SPECIAL SERIES

RISK DOCTOR BRIEFING

RISK MANAGEMENT PRINCIPLES

PART 2:  OGC M_o_R

By Dr David Hillson

The Risk Doctor

UK

The last Risk Doctor Briefing looked at eleven principles for risk management which are contained in the international risk standard ISO 31000:2009. We suggested that adopting and implementing these principles could lead to a more effective approach to managing risk. But ISO 31000:2009 is not the only risk standard that offers a set of risk principles. The UK Office of Government Commerce (OGC) is responsible for the Management of Risk methodology (M_o_R *) which is widely used in government and elsewhere, and the most recent M_o_R guidelines include a set of eight risk principles that can be applied in any setting or type of organisation.

The OGC M_o_R risk principles are informed by the content of ISO 31000:2009 as well as by current corporate governance guidance, so they are meant to have very broad applicability. These are the M_o_R principles:

1. Risk management aligns continually with organisational objectives. Risk is “uncertainty that matters”, and it only matters if it could affect achievement of the objectives of the organisation. We need to understand our objectives, define how much risk is acceptable, and decide how to manage risk within those limits. When objectives or risk tolerances change, the risk process must change too.

2. Risk management is designed to fit the current context. Organisations operate in an external context (markets, competition, regulation etc.) as well as an internal context (culture, people and processes). Risk management must recognise and respond to the context, and change when it changes.

3. Risk management engages stakeholders and deals with differing perceptions of risk. Different stakeholders see risk differently, and the risk approach must take account of these perceptions. We need to recognise and counter bias, and manage stakeholder expectations regarding risk.

4. Risk management provides clear and coherent guidance to stakeholders. Clarity means that everyone knows what the risks are and how they are being addressed. Coherence occurs when risk is managed consistently across all levels of the organisation, and when it is communicated properly across organisational boundaries.

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About the Author Dr. David Hillson Author Dr David Hillson, PMP FRSA HonFAPM FIRM FCMI, is internationally recognized as a leading thinker and practitioner in risk management. He is Director of Risk Doctor & Partners (www.risk-doctor.com), and has worked in over 40 countries. He is a popular conference speaker and award-winning author on risk, with six books on the topic. David has made several innovative contributions to improving risk management, and is well known for promoting the inclusion of proactive opportunity management within the risk process, and for his ground-breaking work in risk psychology.  David is an Honorary Fellow of the UK Association for Project Management (APM) and past chairman of its Risk Management Specific Interest Group.  He is an elected Fellow of the Institute of Risk Management (IRM), the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA), and the UK Chartered Management Institute (CMI).  David is also an active member of the Project Management Institute (PMI) and was a founder member of its Risk Management Specific Interest Group. He received the PMI Distinguished Contribution Award for his work in developing risk management over many years. Since 1998 he has been a core author for the risk chapter of the PMBOK Guide®, and is a core author for the PMI Practice Standard for Project Risk Management.  David can be contacted at david@risk-doctor.com. To see his latest book, Managing Risks in Projects, published in July 2009 by Gower, visit http://www.gowerpublishing.com/isbn/9780566088674.

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