Risk Monetization：Converting Threats and Opportunities into Impact on Project Value

Risk Monetization: Converting Threats and Opportunities into Impact on Project Value addresses the organizational, political, cultural, and technical issues related to implementing a successful risk assessment, management, and monetization process. Suitable for readers in any organization or area of expertise, the book assumes no prior background in risk assessment, management, or monetization.

With more than three decades of experience in risk-process implementation, the author first explains the benefits of the risk-monetization process and how risk matters are generally not handled properly in contemporary organizations. He then introduces the terms and definitions essential to making risk monetization successful in a project. The text goes on to give examples of risk-monetization techniques applied in a variety of settings before discussing the typical risk situation for most projects and the shortcomings of conventional processes. It also describes how risk identification, assessment, management, and monetization processes are set up in an ideal environment as well as in imperfect situations. The final chapter focuses on how investment decisions are made based on the monetization and ranking of risks.

Enhancing your project’s value, this book offers step-by-step practical guidance on identifying, assessing, managing, and monetizing both threats and opportunities so that risk impedes the bottom line as little as possible. It shows you how to convert probable risks into positive impacts on the chance of success and/or profitability of any project.

Glenn R. Koller is a risk advisor at a major corporation. In 2008, he retired after 30 years as the head of the Major Project Risk Group at a major energy company. He holds two international patents on statistical routines and earned his Ph.D. in geochemistry/geophysics from Syracuse University. Dr. Koller’s research interests include all aspects of risk and uncertainty analysis, management, monetization, and training.

What’s the Point?Skipping the Fundamentals for NowSome AcronymsA Focus on Success and Value—Not on Reducing UncertaintyMany Contributing DisciplinesMany Views of RiskAn Aim to Integrate RisksSurprise! Integrated Impact Is Almost Always AlarmingWhere We Would Like to Be

How Risk Information Traditionally Is Handled—The Good, the Bad, and the UglyRisk Registers and Their Many Implications

The FundamentalsDecide for Whom You Are (Really) WorkingBe Clear as to "What Is the Question?"Be Certain of the Right Level of SupportWhat I AssumeSome Definitions

Spectrum of Application for MonetizationAcquisitionsDivestituresEnvironmental ProjectsHealth and SafetyRisk Monetization of Legal MattersOther Project Types

Without Risk Monetization, What Typically Is DoneProject EnvisionedIncomplete RepresentationDon’t Tell Me What to Do!Poor Translation of Qualitative Data into Quantitative DataOne, Two, Three—Go!Little or No Risk IntegrationUse of the "Boston Square"Data Gathered from Those with Vested InterestFaulty ForecastsLack of OrganizationMitigation of ThreatsInitial Budget EstimatesInitial Schedule EstimatesSensitivityRisk Interpreted as UncertaintyPoor Risk CommunicationPiecemeal PresentationsDetermining the Reduction in Probability and/or ImpactNot a Consistent Deciding BodyRewarding Activity

One Route to Risk Monetization—The "Perfect World" or "High Control" PathTry to Be Unfashionably EarlyAppoint a Risk-Process ProponentHave "The Talk"Don’t Underestimate the UpheavalDecide How Sensitive "Soft" Risks Will Be HandledHave the Conversation about Risk AcceptanceDetermine What Has Already Been Done and Establish RapportEstablish a High-Level Story about Why This Is Being DoneDesign a Risk-Monetization Process That Fits with the Existing Culture and WorkflowsEstablish That There Will Be Only "One" Risk RegisterPrepare for Risk-Identification Workshop (RIW)Opening the RIWStart Identifying RisksAssessing, Valuing, and Ranking Risks Prior to MonetizationMitigation/Capture ActionsSome Post-RIW ActivitiesImplement Sustaining Actions

Another Route to Risk Monetization—The "Already in Progress" or "Imperfect World of Low Control" PathSome of the "Perfect World" Stuff Applies"Risk Analyses" Already Done

Risk MonetizationA Warning and Justification for MonetizationSetting the StageThe Monetization Process

Appendix: Summary of the Journey from Risk Assessment to Monetization and More

Selected Readings appear at the end of each chapter.