6182 Principles of Risk Management PLAN 2014-15 final version (1).doc

University of Southampton

School of Management

MANG6182 PRINCIPLES OF RISK MANAGEMENT Alasdair Marshall (module coordinator) Matthew Leitch Aims of the module This module focuses on concepts and theories that are central to understanding what is needed for efficient and effective risk management. Later modules build on this conceptual/theoretical foundation in describing current practice and its limitations, and in explaining best practice tools, techniques and processes. This module sets some of the agenda for later modules, places relevant concepts and issues in a framework and provides an investigation of the significance

of these principles, concepts and issues. An

understanding of this underlying theory enables informed critical reflection of current practices so that weaknesses and limitations can be identified.

Intended learning outcomes Knowledge and Understanding Having successfully completed the unit, you will be able to demonstrate knowledge and understanding of: 1. the scope for risk and uncertainty management in an organisational context; 2 the key concepts and theories that should inform risk and uncertainty management. Subject Specific Intellectual (Cognitive) Skills Having successfully completed the unit, you will be able to: 3. explain the range of factors that can influence the perception of risk, and principles involved in achieving effective risk identification 4. explain and critically compare the ways in which risk and uncertainty may be described and evaluated . Transferable (Key/General) Skills Having successfully completed the unit, you will be able to: 5. apply and develop key skills in critical thinking, reflection and verbal communication during the module, and subsequently through preparation of the written assignments, key skills in information handling, critical analysis and written communication.

Teaching and Learning Methods MANG6182 Principles of RM Outline page 1

The module is taught through a mixture of methods ranging from guided background reading, interactive lectures, and discussion of concepts and examples. The first part comprising lectures will draw on the experiences of students and through class discussion, encourage reflection on generic concepts and processes. The second part will comprise a series of presentations from groups of students reporting on their study of a selected risk management publication. Each group’s choice of publication will be guided and approved by the unit coordinator. Potential sources may include journal articles, specific textbooks, past MSc dissertations, professional guidelines and standards, Government publications (OGC in UK), National Audit Office reports etc. The aim will be to obtain a useful spread of pertinent publications and topics. Following each group’s presentation, the class will interrogate the group and discuss emergent issues. These presentations and discussions will form the basis for an individual piece of coursework requiring you to discuss what you see as the key issues and problems confronting risk managers and/or risk management practice. Assessment 100% course work, through a written assignment. This assignment will require you to reflect on and evaluate the application of concepts and processes discussed in the module.

Assessment method

Group presentation (up to 20 minutes)

Weight

Issue week

Submission Date

20%

Session 1 of unit

23rd October 30th October 6th November

Individual report (1200 words)

30%

Individual written coursework (2000 words)

50%

Session 1 of unit Session 1 of unit

10th December

MANG6182 Principles of RM Outline page 2

12th January

Recommended Reading Stephen Ward, (2005) Risk Management: organisation and context. Witherby & Co Ltd, 32-36 Aylesbury Street, London, EC1R 0ET. www.witherbys.com ISBN 1 85609 298 4 (expensive to buy, but lots of copies are available in the Harley Library !).  M. Woods (2011) Risk Management in Organizations: an integrated case study approach. Routledge.  M. Leitch (2010) A Pocket Guide to Risk Mathematics: key concepts every auditor should know. Wiley Press.  G.M.Breakwell (2007) The psychology of risk, Cambridge University Press, 978-0-52100445-9  D. Lupton (1999) Risk, Routledge Press.  L.T.Drennan and A.McConnell 2007, Risk and crisis management in the public sector, Routledge, London. 978-0-415-37815-4  Smith D. and Elliott D. (Eds) 2006, Key readings in crisis management – systems and structures for prevention and recovery Routledge , London. 0-415-31521-2  B. Fischhoff (1981) Acceptable Risk, Cambridge University Press.  ISO 31000 Risk Management Standard www.iso.org  AIRMIC, ALARM, IRM (2002) A risk management standard . Available as a free

down- load from www.airmic.com or www.theirm.org  J Adams (2001) Risk, Routledge: Abingdon, Oxford. ISBN 1-85728-068-7. This book could have done with a more informative title! It is about how people weigh risks and rewards when choosing to do things, and the difficulties inherent in using cost-benefit analysis to make decisions about regulations and investment in society. It is a very readable, well referenced, discursive book with many examples (some amounting to casestudies). A particularly attractive feature of this book is the heavily critical stance taken towards cost-benefit analysis.  Waring and A.I. Glendon (1998) Managing risk – critical issues for survival and success into the 21st century. London, Thomson Learning. ISBN 1-86152-167-7. (Part I Risk contexts, particularly: Chapters 3 Management systems and risk; 4 Culture and risk; Power and risk; 6 Organisational environment and risk; 7 Risk and change. Part II provides a number of useful case studies of very different contexts: the offshore oil and gas industry after Piper Alpha, the collapse of Barings Bank, safety in the railway industry, introduction of new computer systems, and UK health authorities.)  P L Bernstein (1996) Against the Gods-the remarkable story of risk. Wiley: Chichester. ISBN 0-471-29563-9. This well-known book provides excellent background reading on how approaches to quantifying and evaluating risk developed. A range of important concepts in risk analysis are discussed including basic probability theory, dependence, Utility theory, risk aversion, portfolio analysis, and the psychology of estimating variability. The discussion is well researched and very readable, but it is not a textbook, and it is not a book for looking up and learning about individual topics. Note that a video of Peter Bernstein talking about risk is shown at the end of the first lecture.

MANG6182 Principles of RM Outline page 3

PROGRAMME Autumn 2014 DAY ONE 9.00 – 9.20 9.20 - 9.45

2nd October (Alasdair Marshall) Brief Module Introduction and administration of group presentation forms. What do we need to think about when we contemplate ‘risk’? Some necessary considerations, a critical perspective, and a suggestion for how we might try to think more thoroughly about risk. 9.45 – 10.00 break 10.00 - 10.45 Risk differentiated from uncertainty. Some closely related terms: ignorance, contingency, indeterminacy, innovation, false certainty. lunch 14:00 – 14:35 Risk definitions, risks linked to objectives, group exercise on risk controls. 14.35 - 14.45 Risk management includes threat and opportunity management. 14.45 - 15.00 break 15.00 - 15.15 Uncertainty Management. 15.15 – 15.30 Managing the Unexpected, anticipation and resilience, learning from HROs. 15.30 – 15.45 Summing up: three perspectives on risk management (+ collection of forms). ------------------------------------------------------------------------------------------------------------------------------DAY TWO 9th October (Alasdair Marshall) 09.00 – 09.45 Behavioural decision making, the importance of emotion/affect within risk cognition, stress and information processing. Risk taking as an individual difference. 09.45 – 10.00 break 10.00 – 10.45 Sensation seeking and its correlates, how these vary with threat/crisis. room change 11.00 – 12.30 Chartered Insurance Institute Employability talk: by Amy Hollis of the CII. N.B. This event will be held in Building 2, Room 1089. lunch 14:00 – 14.45 Risk Communication: expert vs lay approaches; aims & effectiveness; obstacles; risk tolerance; perceived risk; the psychometric paradigm 14.45 - 15.00 break 15.00 – 15.45 Risk culture: basic concepts; cultural theory; organisational safety culture; risk ownership and transference; risk appetite; risk homeostasis, risk cultures in financial institutions. -----------------------------------------------------------------------------------------------------------------------------DAY THREE 16th October (Matthew Leitch) 09.00 – 09.45 Decision making and ‘risk identification: pulling it all together, risks and decisions, use and types of model’. 09.45 – 10.00 break 10.00 – 10.45 Describing risk/uncertainty: risk metrics, challenges of risk assessment. 14.00 – 14.45 Towards better management under uncertainty: the value of iterative thinking in risk management, other improvements. 14.45 - 15.00 break 15:00 – 15.45 Formal processes: reasons for formal processes, types of process (integrated vs separate), evaluation of processes.

Group Presentation Sessions

9-11am, 2-4pm on 23rd Oct, 30th Oct, 6th Nov (Matthew Leitch) MANG6182 Principles of RM Outline page 4