CPCU 500 - Identifying and Analyzing Costly Risks 3.2 Questions and Answers

CPCU 500 - Identifying and Analyzing Costly Risks 3.2 Questions and Answers Incorporating individuals from multiple areas of an organization into the risk identification process can __________ bring more risks to light as well as reveal how those risks are interconnected Effective team approaches to identifying risks include? 1) Facilitated workshops, 2) The Delphi technique, 3) Scenario analysis, 4) HAZOP (hazard and operability study), 5) SWOT (strengths, weaknesses, opportunities, and threats) Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:00 / 0:15 Full screen Brainpower Read More Identify reasons it's important to take a team-oriented approach to identifying risks. 1) Provide diverse perspectives on risks 2) It can also reveal how risks are connected across the organization, reducing the likelihood that risks from those areas will be overlooked A neutral party, who has no stake in the outcome or participation responsibilities, administers the risk workshop and propels the group to achieve its goal facilitated workshop The neutral party in a facilitated workshop is know as? the facilitator When risk management professionals meet with an organization's leaders, key employees, and other stakeholders in a __________, the group discussion can help identify risks in a dynamic way. The __________ should initiate a discussion or brainstorming session that allows ideas to flow freely from participants. He or she can then design __________ to encourage follow-up discussion and further brainstorming. facilitated workshop, facilitator, workshops It's wise to include representatives from diverse groups in the organization during facilitated workshops because discussion of the interconnectedness and cascading effects of risks provides valuable information on risk levels and priorities. The discussion can identify both __________ and __________ arising from risks. The facilitated workshop technique can be used for a specific project or process, as well as to identify those risks that affect __________ opportunities, downsides, overall organizational objectives If facilitated workshops are used to identify all organizational risks, the facilitator must be skilled in __________ and __________ as well as __________ and be prepared for a long-term project. If the facilitator is a consultant, he or she can meet with the team at defined intervals after the team has worked independently on identifying the risks in each of the risk quadrants. risk identification, management, group communication Uses the opinions of a select group of experts to identify risks. Typically, these experts don't meet but respond to a survey or inquiry instead. Delphi technique The standard Delphi technique involves what? submitting two rounds of queries to the selected experts. First, each expert responds to a question, and the combined answers, which remain anonymous, are presented to the group. The same question is then posed again to the experts, who are instructed to consider revising their responses based on the results that were reported to the group. This question-and-response cycle continues for a predetermined number of rounds or until a consensus is reached. Assumes that forecasts (or judgments) from a structured group are more valid than judgments from individuals (or unstructured groups). Delphi technique Benefits to using Delphi Technique? 1) It's typically cost-effective because it doesn't require the resources necessary to assemble a facilitated workshop of experts (experts don't meet they answer survey) 2) By keeping responses anonymous, it can eliminate group bias, as well as encourage participants to give their honest opinions without fear of repercussions Disadvantages of using Delphi Technique? Experts' opinions may be limited to their current thinking on a subject. In other words, unless prompted, the experts may fail to render a more forward-thinking opinion For example, if an organization is considering a new product or project, the current expert opinion may not be as useful as the opinion of a group of potential (or future) product users or the community that proposed the idea. Identifies risks and predicts the potential consequences of those specific risks Scenario Analysis This is an example of what type of risk identification? Windstorm is identified as a risk. The outcomes associated with wind damage and the flooding that often accompanies windstorms aren't limited to the hazard risks of property damage and bodily injury. They also include business interruption, disruptions in customer relations, and possibly reputational risk based on how an organization responds during and after a flood Scenario Analysis A __________ can help identify a range of potential consequences and prioritize risks scenario analysis Using scenario analysis an organization should assemble an internal cross-functional team to gain a multidimensional view of a risk's potential consequences. For example, an __________ at a manufacturing facility in Houston may be primarily concerned with damage to a facility and employee safety in the event of a flood. A member of the __________ may be concerned with liability if chemicals stored at the facility leak into floodwaters. A __________ may be concerned about the effect on the prices of raw materials if supply chain disruptions ensue operations manager, legal team, financial representative The benefit of a scenario analysis? It brings all identified concerns together, so they can be addressed as a whole. The disadvantage of a scenario analysis? The risk identification process may be limited by the imagination and brainstorming capabilities of the team selected. This could lead to overlooking key risks or consequences of risks. Inviting cross-functional teams into the process can reduce the chances of this, but it won't eliminate it, especially if members of the analysis team have never experienced a particular risk. HAZOP is derived from? hazard and operability study A team of subject matter experts and stakeholders identifies the risks associated with a given process and recommends a solution HAZOP Primarily used to design complex, scientific systems such as those used in engineering, chemical, mechanical, electronic, and computer operations. But it can be adapted to analyze certain organizational strategies and initiatives HAZOP Steps in HAZOP process? 1) Subdivides project or system design into small components 2) Reviews each component to identify risks 3) Identify the cause and potential outcome(s) for each risk 4) Develop a solution for each risk 5) Ensures that solutions work and reevaluates as necessary Which risk identification does this apply to? Because this process is comprehensive and involves experts on the subject at hand, it's ideal for projects and systems where virtually all risks must be eliminated. HAZOP A retail store located in Key West, Florida, wants to identify a range of potential consequences of a severe windstorm hitting Key West during tourist season. Determine which team approach to risk identification it should use and explain why. The store in Florida should use the scenario analysis because this approach projects the potential consequences of specific identified risks (like windstorms). The outcomes associated with a windstorm aren't limited to the hazard risks of property damage and bodily injury. They also include business interruption, disruptions in customer relations, and possibly reputational risk based on how the organization responds during and after a windstorm. The benefit of a scenario analysis is that it can bring multiple concerns like these together, so they can be addressed as a whole.