Risk Management &
Liability
Informa Brownfield Hospital Development
Summit 23-24 June 2009
www.bluevisions.com.au
What is Risk?
The chance of something happening that will have an
impact on objectives.
Outcome or
impact of an
event
Probability or
Frequency of an
event
(qualitatively or
quantitatively)
Risk = Consequence X Likelihood
www.bluevisions.com.au
Risk Management
What is Risk Management?
The culture, the processes, and the structures that are
directed towards realizing potential opportunities whilst
managing adverse effects.
What is Risk Management Process:
•Establish Context
•Identify Risks
•Analyse Risks
•Evaluate Risks
•Treat Risks, and
•Always Communicate, Consult, Monitor and Control
www.bluevisions.com.au
Context in Brownfield Hospital Developments
For a Disused Site:
•Contamination
•Human Health
•Ecological Impact
•Change of Use Requirements
•Legal (seller and buyer)
•Economical – Not just cost but also finance (willingness to
fund)
•Technical
•Regulatory (changes in standards and exclusions from
standards)
•Liability (long term responsibility)
www.bluevisions.com.au
Context in Brownfield Hospital Developments
For an Existing Hospital Site:
Everything as for disused sites, plus….
•Access
•Staging
•Location of existing services
•Capacity of existing infrastructure
•Interruptions to the existing services (impact on
provision of health care)
•Disruption to the new works (impact on contracts)
•Integration of health services
•Integration of infrastructure
www.bluevisions.com.au
Context in Brownfield Hospital Developments
For All Sites:
As usual, for any project involving real estate, the goals
of the key players are not always aligned.
The Competing goals include:
•Maximising benefits
•Limiting liabilities
•Timely achievement of objectives
•Safety to humans and the environment
•Costs
www.bluevisions.com.au
Risk Management in Overall Context
The Overall Development Process
Includes (typically):
•Land Acquisition
•Site Assessment
•Risk Assessment
•Remediation Plan
•Remediation Action
•New Activity
www.bluevisions.com.au
Risk Management Process
Analyse Risks
Evaluate Risks
Treat Risks
www.bluevisions.com.au
MONITOR AND REVIEW
Identify Risks
RISK ASSESSMENT
COMMUNICATE AND CONSULT
Establish the Context
Proactive vs Reactive?
Plan Proactively
But Stay Flexible
The tools are not a final fix
www.bluevisions.com.au
The Tools
Due Diligence:
•Conduct all appropriate enquiry
•Understand pre-existing conditions
•Understand risk and potential impacts (including impacts
on existing services operational and infrastructure)
However ……
•May later prove to be incomplete
www.bluevisions.com.au
The Tools
Contractual Protection:
•Indemnities
•Transfer of risk
However ……
•May limit parties willingness to enter into an Agreement
www.bluevisions.com.au
The Tools
Financial Tools:
•Cost planning
•Cost adjustments
•Finance / Allocations
However ……
•Funds do not always cover full costs (that should have
been known) – typically at the initiation of Health
Projects, not enough effort is put into identifying all the
risks, options available and likely costs.
•Cost overruns occur
www.bluevisions.com.au
The Tools
Regulatory Protections:
•Federal & State statutory requirements
However ……
•Standards change
•Standards have exclusions
www.bluevisions.com.au
The Tools
Insurances:
•By the Owner
•By the Designer
•By the Contractor
However ……
•Have set limits
•Have exclusions
www.bluevisions.com.au
Analyse Risks
What is Risk Analysis?
A systematic process to understand the nature of and to
deduce the level of risk. Risk analysis may be:
• Qualitative
• Semi-Quantitative
• Quantitative
www.bluevisions.com.au
Analyse Risks (Qualitative)
www.bluevisions.com.au
Likelihood
• Evaluation using multidisciplinary groups;
• Specialist and expert
judgment; and
• Structured interviews and
questionnaires.
Qualitative Representation
Probable Improbable
Qualitative methods for
generating information
for risk analysis include:
Medium
Risk
High
Risk
Low
Risk
Medium
Risk
Minor
Major
Consequence
Cell values = Risk units for ranking only
Analyse Risks (Semi-Quantitative)
Semi-Quantitative Representation
Frequency
In Semi-Quantitative
methods, qualitative
scales such as those
described are given
values.
0.1
10
30
100
300
0.01
1
3
10
30
0.001
0.1
0.3
1
3
0.0001
0.01
0.03
0.1
0.3
V.Low
100
Low
300
Medium
1000
High
3000
(Events/yr)
Consequence
($ x 1000)
Cell values = Risk units for ranking only
www.bluevisions.com.au
Analyse Risks (Quantitative)
Quantitative analysis uses numerical values for both
consequences and likelihood using data from a variety of
sources.
These may include:
•statistical analysis of historical data
•influence diagrams
•life cycle cost analysis
•simulation and computer modelling
•statistical and numerical analysis
•probability analysis
www.bluevisions.com.au
Evaluate Risks
Risk evaluation compares the level of risk against the
criteria. It is the basis of decision making which may
include, but not be limited to:
• Whether a risk needs treatment
• Priorities for treatment
www.bluevisions.com.au
Treat Risks
What is Risk Treatment?
process of selection and implementation of
measures to modify risk
Options for treating risks with negative outcomes:
Avoiding the risk
Changing the likelihood of the risk
Changing the consequences
Sharing the risk
Retaining the risk
Action Plan defines: RESPONSIBILITY,
RESOURCES, BUDGET, TIMETABLE, REVIEW,
COMMUNICATION, and Cost-Benefit Analysis.
www.bluevisions.com.au
Monitor, Control & Communicate
Monitor and control risks:
• Manage risks in accordance with established risk
management plans to ensure a common approach to
the achievement of objectives;
• Monitor progress against plans to identify variances;
and
• Implement agreed risk responses and modify plans to
reflect changing objectives in an environment of
uncertainty.
www.bluevisions.com.au
Questions
Questions ?
www.bluevisions.com.au