ADB Risk Management Services
Root Cause Analysis: Supporting Effective Enterprise and Strategic Risk Management Andrew Bent, ARM-E Presentation to SKRIMS Conexus Arts Centre, Regina, SK 14 February 2013 © 2013 ABD Risk Management Services
ADB Risk Management Services
Outline • Overview of Root Cause Analysis • Post Event Analysis – Worked Example 1: Internal Conspiracy
• Predictive Analysis – Worked Example 2: Strategy Development
• Root Cause Analysis Exercise • Questions / Discussion © 2013 ABD Risk Management Services
Warm-up Exercise
ADB Risk Management Services
• Why did the Titanic sink? • How did this change our approach to travel?
© 2013 ABD Risk Management Services
ADB Risk Management Services
Section 1:
OVERVIEW OF ROOT CAUSE ANALYSIS 18/03/2013 © 2013 ABD Risk Management Services
4
Why Do We Need Root Cause Analysis?
ADB Risk Management Services
• Enables us to understand the how, what and why of an event (either past or future) • Enables us to take corrective action that prevents event recurrence • Enables us to take proactive action to reduce, remove, exploit or mitigate future risks • Allows for cost-effective, timely and informed decision making © 2013 ABD Risk Management Services
How does Root Cause Analysis Support Effective ERM / SRM?
ADB Risk Management Services
• Enables us to understand the enterprise-wide implications of our risks • Enables us to protect our organizational objectives through targeted action • Enables risk-informed decision making on new initiatives / plans / objectives • Supports strategic exploitation of risk © 2013 ABD Risk Management Services
ADB Risk Management Services
Types of Root Cause Analysis Post-Event Analysis • Used to uncover latent errors that led to an incident or event • Can be used to prevent “Band-Aid” treatment of symptoms • Reduces the level of individual blame • Usually not as data driven
© 2013 ABD Risk Management Services
Predictive Analysis • Used to uncover systemic weaknesses that may impact objectives or plans • Enables proactive planning and action to address issues • Supports exploitation of opportunities • Supports predictive modeling and option analysis
ADB Risk Management Services
Section 2:
POST-EVENT ROOT CAUSE ANALYSIS 18/03/2013 © 2013 ABD Risk Management Services
8
ADB Risk Management Services
Five-Whys Analysis • Useful for reasonably simple, lower-risk analyses • Gets to root cause quickly • Normally only used for single-cause analysis • Can be highly subjective, so use of teams recommended • Bound by previous knowledge • Usually not heavily data driven
© 2013 ABD Risk Management Services
Tire Falls Off While Driving Wheel Nuts Loose Wheel Nuts Not Torqued After Puncture Repair Tire Store Employee Not Properly Trained Tire Store Does Not Have Training Program for New Staff
ADB Risk Management Services
Cause & Effect (Ishikawa) Analysis
• Useful for more complex, higher-risk analyses • Enables multiple cause analysis through multi-input review • Can be used to identify key priorities for action (Pareto analysis) Finance Cheapest Repair
People No Supervision
Low Quality Wheel Nuts
Lack of Training
Low Paid Staff
Unqualified Staff
Materials Poor Quality Tools Not Enough Wrenches
Equipment © 2013 ABD Risk Management Services
No QA of Repairs
Process
Quantitybased KPIs No Process Checklist
Tire Falls Off While Driving
Worked Example 1: Internal Conspiracy
ADB Risk Management Services
Scenario • Assistant Team Leader for border agency at major international airport approached by OC Group • Provided “clean” documentation for crime syndicate drug couriers • Escorted body-packing couriers through the arrivals process • Personally carried drugs (methamphetamine) across the border © 2013 ABD Risk Management Services
ADB Risk Management Services
Worked Example 1: Internal Conspiracy Training
Technology Relied on humans to enforce Could be “overruled” by ATLs
No regular supervision of Supervisors
Limited Ethics Training
No Internal Threat Training
Inconsistent policy standards
Culture of “Us vs. Them”
Permissive Supervision Culture
© 2013 ABD Risk Management Services
Contradictory policy in place
Inconsistent Training of Staff / Leaders
No Automatic Flagging of Irregularities
Supervision
Policy
Junior, Inexperienced staff
Inexperienced Supervisors
Noncompetitive pay rates
People
Internal Conspiracy
ADB Risk Management Services
Section 3:
PREDICTIVE ROOT CAUSE ANALYSIS 18/03/2013 © 2013 ABD Risk Management Services
13
Root Cause Analysis as a Predictive Tool
ADB Risk Management Services
• Enables us to take proactive action to reduce, remove, exploit or mitigate future risks • Helps us to consider how, when and why our risks can impact our objectives • Feeds into scenario planning and strategy development • Helps to reduce surprises by increasing the robustness of our planning © 2013 ABD Risk Management Services
ADB Risk Management Services
Root Cause Analysis as a Predictive Tool
• Tools we use for post-event analysis can still be used – Five Whys – Cause and Effect
• Also use (or draw on) – – – – – –
PEST analysis Failure Mode Effects and Criticality Analysis (FMECA) Hazard and Operability Studies (HAZOP) Force Field Analysis Influence Diagrams Solution Effect Analysis
© 2013 ABD Risk Management Services
RCA as a Predictive Tool
PEST Analysis (Context)
Opportunity Five Whys Cause and Effect Force Field Analysis
FMECA
© 2013 ABD Risk Management Services
Scenario and Contingency Planning
Strategy Process Objective or Goal
Success Measures
Specific Initiatives
Initiative Level Performance Measures
Specific Actions or Processes
Action/Process Level Performance Measures
Solution Analysis
Influence Diagram
HAZOP
ADB Risk Management Services
Solution Analysis
Worked Example 2: Strategy Development
ADB Risk Management Services
Scenario: • New strategy required to (re-)focus a law enforcement agency on violent crime and its precursors • Significant external pressure for new approach to succeed • Large number of stakeholders involved • Known (but not necessarily acknowledged) internal barriers to implementation of strategy © 2013 ABD Risk Management Services
Worked Example 2: Strategy Development
ADB Risk Management Services
Approach: • Modified Failure Mode Effect and Criticality Analysis 1. Use “Force Field Analysis” to identify key drivers / restraints 2. Use “Five Whys” to analyze key drivers / restraints to root cause or motivation 3. Identify risk interdependencies based on 1 and 2 4. Use 1 - 3 to populate “Cause and Effect” behavioral analysis 5. Identify existing controls 6. Identify additional controls required 7. Identify additional opportunities created © 2013 ABD Risk Management Services
Worked Example 2: Strategy Development
ADB Risk Management Services
Approach: • Modified Failure Mode Effect and Criticality Analysis 1. Use “Force Field Analysis” to identify key drivers / restraints Driving Forces Political desire to try new approach
Increasing levels of community violence and homicides
© 2013 ABD Risk Management Services
Restraining Forces Negative organizational leadership culture around strategy development Social agencies and groups not interested in working with others
Worked Example 2: Strategy Development
ADB Risk Management Services
Approach: • Modified Failure Mode Effect and Criticality Analysis 2. Use “Five Whys” to analyze key drivers / restraints to root cause or motivation e.g.
Social agencies and groups often didn’t work efficiently with others
Government funding is based on number of individuals served / assisted Shared services may reduce the total number of individuals attending any one agency and increase numbers at “rival” agency
Reduced / removed job security for employees of social agencies
© 2013 ABD Risk Management Services
Reduced revenue impacts administrative costs
Worked Example 2: Strategy Development
ADB Risk Management Services
Approach: • Modified Failure Mode Effect and Criticality Analysis 3. Identify risk interdependencies based on 1 and 2 e.g. - Need to increase effectiveness of community partnerships; and - Potential for reduced / removed job security for social agency employees
© 2013 ABD Risk Management Services
ADB Risk Management Services
Worked Example 2: Strategy Development
Approach: • Modified Failure Mode Effect and Criticality Analysis 4. Use 1 - 3 to populate “Cause and Effect” behavioral analysis Finance
Communication Increased Media Coverage Adverse Reporting
© 2013 ABD Risk Management Services
Reduced funding availability Reallocated support for funding bids
People Reduced Support for Programs
Damaged reputations
Reduced Job Security Frustration with Change
Realigned Community Partnerships
Worked Example 2: Strategy Development Approach: • Modified Failure Mode Effect and Criticality Analysis 5. Identify existing controls • Social control • Relationships with media 6. Identify additional controls required • Increased media monitoring • Performance-based agreements / MOU 7. Identify additional opportunities created • Assessment and Sobering Centre © 2013 ABD Risk Management Services
ADB Risk Management Services
ADB Risk Management Services
Section 4:
ROOT CAUSE ANALYSIS EXERCISE 18/03/2013 © 2013 ABD Risk Management Services
24
ADB Risk Management Services
Section 5:
SUMMARY
18/03/2013 © 2013 ABD Risk Management Services
25
ADB Risk Management Services
Summary • RCA enables us to understand the how, what and why of an event (either past or future) • RCA enables us to take corrective action that prevents event recurrence, or proactive action to reduce, remove, exploit or mitigate future risks • Uses a variety of tools that are often nested to develop the full picture © 2013 ABD Risk Management Services
ADB Risk Management Services
Summary • Allows for cost-effective, timely and informed decision making • Provides opportunities to support enterprisewide problem solving and action • Supports strategic planning and management processes © 2013 ABD Risk Management Services
ADB Risk Management Services
Questions?
© 2013 ABD Risk Management Services
ADB Risk Management Services
Contact Details Andrew Bent Owner / Risk Management Consultant ABD Risk Management Services Phone: 1-780-263-7475 Email:
[email protected] Web: www.abdriskmanagement.ca
© 2013 ABD Risk Management Services