while their machine ‘co-pilots’ can do the routine project stuff. See the video for more details.
Gabe Barrett, a partner from RiskTalk, discussed the importance of honest and transparent risk-based discussions to create cultures that support the discussion and management of risk, which ties in with the concept of psychological safety in organisations. This includes avoiding ‘risk incubation’ – where potential risks are informally tolerated in an organisation’s culture and then normalised, as well as ‘value drift’, where an organisation’s value system is eroded over time.
Trine Holst Veicherts, in conversation with Graeme Keith, discussed the practical application of quantitative approaches to risk management, and whether new innovative approaches can be applied in a real, ‘front-line’ context. They queried the true value of data and digital innovation, and the need to apply such approaches where they are appropriate, with quality datasets, and continually and testing models to ensure that they are fit for purpose.
To bring the first session to a close, the group of panellists discussed the cost/benefit of cleansing datasets and the requirement for good quality data to leverage innovative digital approaches to provide useful insights. However, it was argued that at least from a Bayesian perspective, that historical data may be of limited value, and itself can include elements of bias. Therefore, it may be beneficial to identify a problem first, and apply an agile project management approach (rather than a waterfall approach) to identify the data required to help solve that problem. The panel also touched on the issue of treating data and numbers as empirical truth, and the potential dangers and tangible opportunities associated with this, which can help a business to achieve its key objectives.
Lunchtime workshop – ‘Man vs Machine – the ultimate evaluation of schedule risk analysis’
Hosted by the team from nPlan, this workshop discussed how machine learning alongside (not against) project practitioners, can assure the schedules of their projects using machine/deep learning. By leading a whistle-stop tour through the process of traditional Quantitative Schedule Risk Analysis (QSRA) and Artificial Intelligence (via Machine Learning and Deep Learning), the attendees then took part in an interactive session using the nPlan platform to assess sensitivities and risks in a fictional building project to identify how they could best improve the prospects of the project, feeding back the positive impacts they had on their schedule outputs.
The group learned that the title of the workshop was a cheeky misnomer – humans can seek to use technologies such as the nPlan Project platform to augment their capabilities when managing risks on projects, so ‘Humans + Machine’ would be more appropriate.
After the break, Dev Amratia, CEO and Co-founder of nPlan shared his vision of a world which is no longer limited by its understanding of risk, and how deep learning approaches to schedule analysis and proactive risk management can accelerate project learning and maximise chances of success by decoupling it from existing, traditional QSRA approaches which are labour intensive and subjective. See the video for more details.
Next, Dr. Gareth Morgan, Founder and CEO of Terrabotics discussed developments in satellite technologies and their role in mapping and monitoring risks. This surveying creates vast amounts of data, and the challenge in this space is often finding the smartest way to manage this data to its best advantage, which is beyond the capabilities of the human brain. This can include certain parts of AI and Advanced Analytics, which, when placed alongside the domain expertise of individuals, can augment our understanding and insight of this vast amount of data, particularly in a world where climate change is a ver. The attendees also discussed challenges of data ownership and security in this area. See the video for more details.
Edson Lopes Cedraz, Risk Practitioner Consultant and Risk Management Innovation Lead from Deloitte looked at third-party risk management and risk networks. By looking at the risks associated with the extended enterprise, we can see that organisations do not work in isolation, and therefore understanding the network of risks and relationships between different organisations is important to understand the full risk context of a business objective. Where there is a greater level of dependency between organisations, the severity of the risk is also greater, particularly where there is dependency between numerous ‘links’ in the supply chain. Therefore, third party risk management (TPRM) can therefore enhance supply chain efficiency and minimise exposure to ESG risks. This however requires a ‘human touch’ alongside the deployment of leading technological approaches, particularly when dealing with risks with a third-party, safety or ethical dimension.
Mike Tunstall from St. James’s Place Wealth management explored implementing risk frameworks by using technology. Mike took us through a journey of the challenging implementation of a proprietary risk management system, to developing something more bespoke and aligned to his organisation’s risk management framework at no material cost, combining a number of solutions through MS Office 365. This reduced the reliance on an external provider which made the ‘build’ phase more straightforward, as well as a product that the business could interact with more intuitively, and empowering employees to create something in a ‘low code’ environment.
Henrique Pereira and Melina Amoni of WayCarbon brought climate change into focus in relation to innovation in risk management, by looking at a geospatial modelling tool to integrate climate risk into corporate decision making in different dimensions: assets, companies, sectors and supply chains. By mapping climate change risks such as flooding or drought into geospatial mapping, this use of technology has the power to inform policy or influence infrastructure investment decisions. It was a very literal way of seeing the bigger picture when it comes to risk.
Mike Lutomski discussed digital innovation and risk in the space sector and emphasised that regardless of the sector or stakeholders, risk management remains a communication tool to convey the appropriate information to decision makers for them to take the needed action. Mike discussed the evolution and development of risk management tools, and that the most powerful development has been the integration of these tools, both with each other and with other parts of organisations. This helps to manage risks in situations that are technically sensitive/volatile (e.g. rocket science, literally!), where innovations like 3D printing can allow organisations to be creative, take risks and experience failure at a reduced fabrication and safety cost.
Finally, the Innovation SIG’s Mark Turner and Jane Walde explored leadership mindsets and how to communicate effectively with senior stakeholders. They discussed the challenges of framing risk information in a negative way, and illustrated this using engaging (and amusing!) role-playing scenes which showed the power of positive, credible storytelling to influence stakeholders.
The panel rounded off the day by discussing trends in the presentations, including making AI accessible for all (including non-technical professionals), the importance of communication in complex and evolving environments, and the power of keeping things simple.