Higher Level Skills
Demand Led Training,
Risk Management
A South West Higher Level Skills Pathfinder
Report
This paper focuses on the key lessons learnt, through the
pathfinder projects and other higher skills initiatives in
respect of identifying and exploring failure and success
factors for engaging in the development of new employer
led training courses. In particular, it explores the inherent
common risks, their indicators, their financial and
reputational impact and the probability of occurrence
through the provision of an exemplar risk register.
Deborah Winwood
10/31/2011
Higher Level Skills Demand Led 2011
Training, Risk Management
Contents
Section 1 - Introduction .......................................................................................................................... 3
Background ............................................................................................................................................. 3
The rationale for the focus ..................................................................................................................... 4
Methodology........................................................................................................................................... 5
Section 2 - Risk Context .......................................................................................................................... 7
Benefits and Success ............................................................................................................................... 7
Benefits Management......................................................................................................................... 7
End Benefits .................................................................................................................................... 7
Project outputs ............................................................................................................................... 8
Project outcomes ............................................................................................................................ 8
Recovery of development costs .......................................................................................................... 9
Recovery of delivery costs .................................................................................................................. 9
Section 3 – Risk Analysis ....................................................................................................................... 10
The risk analysis .................................................................................................................................... 10
Background ....................................................................................................................................... 10
Assumptions...................................................................................................................................... 10
Categories ......................................................................................................................................... 10
Proximity ........................................................................................................................................... 11
Risk statements ................................................................................................................................. 12
Impact analysis.................................................................................................................................. 13
Probability analysis ........................................................................................................................... 15
Risk Rating ......................................................................................................................................... 15
Overall risk rating .............................................................................................................................. 16
Risk Appetite ..................................................................................................................................... 16
Risk Response Management ................................................................................................................. 16
Priority............................................................................................................................................... 17
Risk Maps .......................................................................................................................................... 18
Accountability ................................................................................................................................... 20
Summary ............................................................................................................................................... 22
Key Risk Factors................................................................................................................................. 22
Key success factors ........................................................................................................................... 22
Quotes ................................................................................................................................................... 23
Risks .................................................................................................................................................. 23
Benefits ............................................................................................................................................. 24
Appendix 1 – Data Collection Tool ........................................................................................................ 26
Appendix 2 – Example of first stage cause-consequence mapping ...................................................... 30
Appendix 3 – Example of early analysis of impact and probability ...................................................... 31
Appendix 4 – Sample of inherent probability data ............................................................................... 32
Appendix 5 – Glossary of Risk Terms .................................................................................................. 33
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Section 1 - Introduction
Background
Engaging with the provision of demand led higher level skills courses is a high risk activity. Between
2006 and 2011 three regional Higher Level Skills Pathfinder Projects (HLSPP), funded by HEFCE,
enabled significant employer led higher skills course development by mitigating the financial risk for
HEIs through the provision of funding. This provided a test bed to trial the demand and response
processes in a manner that encouraged the activity to become embedded more firmly in the region’s
HEI strategies.
The three HLSPPs had an overarching remit to stimulate the HEI response to employers higher level
skills needs. Whilst each of the three pathfinders had different operating mechanisms they all
funded and controlled a number of individual projects for their regional HEIs to produce employer
led higher level skills training courses.
The training courses developed ranged in duration, accreditation, level, delivery mechanisms,
subject area, sector and learning hours. However, every one of them has provided information and
lessons about the principles and parameters relating to the production of employer led provision.
The debate about the use of the words “skills” and “training” in this context, is long over, therefore,
in the context of this and associated documents the following terminology is used:
1. Higher skills – any learning and development of an individual, at level 4 or above equivalent,
which is directly related to industry or business workforce competence.
2. New training course – used to describe any manner of learning developed for delivery, in
response to specific employer workforce development demand, regardless of size, level,
delivery style or content. Learning may be developed from scratch (bespoke), or through
modification of existing materials. Delivery may be anything from one day workshops for
standalone CPD, to major new ventures such as a full Masters level course.
3. Development Project – the whole life cycle required to obtain, clarify, and agree the demand
for specific workforce development through to the point of delivery of the new training
course. For the purposes of clear explanation within these documents this is divided into
stages, and breakdown of which can be found in Table 1.
a. Feasibility
b. Start up
c. Initiation
d. Development of training course
e. Delivery of training course
f. Closure
Through this paper the use of the term HEI (Higher Education Institution) should be read to include
those FECs (Further Education Colleges) whose remit includes the provision of higher level
education.
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This paper is concerned with focussing on the key lessons learnt, through the pathfinder projects
and other higher skills initiatives in respect of identifying and exploring failure and success factors
for engaging in the development of new employer led training courses. In particular, it explores the
inherent common risks and their indicators that have been identified, their financial and
reputational impact and the probability of occurrence.
It is envisaged that it will assist HEIs or FECs who have the opportunity, through employer
engagement, to develop and provide new demand led training courses, to more consistently
evaluate their probability of success. It will enable them to evaluate whether the proposed
development project for a new training course falls within their “risk appetite” as it stands, what
controls and/or actions could be taken to reduce the risk to within “risk appetite”, and as a
consequence assist with the decision making process regarding whether to authorise and/or fund
such a programme. Success, in this instance, means:





Delivery according to plan;
Return on investment;
Sustainability;
Contribution to HEI strategies;
Customer satisfaction.
The rationale for the focus
Whilst the majority of the new training courses developed were considered a success, a number of
them could be considered to be failures, either partial or total. Failure constitutes those
development projects that did not meet expected quality, cost or time criteria. Since the purpose of
the pathfinder projects, above all, was to experiment with processes and to provide funding to
mitigate the risks associated with cost, those projects that did run over budget, ran over time or had
low learner numbers on delivery were not classified as failures. Only those that failed to complete
were classified as failures. However, the potential financial and reputational impact is high and in a
commercial context, where funding is HEI internal or by the employer these factors should be
considered a failure. Indeed a number of the development projects that were allowed to continue
despite their status, would in a commercial context have been closed down.
As in any project context, the main causes of course development failure are:
1. Insufficient attention to checking that a valid business case exists for the production of a
new training course;
2. Insufficient attention to the quality at the outset and during development;
3. Insufficient definition of the required outcomes, leading to confusion over what the project
is expected to achieve;
4. Lack of communication with the stakeholders (employers, other educational parties,
awarding bodies, industry associations, external funders) and interested parties (potential
future customers, employer trade associations), leading to a higher skills training course
being delivered that does not meet the original employer needs/demand;
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5. Inadequate definition and lack of acceptance of project management roles and
responsibilities, leading to lack of direction and poor decision making;
6. Poor estimation of duration and costs, leading to projects taking more time and costing
more money than expected;
7. Inadequate planning and co-ordination of resources, leading to poor scheduling;
8. Insufficient measurables and lack of control over progress, so that projects do not reveal
their exact status until too late;
9. Lack of quality control, resulting in the delivery of learning products that are unacceptable to
the employer or are unusable.
HLSPP experimentation has provided the means to collate quantities of data relating to the risks and
issues that arose, their impact and the lessons learnt. Issues that arose centred on
1. Feasibility and business development
2. Development project management
3. Risk management and identification of success criteria
The issues that arose around how to successfully conduct feasibility have been addresses by the SW
HLSPP through:



Production of an Employer Engagement Toolkit that defines the processes, documentation
and procedure for engaging an employer, conduction ONA (Organisational Needs Analysis),
producing an outline training specification and accessing appropriate HE resources.
Provision of a training package for staff employed in a business advisory role for higher level
skills. http://ee-toolkit.oucpld.com
Publication of three employer engagement reports:
o Report 1 - Higher Skills Literature Review;
o Report 2 - Employer Engagement with Higher Education;
o Report 3 - Strategies for Effective HE Employer Engagement.
Project management risks and issues should be addressed through the adoption (and appropriate
training for staff) of recognised project management methodologies such as Prince2.
However, there are no clear publications or tools to assist with or reflect upon the risk management
associated specifically with development projects producing new higher skills training courses. Risks
will impact on finance and reputation and may have serious consequences if not adequately
managed. Therefore, it is the lessons learnt about risk management of this work, coupled with an
analysis of the risks that arose or were identified and their impact on the success criteria that have
been explored, analysed and expanded.
Methodology
Qualitative and quantitative data was collected arising from the 28 SWHLSPP and the 13 SW LCHS
(Low Carbon High Skills Project) new training course development projects in the form of the
progress and closure reports. Further quantitative data was collected from 65 projects, using a data
collection form specific to risk analysis. These projects included input from the NW HLSPP, NE HLSPP
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and other national co-funded projects and HEI’s own project work. The data collection form was
designed specifically for the purpose of producing this paper and its associated documents, and is
available at Appendix 1.
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Appendix 1.
This data was evaluated as part of a CC (cause – consequence) risk impact analysis to identify:










Success criteria;
Risk factors;
Risk indicators;
Probability of occurrence;
Impact of risk on success criteria;
Proximity of risk factors;
Chains of events;
Possible action to reduce the risk either the likelihood of occurrence or the impact;
Potential contingency action that could take place should the risk occur.
Where there were no apparent ways to treat the risk and it could be tolerated;
Samples of the cause – consequence analysis map can be seen at Appendix 2.Appendix 2 – Example
of first stage cause-consequence mapping.
The information and findings have been provided in the form of:
1. This paper;
2. Exemplar risk register (used in conjunction with this paper, and as a reference tool with the
toolkit);
3. Toolkit - Template risk register spreadsheet;
4. Toolkit – Risk management user reference guide.
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Section 2 - Risk Context
Benefits and Success
Benefits Management
In order to fully analyse the potential impact of risks that may affect the development project for a
higher skills training course it is necessary to clearly define the expected outputs, outcomes and
benefits.
The research report “Strategies for Effective HE-Employer Engagement” Bolden et al, Feb 2010, was
completed as an output from the SWHLSPP. This report finds that active engagement with
employers is regarded as a core aspect of the academic mission within all types of HEI; and that it is
regarded as contributing positively to all forms of education, not just CPD and workforce
development. The impact of successful employer engagement is seen to reach into strengthening
the work experience and employability of all their students, the teaching and learning, progression
routes, research activities and their brand image. In addition, the success and international
recognition as researchers of their academic staff was stated as a priority in some instances.
Therefore, if employer engagement activity is undertaken by an institution with the intention of
responding to employers’ workforce development needs through the provision of higher level skills
training, it is important to appreciate how it effectively contributes to the academic mission through
benefits realisation.
End Benefits
Figure 1 below, shows the typical benefits that could be expected by an HEI as a result of engaging
an employer(s) with the intention of producing and delivering a new employer led higher skills
training course, together with the strategic objectives to which they contribute. The sequence
required for benefits realisation, together with the business change/processes necessary for support
are mapped. Complex interdependencies are identified, therefore, overall success relies not just on
managing the risks throughout the development project, but on careful change management once
the new training course has been achieved.
It was apparent from the available data that a number of the SWHLSPP new training courses were
not sustained beyond initial delivery, consequently, making no significant contribution to overall
strategic objectives. This was attributed, by the development HEIs, to the fact that:
“Marketing and sustainability was not built into the development project”
“Confusion about where in the university the course sits after production, and whose responsibility it was”
“No provision was made to integrate it into mainstream activity or with other E-E activity”
“We lost our main employer contact due to restructuring and because we had pitched too low down in the
organisation there was no executive level support to continue”
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Figure 1
Project outputs
Success of the training course project outputs can be measured in terms of:
1. On time;
2. On budget;
3. To the defined quality criteria (level of learning, size of learning, type of learning, planned
accreditation achieved, delivery mechanisms);
4. Projected number of learners on first delivery achieved.
Project outcomes
Expected outcomes from a project can be defined as:
1. Income generation from skills training activity, measured as:
a. Recovery of development costs;
b. Recovery of first delivery costs;
c. Income generation from sustained delivery of new training course.
2. Enhanced relationship between businesses and the HEI to encourage a broader range of
joint activity, measure as:
a. Employer satisfaction with new training course;
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b. Learner satisfaction with new course;
c. Take up of new course by other employer businesses;
d. Readiness of employer(s) to discuss and consider other E-E activity.
3. Enhanced academic engagement with industry.
Recovery of development costs
The HLSP projects funded the costs associated with the development of new demand led higher
skills training courses in the majority of cases, as did the Low Carbon High Skills Project. In several
cases the projects went “over budget” due to scope change or poor initial costing/financial planning,
but the funding was sufficiently flexible to be able to cover the additional costs. Therefore, the risks
to the HEI associated with an overspend were of low impact in that context, but could not be
considered low if the funding had been internal or from an employer.
However, in the SWHLSPP once the development fund had been consumed, all further work
associated with developing new courses was funded by the employers. In this situation control of
costs and timescale were a much higher priority, since recovery of development costs was built into
the training delivery price. Therefore, overspend was a much higher risk.
Development costs associated with the SWHLSPP funded development projects were analysed in
depth, as a separate piece of work. The findings are available in the report “Employer engagement:
the costs of the development and delivery of work-based learning experiences” available to
download from the HEFCE website as a public report.
http://www.hefce.ac.uk/pubs/rdreports/2010/rd22_10/rd22_10.pdf
Recovery of delivery costs
For those course for which the employer or learner paid in full for delivery of the training, delivery
costs ranged from £25 per learner day to £390 per learner day, with the average price being £157
per learner day. The higher price paid was for a one off bespoke leadership course, priced per
course, rather than per learner. The majority of bespoke courses commissioned by an employer
were priced per course and included the cost of any development /revision of curriculum materials.
When broken down by course length:
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Section 3 – Risk Analysis
The risk analysis
Background
Risk can be defined as uncertainty of outcome, and risk taking is inevitable when developing a new
course. Risk management seeks to manage the projects exposure to risk, such that risks are
identified, evaluated and potential exposure to undesirable effects are minimised. In managing the
risk associated with a development project the risk impact analysis will provide an overall risk rating
as well as individual risk scores. To arrive at a risk rating each risk factor must be identified,
evaluated for impact and probability, assessed for possible action and considered for proximity.
In order for the institutional risks to be fully analysed in terms of impact, it is first necessary to
understand the desired outcomes and expected benefits to the institution of realising a success. The
benefits map at Figure 1Error! Reference source not found. shows the outputs, necessary business
support processes, intermediate and end benefits, together with their interdependencies and
realisation sequence.
Assumptions
In analysing and evaluating the risk associated with new higher level course development the
following assumptions have been made:
1. The development project is not part of a funded test group and as such the emergence of
risks resulting in over budget or significantly over time would not be tolerated.
2. The work is being undertaken on a commercial basis.
Categories
To enable clarity of risk analysis and subsequent risk management the risks associated with
responding to employer demand for higher level skills training through the development of a new
training course have been allocated to seven high level categories. These are:
1.
2.
3.
4.
5.
6.
7.
Main output risks.
Strategic and commercial risks.
Financial risks.
Legal risks.
Organisational and management risks.
Project delivery risks (operational).
Training delivery risks.
Therefore, the final risk register contains a high level risk statement for each category, followed by a
detailed breakdown of the individual risks that will contribute to it.
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Proximity
A development project for a new training course can be divided into six clear stages. See Table 1
below. In addition to risks that could occur at any time throughout the life cycle of the project there
are risks that are specific to a particular stage (risk proximity). As the project progresses and stages
are completed, those stage specific risks are no longer considered active and are no longer
significant in the overall project risk rating. Therefore, the likelihood is that as the project progresses
to plan, the overall risk rating of the project will reduce.
Table 1 – Project Stages
Stage
0
1
Any time throughout
the full lifecycle
Feasibility
2
Start up
3
Initiation
4
Development of
training course
5
Training course
delivery
Closure
6
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0 allocated for use in proximity scale to indicate that the risk could occur at any point
during the whole lifecycle of the project
Identification of potential demand for a new training course through ONA
(organisational needs analysis)
Identification of options to meet the demand
Assessment of the viability of HEI developing new training course to meet the demand
Presentation of recommendation to employer and other stakeholders
Preparation of business case
Identification and in principle agreement with partners
Identification of risks
Outline planning and costing
Production of outline training specification
Liaison with partners and outline agreement for input into development and/or delivery
Identification of funding source
Preparation and submission of bids for funding ( where appropriate)
Agreement to commence work
Detailed TNA (training needs analysis) to refine training specification
Appoint project manager
Detailed time and resource planning and costing
Establish steering groups
Draw up and agree contracts with suppliers
Establish employer interest groups
Define quality of training course
Refine and update the project risks
Appoint project team resources
Contracting with suppliers and SLAs with partners
Final agreement to produce the training course
Production of all materials for new training course delivery and assessment
Provision of resources for delivery
Course accreditation (where planned)
Control of work
Management of risks and issues
Activities and communication to ensure sustainability of delivery
Delivery of learning to employer(s) workforce
Refinement of new training course
Completion of all documentation for project, funders and employers
Handover of materials and responsibility for delivery to appropriate faculty
Handover of marketing for sustainability to relevant departments
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Risk statements
The qualitative and quantitative data collected was “cause-consequence” map analysed to identify
each factor’s effect on the project outputs, educational outcomes and institutional benefits. Thus a
series of statements was produced in the format of risk factor, leading to and the result.



Risk factor – an event that might happen;
Leading to - the chain of events that could follow;
The result – the effect on the outputs, outcomes and benefits.
The risk statements that relate to the seven categories identified are detailed in Table 2 below.
Table 2 – Seven High Level Risks
Risk no/category.
1. Main output risks
2. Strategic and
commercial risks
3. Financial risks
4. Legal risks
5.Organisational and
management risks
6. Project delivery
risks (operational)
7. Training delivery
risks
Risk Statement
There is a risk that if the status of the development project associated with the new course
exceeds defined tolerances and quality criteria leading to one or more critical success factors
being compromised the project may be closed early or fail to meet its projected learner and
financial targets resulting in loss of realised benefits
There is a risk that without clear direction and explanation from the HEI and its project partners
and suppliers of their strategic, aims and ambitions for the new training course leading to the
viability and reliability of the new course being compromised; resulting in loss of financial
investment, reputational damage or financial claw back
There is a risk that without accurate and clear costing and budgetary control the working capital
required to meet the plans will not be available; resulting in time delays, critical path impacts
and potential overspend
There is a risk that without properly consulted contracts, agreements and understandings in
place between the HEI and its third party suppliers and partners it will lead to
misunderstandings, inconsistencies and an inability to quantify performance of those providers;
resulting in issues going un-noticed, breakdown in relationships and the new course fails to meet
its objectives and benefits
There is a risk that the HEI processes and management are insufficient to support the resourcing
necessary to develop and deliver the new course leading to an inability to maintain development
and/or delivery to the defined plans; resulting in time delays that will impact on critical paths,
delaying the course start dates; and affecting employer and internal faculty relationships
There is a risk that the curriculum and/or delivery mechanism of the delivered training course
does not align with the original employer needs and demand, leading to employer and/or
learner dissatisfaction with offered course; no take up of delivered course and/or degradation in
employer relationship and loss of longer term benefits
There is a risk that without effective marketing, curriculum planning and clear transition plans
the new course will not be attractive to a wider audience than the commissioning employer or
the HEI faculties will not be able to support ongoing delivery; resulting in low learner numbers
initially and on an ongoing basis, failure to achieve a return on investment and failure to realise
institutional benefits
Each of these high level categories was then analysed in detail to list the detailed risk statements
that contribute to it. See the Template Risk Register for all risk statements.
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Impact analysis
The impact or severity factor is defined as a measure of the expected degree of loss or damage
(impact) from the most severe event associated with a risk factor and is derived from the severity
level. The severity levels are classified as severe, major, moderate, minor and low. See Table 33
below.
Table 3 – Severity Levels
Severe
Major
Moderate
Minor
Low
An event that, if it occurred, would cause program failure (inability to achieve
minimum acceptable requirements)
An event that, if it occurred, would cause major cost and schedule increases.
Secondary benefits/requirements may not be achieved.
An event that, if it occurred, would cause moderate cost and schedule increases, but
important requirements would still be met.
An event that, if it occurred, would cause only a small cost and schedule increase.
Requirements would still be achieved.
An event that, if it occurred, would have negligible effect on program.
The severity includes several impact types. Impacts are divided into primary and secondary.
Primary impacts are those that are directly related to the immediate outputs of the new course
development project, whereas secondary are those that are related to the institutional outcomes
and benefits. See
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Table 4 below.
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Table 4 – Impact Types
Delivery
Schedule
Total Nonrecovery of
development
costs or increase
of costs greater
than 15% that
would cause
termination
Increase in costs
greater than 5%
Total failure of
delivery with no
learners
Significantly low
learner numbers,
delivered
without full cost
recovery
Cost increases of
not more than
5%
Learners drop
out of
assessment of
course
Small cost
increases that, in
most cases, can
be absorbed by
the project
Lower numbers
than predicted,
but costs still
recovered
No loss
No loss
Moderate
Secondary
Reputational/o Educational
pportunity
Internal
Major schedule
Not sustainable
overrun so
severe that
project would be
terminated by
funder or
employer
Permanent loss
of employer
regard within
networks
affecting further
engagement with
sector
Prolonged loss of
recognition for
expertise in
subject area
Withdrawal of
institutional
support for this
type of demand
led course
5
Significant
schedule
increase of more
than 15% that
could lead to
reduction in
employer
support and low
learner numbers
Schedule
increase of not
more than 15%
that may lead to
lower employer
support
Small schedule
increase up to
10% that, in most
cases, would be
absorbed by the
project
No increase
Not sustainable
after first pilot
delivery without
significant
further
investment in
revision and
marketing
Adverse publicity
with one
employer
affecting further
engagement with
employer in all
areas of
institution
Affects learner
perception of
institution’s
expertise or
flexibility
Withdrawal of
faculty support
for this type of
demand led
course
4
Sustainable with
some
modification of
course
Loss of
opportunity to
exploit employer
relationship in
other business
areas
Minor, adverse
complaints
affecting number
of learners
provided
Adverse affect on
motivation of
learners to enrol
on further
courses of study
Loss of capacity
to update other
mainstream
courses through
integration
3
Missed
opportunity for
collaboration
with other
institutions
Loss of
opportunity to
update
academic’s
“Employability”
2
Concern
restricted and
repairable
Negligible
Negligible
1
Content
sustainable with
additional
marketing
No loss
Low
Minor
Sustainability
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Severity
Factor
Development
cost
Major
Severe
Severity
Level
Impact types (an event that if it occurs will cause )
Primary
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Probability analysis
The probability or likelihood factor (Table 5) is defined as a measure of the chance of an impact at
that selected level of severity actually being incurred. The likelihood is assessed, in the first instance,
assuming preventative management controls and actions have not been applied. Then, residual risk
likelihood is assessed and assigned after the consideration of the proposed management measures
(risk reduction action). Thus two probability ratings are given for each risk.
Table 5 – Probability Factor Rating
Project Delivery Probability Factors
Based on experience with similar projects, the event:
Probability
Factor
Chance
Could be expected to occur during the project delivery
6
74% - 99.9%
Could easily be incurred and has generally occurred in similar projects
5
57% - 73%
An even chance of occurring in similar projects
4
40% - 56%
Known to happen in similar projects
3
23% - 39%
Has occurred in a minority of similar projects
2
6% - 22%
Conceivable, but has rarely occurred in similar projects
1
0%-5%
A sample showing inherent probability data can be seen at Appendix 4, Appendix 4 – Sample of
inherent probability data.
Risk Rating
Each determined risk rating, was assigned a qualitative classification as low, medium or high as
outlined in Table 6 below. This was derived from the risk score calculated as impact x probability
(see Table 7 )
Table 6 – Risk Rankings
High impact and probability risks posing a severe threat to project success. They
require detailed assessment and immediate comprehensive action bring within risk
appetite to reduce the risk.
Risks that pose a threat to the success of the project. Some immediate action may be
required to reduce their impact and/or probability, together with a comprehensive
action plan.
Risks with low impact or low probability that require a less detailed assessment and
that could be accepted/tolerated. Their status should be monitored periodically for
changes.
High
Medium
Low
PROBABILITY
Table 7 –Risk Score Range
6
5
4
3
2
1
IMPACT FACTOR
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6
5
4
3
2
1
1
12
10
8
6
4
2
2
18
15
12
9
6
3
3
24
20
16
12
8
4
4
30
25
20
15
10
5
5
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Overall risk rating
The overall risk rating of the development project is calculated as the sum of the risk ratings
assigned to each individual risk. A total of 60 detailed risks have been documented. The maximum
score is 60x30 = 1800 and the minimum is 60x1 = 60. This is then categorised as low, medium or
high. (The template risk register creates the colour automatically, based on the number of risks
entered in the register)
High
Medium
Low
>720<1800
>300=720
<300
Risk Appetite
The risk appetite is the amount of risk that the organisation is prepared to accept, tolerate or be
exposed to at any point in time. It is about taking well considered risks where the long term benefits
are expected to be greater than any short term losses. The risk appetite is not quantifiable; each
institution will have to make their own decisions about how much risk they are willing to accept at
the point of authorising a project to develop demand led higher skills training. The risk toolkit that
has been produced provides an evidenced analysis of the full scale inherent risk associated with this
type of project, together with evidenced analysis of how much the risk can be reduced, to become
residual risk, through the provision of countermeasures.
The data available from the SWHLSPP, which due to the project being experimental and a “test bed”
for response, enabled inherent probability, impact and proximity to be analysed. The overall
inherent risk rating of a typical new course development project was found to be 579 (medium).
This is probably too high to be within “risk appetite”, since it resulted in 75% running significantly
over time, 18% going significantly over budget, 13% resulting in early closure, 31% had
commissioning employers withdraw during development, 42% had low learner numbers on delivery
and 30% did not achieve their planned delivery mechanisms/accreditation .
However, with appropriate control measures and mitigating actions implemented this overall risk
can be significantly reduced.
Analysis of the data available from the Low Carbon High Skills Project training course development
and other national co-funded project course development, in which appropriate action was put in
place to reduce the probability and impact of risks, the overall risk rating was found to reduce to a
residual rating of 263 (low). This resulted in 7% running overtime, 14% going a small amount over
budget, 0% had employers withdraw during development, 0% early closures, 7% with low learner
numbers and 0% failing to achieve planned delivery mechanisms/accreditation.
Risk Response Management
The risks described assume that no risk countermeasure action has been undertaken; they describe
what may happen in a worst case scenario. However, with appropriate risk reduction management
actions many of the risks can be reduced to within “appetite” prior to authorising and commencing
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the new course development activity. Therefore, where appropriate, risk reduction action has been
suggested that will reduce the probability and impact. A further risk rating is then calculated, giving
a residual risk score.
All of the identified risks should be continually monitored to determine whether the probability
rating is increasing or decreasing dependent upon project influencing factors and progress. As the
project progresses, one or more of the suggested risk indicators may become apparent, that could
be indicative of the probability increasing. Decisions to implement reduction or contingency action
must then be taken to reduce the rating back to within “appetite”. At the point where the
probability increases to maximum then the risk has materialised and it should be transferred to the
project issues register and immediate contingency action taken to deal with it.
To assist with the risk management decision making the evaluated risks contained in the risk register
need to be assessed and monitored dependent upon their priority.
Priority
When prioritising which risks to deal with, at least these three aspects must be considered:

Probability (how likely is it that the risk will happen).

Impact (how serious will it be, if it does happen).

Proximity (how soon it will happen).
Risks that are high impact, high probability and high proximity need to be dealt with before the
unlikely, low impact risks that won’t happen in the early stages of the project.
A series of risk maps can be utilised to aid management decision making when determining which
risks to action in terms of putting countermeasures in place and when.
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Risk Maps
The risk bubble map shown in Figure 2 High Level Risks – Magnitude – Inherent and Residual below
provides a graphic representation of the seven high level risks identified earlier in Table 2 – Seven
High Level Risks. The x axis is derived from the probability of the risk materialising, the y axis the
worst case impact should the risk materialise, the bubble size is derived from the risk rating (the
magnitude). The shading indicates the risk classification. The blue bubbles are the full inherent risk
and the red bubbles indicate how the risk is reduced if the suggested control measures for each of
the contributory detailed risks are put in place.
Figure 2 High Level Risks – Magnitude – Inherent and Residual
To prioritise actions it is necessary to examine each of the seven categories in detail using the
detailed risks contained in the risk register, not just for probability and impact but also to consider
when they might occur (proximity). As an example high level risk number 2, which relates to
strategic and commercial risks, can be graphically shown as probability x proximity x impact
(magnitude) see Figure 3, whereas, Figure 4 shows the risks as impact x probability x risk rating.
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Figure 3 – Strategic and commercial risks proximity, residual and inherent
Figure 4 – Strategic and Commercial Risks Magnitude, Residual and Inherent
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We can see from the above that to prioritise the order of actioning risk control measures:
1. Risk 2a is high risk and could occur during project start up, but, can be brought within risk
appetite by significant reduction in the probability.
2. Risk 2h is a moderate risk and risk 2i is a high risk, both could occur during project initiation
and can be brought within risk appetite by significant reduction in the probability.
3. Risks2g and 2d are moderate risks and both could occur during development of the course
and can be brought within risk appetite by reduction in the probability.
4. Risks 2b, 2c, 2e, 2f are bordering on low risk, could occur during development of the course,
though the implementation of countermeasures does little to reduce the residual risk.
Another consideration at the point of prioritisation may be the cost associated with action taken.
The suggested action to reduce probability, reduce impact and any contingency action that may be
taken should the probability begin to increase, can be found in the template risk register. It should
also be noted that dealing with risks 2a and 2i alone will reduce the aggregate risk associated with
the high level risk 2, though not to the same extent as dealing with 2a, 2h, 2i, 2g and 2d.
Priority could, therefore be assigned as:
Priority
High
Medium
Low
Risk number
2a,2i,2h
2g, 2d
2b, 2c,2e, 2f
Source of risk
Project management, Employer, Employer
External, Organisational
External, Organisational, External, External
Once priority has been assigned and decisions made about which risks require risk management
control action and individual should be assigned responsibility for taking the action (documented on
the risk register) and any re-planning of overall stage plans carried out.
A full set of bubble maps covering all seven high level risk areas can be seen in the ‘Exemplar Risk
Register” on the ‘Bubble maps’ sheet.
Accountability
The success of risk and issues management activity relies on the project board or steering group
accepting full accountability for the management of the project risks together with the project
manager accepting full responsibility for managing risks. This does not mean that the project
manager should be responsible for carrying out all of the mitigating actions, this should be assigned
to a person for whom the mitigating action is most appropriate.

A risk owner is assigned responsibility for monitoring the risk and reporting any changing
status to the project manager. The type of risk indicator that has been documented for
monitoring is a good source of information on which to base the decision about who should
own the risk. For example, the person best placed to monitor the status of risks associated
with changes to HEI strategies and policies, may be a steering group member who is the
most senior HEI manager. Whereas, for some of the delivery risks the most appropriate
person could be someone in the “course registrations” department.
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 A mitigating action owner is assigned responsibility for putting the actions in place and
controlling their effect. For example, in the case of the HEI strategies risks, the reduction
action is linked to communications plans and briefings, therefore, the project manager may
well be the most appropriate person. Whereas, for risks linked to contracting it may be
more appropriate to assign responsibility to the legal/contracting team.
Because of the variety of different people involved with risk monitoring and control it is advisable
that risk status monitoring and action progress is included in all regular progress monitoring and
reporting processes.
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Section 4 - Conclusions
Summary
Comparison of data collected from the early stages of the HLSPP with data collected from later
stages and other similar projects that commenced activity two or three years later, clearly shows
that by acting on the lessons learnt in respect of project risks the probability of success can be
significantly increased.
Key Risk Factors
The key risk factors that have been identified as having a significant effect on the success of a new
course project include:









Only one employer commissioning the new training course;
Employer no funding or part funding development of new or revised materials;
Late delivery of course;
Low level of support within the commissioning employer organisation for the new course ;
Lack of dedicated project manager;
Lack of formal and workable HEI procedures to buy out/free up an academic’s time to
develop new curriculum;
Poor recording of employer skills gaps and course expectations;
Lack of formal contracting;
Lack of provision for marketing and customer relationship management.
The other relevant risk factors that have been identified include:





Lack of learner involvement;
Lack of involvement of Sector Skills Councils/Professional bodies;
No process for drawing up contracts/SLA agreement with employer;
Poor planning when E learning is utilised;
Complexity of validation not accounted for.
Key success factors
The key success factors, or action taken that significantly reduced the risk include:





Courses commissioned by or involving more than one employer.
A well argued business case and fully costed proposal made to the employer and agreed in
writing.
Employers funding or part funding development costs.
Formal internal policies and working procedures for carrying out ONA, TNA and course
specification.
Formal policies and working procedures for enabling academics to engage with demand led
course development and delivery.
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



Appointment of an experienced project manager to control the whole life cycle.
Alignment of new course subject matter with HEI/FEC areas of expertise and growth.
Adoption of a formal project management methodology and techniques, such as Prince2 or
similar to plan, monitor and control quality, budget, progress, communications, risks and
issues, supplier management and contracting.
Well planned sales and marketing plan, together with benefits realisation that includes all
stakeholders internal (faculties and departments) and external (SSCs, trade associations,
partner institutions).
Irrelevant factors
The following factors appeared to have little or no affect on the success of a new course project:



Length of provision
Level of provision
Whether the course material/curriculum was bespoke or modification of existing.
Quotes
The following is a list of quotations relating to project risks and successes, from the institutions that
provided data for the analysis of risk.
Risks
“The main contact in the employer company was made redundant and new contact had to be identified, once the
company was able to refocus onto the project”.
“Very little activity on course development in first half of 2009, due to the early retirement of the main
contributor. This was the biggest cause of the delay to the project, as it was not possible to replace him due to
the recession. This situation has now improved and the programme is moving as originally planned – but with
approximately an eight month delay in timescales.”
“Accredited training is expensive in terms of academic time and involvement, and it may not in the end be taken
up once the most immediate learning needs have been met and the staff concerned returned to the workplace”.
“Staffing can be volatile particularly if academics are only part time and liable to have various commitments”.
“Allocation of IP rights - using multiple training providers to develop and deliver learning materials led to
protracted discussions over materials and IP rights which have taken time to resolve. Lesson learnt is that it is
better to start from day 1 with a contractual position on IP rights and allocation and ownership of them”.
“It would seem that when people undertake a Training Needs Analysis their initial responses are not always the
most accurate. There is a tendency for people to say what they think the researcher wants to hear and to answer
from a slightly idealised perspective. When given the results and the implications of committing to the sort of
project the results suggest is needed i.e. business study in this instance, people will then be more honest and vocal
in their response. So TNA is possibly best done in segments to allow for false starts, revisions and a compatible
and communicative relationship between researcher and subject to develop”.
“Change of management structure – left a power vacuum in the organisation and no buffer against a very single
focussed director. This slowed the pace of the project and made communications difficult”.
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“Employer engagement was an issue throughout the project, some Project Steering Group members failed to
attend the second meeting and therefore did not make full use of opportunities to input into the modules’
development. More steering group meetings and regular updates would help to maintain employer engagement.
Also appointing employer representative as Chair of Project Steering Group might help with sense of employer
ownership and buy-in.”
“Long time to get a formal partner agreement signed by key partners. In the early months this compromised the
resource and time available to spend on the core curriculum development objectives of the project. To address
partner buy-in at an early stage: include an initial propensity to partner workshop, in which all partners mutually
establish their expectations, delineate resource issues and risks and institutional-level contingencies.”
“Access to the in-house course materials was delayed by 4 months. Due to the innovative nature of the project,
no University legal agreement templates were available. Time and resource had to spent on developing a tripartide agreement to define the role and responsibilities of the employer, institution and delivery partner. The
need for contractual agreements needs to be considered at an early stage in the project”.
“The length of time to come to validation event from the initial consideration has taken over 6 months and
brought it into the window of end of year workload (marking and degree show) for the academic staff involved in
the project – this has caused further delays and impacted on staff time availability for this project.”
“Whilst adequate budget allocation was made to buy out the specialist academic time in reality it was incredibly
difficult to find and attract a specialist consultant to backfill. This led to significant time delays that affected the
critical paths of the project”.
“The two modules were planned as 10 credit stand alone, this was not achieved because the delivery time and
difficulty associated with validating from scratch made it unviable. We opted to incorporate them with an
existing programme so that we could use a permitted change route instead”.
Benefits
“This project has brought substantial benefits in the form of an ongoing employer engagement project which now
attracts co-funded student numbers. The project has also kept the HEI in close contact with a major player in the
industry”.
“Significant enhancement to reputation of HEI in terms of employer engagement and dealing with real issues”.
“Significant relationship developed between BPC Applied Arts dept and Poole Pottery with future work placement
and employment likely, mutual publicity potential and specialist teaching provision to BPC by master potter.”
“Benefits to the University were seen to be better engagement with local organisations involved in management
and planning of the marine and coastal environment; improvement of the knowledge locally and in the university;
developing a reputation as an expert organisation in this area.”
“One of the end results of this project is a very focussed and portable programme able to deliver great
improvements to manufacturing and processing business organisations”.
“Establishes the institution as a leader in the field of air quality and carbon management training. Creating
employer engagement opportunities in the region and widening the network of external partners. Supporting the
Centre’s research and reputation in the fields of air quality and carbon management. Supporting the Centre’s
research and reputation in the fields of air quality and carbon management”.
“Engagement with this project had given us the opportunity to address our key themes embedded within the
college’s strategic plan. Which are explicitly: Innovation, Partnership, Quality and Agility”.
“The project has provided the University with an opportunity to develop a unique model for the delivery of bite
sized chunks of learning to meet a wide industrial base. It has also provided other departments within the
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University with a model for the development of curriculum and assessment which varies from the standard format
and which can respond to the training needs of employers”.
“The project has enabled the institution to understand, develop and embrace a much more flexible way to engage
with and deliver training to local businesses. This has increased the number of businesses that we engage with
and has increased the take up of HE level learning accordingly. Whilst we did not meet the intended outputs in
terms of delivering stand alone accredited modules to learners, the material and modules have been absorbed
into existing programmes and offered as options, which in turn has made the mainstream programme more
flexible and attractive to learners.”
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Appendix 1 – Data Collection Tool
Data collection tool - Demand led programme development
Programme details, factors and drivers
Strategic Aims
and success
factors that are
applicable to
your reasons for
undertaking
new demand let
programme
development
Programme
factors
Output effects
If Employer
dropped out of
development
Engagement
factors
Factors that relate to the new programme being developed and/or delivered
Revenue generation from initial delivery of programme
Revenue generation from subsequent delivery of programme
Full cost recovery of development costs
Integration of developed material into other HEI programmes
Use of employer contact for other activities such as KTP/research/placements
Employer satisfaction with delivered programme
Learner satisfaction with delivered programme
Collaboration with other HEIs and/or professional bodies
Increasing reputation with other employers and trade associations
Increasing the engagement of academics with industry
Building the recognition for specific expertise within the HEI community
Encouraging first time HEI learners to engage more fully with other programmes of learning
offered by your institution
Planned length of development time (man-hours) if known
Planned length of development time - output time in weeks (start to ready for delivery)
Total budget for development of programme
Development work funded by employer
Development work internally funded by HEI
Development work funded through other funding source - please state what
Bespoke development
Revised material/curriculum from existing training
Off the shelf training with bespoke delivery mechanism
Off the shelf training with existing delivery mechanism
Level of provision (notional or actual)
Short course/CPD accredited (HEI) (please specify length and level in comments)
Short course/CPD professional body accreditation (please specify Professional body, length
and level in comments)
Short course/CPD unaccredited (please specify length in comments)
Small programme accredited (please specify type, length and level in comments)
Whole programme accredited (please specify type, length and level in comments)
Total cost of delivering programme/training
Price charged per learner (regardless of source of funds)
Planned number of learners on first cohort
Overspend on budget - please show as a percentage over budget
Over time - please show as a percentage over time
Under spend on budget - please insert the percentage under budget
Under time - please insert the percentage under time
Low learner numbers on first delivery - please show as percentage under
High learner number on delivery - please show as percentage over
No repeat business
Not completed/closed early
Planned accreditation not achieved
Poor learner feedback
Poor employer satisfaction
Learners completed content but not assessment/accreditation
Development costs not recovered
Delivery costs not recovered
Employer withdrew input into programme
Impact score
on 1-5 scale
Comments
Contingency action taken to replace
Single employer - SME (5 - 250 employees) please state number of employees in the
comments column)
Single employer - large
No employer involved
Sector Skills Council (SSC) involved - please state which in the comments column
Professional body or trade association involved - please state which in the comments
column
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Employer funding development
Delivery funded by employer
Delivery funded by other source (i.e. Free to learner and employer) Please state source of
funding
Delivery funded by learner
Full ONA and TNA carried out with employer(s) prior to commencing development work
Clear Job/role descriptions/training plans for advisors
Learners consulted during ONA/TNA
Full proposal provided to and signed by employer ahead of development
Multiple providers/partners involved
Subject area/business sector (e.g. Creative industries, construction, engineering) please use
the comments section to add
Is this sector currently an area of economic growth?
Clear internal strategy/process for academics to contribute to this type of programme
development
Is this subject area a current area of expertise for your HEI?
Risks and issues that affected programme
1. Identify each of the following risks/issues that may have materialised during development of the programme,
2. then consider the impact of the factors that caused or contributed to the risk - please score on a scale of 1 to 5 (low is 1 and 5 is high)
depending upon how much you consider it to have impacted
3. Please use the comments column to explain further the reasons or contributory factors.
4. If the risk/issue in column A was not applicable to the programme please leave the corresponding column C answers blank
Development of material ready for delivery
Risk that
materialised
Factors that caused or contributed to the risk materialising
Score 1-5
Funding for
External funding support changed due to strategic policy changes
development
Internal funding support changed due to strategic policy changes
reduced or
withdrawn
Employer funding changed due to strategic changes
Employer
HEI has no processes for maintaining employer engagement during development
changed
Employer has no prior involvement with HE
support for
Employer sector market not buoyant
programme
Declining Company profit/turnover
Employer goes out of business
Changes to employer internal training strategies
Changes to employer staffing structure
No approval from senior management to engage with curriculum development
No approval from senior management to commit learners to final programme
Employer felt out of the process
Employer unclear about delivery
Inadequate business case
Other - please explain
Development
Curriculum material being sourced from another provider - IPR issues
over ran
Use of other provider - HEI approval issues
planned
Curriculum material being sourced from Employer
timescale
More than one provider developing material (contract issues)
More than one provider developing material (IRP issues)
HEI resources (academic) not available as planned - please state reason e.g. Unable to buy out
academic due to....
Partner resources not available as planned - please state reason
Project management not available as planned
HEI restructuring with no staffing contingency planned
Physical resources not available
E Learning, software/hardware issues
Increase curriculum scope (not originally planned)
Difficulty getting employer input
Changed delivery requirements
HEI strategy unclear
Poor initial time planning
Detailed ONA/TNA process unclear
Other - please explain
Development
No original financial provision to buy out academic time
overspend on
Consultants had to be used to stay in timescale
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budget
Employer driven increase to curriculum content
Employer driven changes to delivery mechanism
E learning software costs underestimated
Poor initial financial planning
Other - please explain
Curriculum
TNA inaccurate (Employer's process)
misaligned with
TNA inaccurate (HEI process) - please explain what, e.g. Incorrect level, content, size and why,
employer
e.g. Insufficient academic input
demand Employer(s) did not maintain input via steering group
requiring
Employer(s) did not maintain input via direct curriculum input
revision of
Changed employer requirements - recession linked
original planned
Initial ONA provided as business case inaccurate due to quality of information - please explain
scope or failure
what might have contributed
of programme
Initial ONA provided as business case inaccurate due to quantity of information - please
explain
Other - please explain
Delivery
ONA inaccurate
mechanism
Resource availability
misaligned with
More effective methods identified and agreed
employer
Employer agreement not initially provided
demand
Other - please explain
Planned
No process to approve bite size learning
accreditation
Unable to meet professional body's requirements
not achieved
Final curriculum/assessment did not meet HEI quality requirements - please clarify, e.g. Level,
size, content
Insufficient funding planned into budget
Employer pressure to not accredit
Other - please explain
Risks and issues that affected successful delivery of programme
Low learner
No contracted learners with employers at outset of development
numbers on first Marketing to other employers not effective within timescale
delivery
Late delivery leading to employer loss
Employer unable to fund (or individual for sole trader/self employed)
Employer will not release learners to attend - please explain why
Learners reluctant to register (where employer support is present)
HEI registration process too slow
Venue not attractive
Other - please explain
Learners did not
No clear APEL policy and process
complete
Learners did not have sufficient time to complete assessment (employer cause)
programme
Assessment not completed due to insufficient opportunity (WBL)
Prior learning levels
Misalignment between delivery and assessment (staff)
Cost of assessment
No perceived value in assessment
Other - please explain
Delivery costs
Pricing model incorrect
not recovered
Contract issue with employer
Run as a loss leader
Insufficient places sold
Other - please explain
Delivery not
One employer specific -so further investment necessary to revise to more generic
repeated
Marketing not properly planned or executed
Changed industry requirements
Loss of employer contact due to staff changes in employer
Loss of employer contact due to staff changes in HEI
No clear indication of who owns programme/ where it sits within HEI faculties
Predicted employer repeat delivery failed - please explain why
HEI no interest
Other - please explain
Success Factors
Please rate how successful you consider this programme to have been
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If 4 or 5, is this
success
attributable to
any of the
following
factors?
If 1, 2, 3, do you
consider any of
these would
have made
success more
easily
achievable
Clear process for establishing how an employer will be kept engaged in the development
Clear process for communicating with the employer(s)
Clear process for initial ONA with an employer
Clear process for negotiating level of learning
Clear process for negotiating size of learning
Clear process for negotiating type of assessment
Detailed business case and proposal agreed by employer(s) up front
Trained staff acting as advisors to employers during initial engagement and ONA
Trained staff undertaking detailed TNA
Alignment of programme content with HEI subject expertise
Clear policy for engaging academic resources in development/delivery of demand led
provision
Clear costing model for development
Clear costing model for delivery
Dedicated project manager controlling development
Clear marketing plans
Involvement of Sector Skills Council(s)
Involvement of trade associations/employer networks
Academic champion
Clear process for establishing contracts with employer(s) and other partners
Clear process for approving other providers
Effective due diligence on employer status/situation
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Appendix 2 – Example of first stage cause-consequence mapping
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Appendix 3 – Example of early analysis of impact and probability
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Appendix 4 – Sample of inherent probability data
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Appendix 5 – Glossary of Risk Terms
Risk Term
Meaning
Risk
Uncertainty of outcome, whether positive opportunity or negative threat
Risk Framework
The structure and methodology designed to be implemented across Aviva to ensure risk
management is performed consistently across the Group.
The uncertainty of outcome that exists prior to the application of any mitigating actions or controls
– i.e. what could happen if we do nothing.
The uncertainty of outcome that exists after the application of current mitigation actions and
controls – i.e. where is the risk now, taking into account the controls currently in place (but not any
planned future actions)
Uncertainty associated with internal processes, people, systems, or external events. i.e. how we do
things and the impact on us of external changes
Uncertain financial impact due to changes in benefits realisation or future cash flows. i.e. is the new
course worth what we expect and will we get the investment income we’re planning for?
Uncertainty relating to impacts on our reputation
Inherent Risk
Residual Risk
Operational Risk
Financial Risk
Reputational/
Educational Risk
Emerging Risk
Issue
Events or changes which could happen in the future which we perceive might have a significant
impact – often not fully understood in terms of impact or probability, but which require monitoring
to enable us to prepare and respond appropriately.
A holistic view of the key risks that need to be managed with a
given business area. It should include all the major inherent risks and currently topical risks along
with risks which, whilst still developing or speculative and difficult to quantify or assess, could
become material (i.e. emerging risks). The risk environment should be derived through discussions
with senior management who will own the risks.
The Business Area Risk Report should include:

A bubble map showing all the risks in the Risk environment and a second map with current
high profile risks

Narrative explaining the positioning of the high profile risks (i.e. which element of the scales
have been used)

Management’s view of whether the risks are within tolerance and, if not, what movement is
required

A summary of the status of Policies owned in that business area with rationale. (incorporating
supporting Information on audit issues, breaches and similar (e.g. first line assurance)

Clearly defined actions with an owner and time scale
What exists when an uncertain outcome actually happens (i.e. a risk crystallises)
Crystallise
The process of an outcome ceasing to be uncertain and becoming an issue.
Risk Register
Risk Report
Key Risk Indicator:
Lead
Lag
Policies
Identification
Preventative
Control
An indicator (i.e. measure, ratio or assessment) that gives early warning that a business objective
may not be achieved (at some time in the future). These can include:
- Changes in the external risk environment
- Impact of future internal change initiatives
An indicator that measures the achievement of a business objective. These can include:
- Variances from plan / target
- Performance (including survey results) compared to target
- Level of losses, errors or omissions
Documents describing the principles and practices we must follow in managing governing and
administrating the business.
Process for discovering and documenting the risks faced.
A process that stops a risk from crystallising into an issue.
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Risk Term
Meaning
Detective Control
A process that identifies when a risk has crystallised in order for corrective action to be taken.
Control adequacy
Assessment of whether the control(s) are appropriately designed to mitigate the risk – i.e. if all the
controls currently in place are operating effectively, will the risk be managed to within
appetite/tolerance?
Assessment of whether a given control is operating as it is designed to.
Control
Effectiveness
Loss Event
Impact
Any issue that occurs that results in avoidable cost or reputational damage. These should be
investigated and action taken to prevent repeat occurrences.
A measure of how much risk we are prepared to take i.e. what is an acceptable level of risk for us?
Risk Appetite (high level Group statements)
Tolerance (lower level management discretion to accept / mitigate risks)
A conscious decision, considering all the pertinent facts, not to take any further action to mitigate a
risk.
Quantification of the size of the risk – i.e. how much damage could it do ?
Probability
How likely is the risk to actually occur (crystallise)
Risk
Appetite/tolerance
Risk Acceptance
Four T’s:
Treat (Reduce)
Tolerate (Accept)
Terminate (Avoid)
Transfer (Transfer)
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Final version 31/10/11
To put in place a containment or contingent control
To accept there is an amount of risk in the activity but within tolerance / appetite
The activity is too risky, we need to terminate or avoid the activity
Transfer the risk to a 3rd party, e.g.
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