Risk is usually applied to negative events, things that might go wrong. Hopefully there are things that we can do, systems that we can put into place that will prevent bad things from happening, or at least if bad things happen, will minimize the likelihood of it being a total catastrophe. Some of these things are obvious, some of them are not so obvious and might sound like common sense, but there is a lot of science to back this up. This science is called risk management. It is a whole profession and may take you a few years to get there. The good news is it is a gradual process, and all we need to know is that it can be a handy tool for our trade and achievable by changing our working habits.

1. Critical RoleCritical Role of Risk Assessmentof Risk Assessment
in Internationalin International ProjectsProjects
IACCM Russia Member MeetingIACCM Russia Member Meeting
Vyacheslav Guzovsky
April 2013

2. Hello, we’re in Moscow, Russia.
Today is 2013 04 05
You Are The Hope for Your Companies.
The subject is: Critical Role of Risk Assessment in International Projects.
Constant Change vs. Status Q

3. Risk or Insanity?
Constant ChangeStatusQ

4. Risk or Insanity?
Status QConstantChange

5. Hello,I’mVyacheslavGuzovsky.
We’reinMoscow,Russia.
Todayis20130405
YouAreTheHopeforYourCompanies.
Thesubjectis:CriticalRoleofRiskAssessmentinInternationalProjects.
ConstantChangevs.StatusQ
?

6. Contents
• Introduction
• Role of Statistical Insights
• Project Development and Execution Risk Process
• Interface Process
• Mitigation Process
• Risk Reporting
• Risk Management Process References

7. Terms Included in ISO Guide 73
• RISK AVOIDANCE
• RISK CRITERIA
• RISK DESCRIPTION
• RISK EVALUATION
• RISK FINANCING
• RISK IDENTIFICATION
• RISK MANAGEMENT
• RISK MANAGEMENT AUDIT
• RISK MANAGEMENT FRAMEWORK
• RISK MANAGEMENT PLAN
• RISK MANAGEMENT POLICY
• RISK MANAGEMENT PROCESS
• RISK MATRIX
• RISK OWNER
• RISK PERCEPTION
• RISK PROFILE
• RISK REGISTER
• RISK REPORTING
• RISK RETENTION
• RISK SHARING
• RISK SOURCE
• RISK TOLERANCE
• RISK TREATMENT
• STAKEHOLDER
• VULNERABILITY
• COMMUNICATION & CONSULTATION
• CONSEQUENCE
• CONTROL
• ESTABLISHING THE CONTEXT
• EVENT
• EXPOSURE
• EXTERNAL CONTEXT
• FREQUENCY
• HAZARD
• INTERNAL CONTEXT
• LEVEL OF RISK
• LIKELIHOOD
• MONITORING
• PROBABILITY
• RESIDUAL RISKS
• RESILIENCE
• REVIEW
• RISK
• RISK ACCEPTANCE
• RISK AGGREGATION
• RISK ANALYSIS
• RISK APPETITE
• RISK ASSESSMENT
• RISK ATTITUDE
• RISK AVERSION

8. Introduction

9. IACCM Members Survey

10. International Contracts: Areas of Concern
A client's risk management program for an international project comprises many elements, the most familiar of which
are :
• obtaining commercial and political risk insurance available;
• currency risk hedging;
• country risk analysis.
In some projects, there will be no question that the host-country government will guarantee the obligations of utility
offtaker under the project agreements and the developers' and lenders' analysis in this case will be mostly one of
sovereign risk. In projects without sovereign guarantees the terms of the project agreements themselves take on
even greater importance. Further, there are certain project risks that can't necessarily be insured against or are on
too operational level to be part of a risk-management program. In these cases, the provisions of the basic project
agreements will be the client's bulwark against risk.
This presentation will help to identify certain number of risks that need to be addressed and guarded against in the
project agreements and will focus on the contractual terms that will afford the clients and the contractors the greatest
measure of protection.

11. Risk: Effect of Uncertainty on Objectives
• An effect is a deviation from the expected – positive or negative.
• Objectives can have different aspects (such as financial, health and
safety, and environmental goals) and can apply at different levels,
such as strategic, organization-wide, project, product and process).
• Risk is often characterized by reference to potential events and
consequences, or a combination of these.
• Risk is often expressed in terms of a combination of these
consequences of an event (including changes in circumstances) and
the associated likelihood of occurrence.
• Uncertainty is the state, even partial, of deficiency of information
related to, understanding or knowledge of, an event, its
consequence, or likelihood.

12. Uncertainty: Likelihoods & Outcomes

13. Indeterminacy

14. Role of Statistical Insights
Where a risk assessment model is developed, some of the outcomes
will be used to estimate the efficiency of the model itself taking into
account that out of sample data can be used.

15. Misconceptions
• Focus is made on mechanisms and methods of risk management.
• Human side is frequently ignored.
• Risk management process identifies and mitigates bad things that can happen.
• Risk management is about counting, tracking and closing risk items.
Solutions:
• Accepting the fact that bad things happen.
• Awareness of the adverse impact of these bad things.
• Making sure bad things do not impact the customers' ability to achieve their goal.
Summary:
• A program with minimal risk is a program that is not going to make much
difference in the world!
• Risk management is not only about checklists and procedures.
• The real risk handling happens when we are left with the need to decide and the
need to act.
• Failure to trust is an unacceptably risky strategy.

16. Risk Management System

17. Risk Management Approach
Risk Management should:
• Create value
• Be an integral part of organisational process
• Be part of decision making
• Explicitly address uncertainty
• Be systematic and structured
• Be based on the best available information
• Be tailored
• Take into account human factors
• Be transparent and inclusive
• Be dynamic, iterative and responsive to change
• Be capable of continual improvement and enhancement

18. Risk Management Role in Corporate Governance

19. Risk Management - OEMS

20. Organisational Risk Criteria

21. Operational Risk Management Cycle

22. Risk Management Process Overview

23. Risk Management Process in Detail

24. Interface Process
Areas of concern:
• Distortions of risk perception.
• Social amplification of risk.
• Ripple effect (secondary social or economic impact).
Solutions:
• Developing detailed internal and external interface procedures for
each project.
• Project execution risk prioritization.
• Using single source data that can be accessed from any
geographical location.
• Application of integrated web-accessed database systems for
recording, monitoring and reporting project execution risks.

25. Internal Interface Process Flowchart

26. External Interface Process Flowchart

27. Project Development and Execution Risk Definitions

28. Managing New Risks
•Requester (any member of the Project Team) identifies a proposed new risk and forwards it to the Project's Delivery Team
most impacted by the risk.
•Periodic Risk Creation Workshops at the Project Leadership Team or technical level can create a series of new risks that are
uploaded to the web-accessed database.
•The Delivery Team Manager, with assistance from the delivery team, defines the risk, assigns a Risk Level and a Risk Owner
(Subject Matter Expert).
•The Risk Owner develops a series of Action Plans (Mitigation Milestones) and a Management Strategy (high level overview of
the mitigation process).
The Delivery Team Manager reviews and approves a Risk Mitigation Plan by either of the following:
•Risk mitigation plans with a Risk Level 1 - 5 are approved verbally or in writing by the Project Leadership Team following
discussion of the mitigation plan at a Project Leadership Team meeting.
•Risk mitigation plans with a Risk Level 6 - 10 are approved by the Delivery Team Manager with the support of the delivery
team.
•Once the mitigation plan has been approved by one of the two above referenced processes the Delivery Team Manager
enters a "Chance of Success" rating in the database and moves the risk to the "Action Plan Approved" status.
The Action Owner works through the mitigation process and then closes out action items as completed. The Delivery Team
Manager, with the delivery teams, re-ranks the risk level, determines if a residual risk remains, and prepares a "Close out
Summary". The Project Risk Coordinator in conjunction with the appropriate Delivery Team Manager will review all risks in the
"Closed Project Risks" area to determine if they should be placed in closed status by the system administrator.

29. Risk Prioritization Matrix

30. Major Risks in Translation Industry
• Market risks.
• Financial risks.
• Project risks.
• Production process risks.
• Product risks.

31. Risk Profile
• Risk assessment can be defined as the overall process of risk analysis and risk evaluation.
• Risk analysis is performed through risk identification, risk description and risk estimation.
• Risk identification helps the role players to find out their exposure to uncertainty. To successfully identify possible
risks, role players need to have professional knowledge of their job, be aware of the market conditions and
requirements, and know the legal, social, political and cultural environment in which they are working.
• Risk description is meant to display the identified risks in a structured format which explains the name, scope,
nature, and significance of the risk along with the role player's risk tolerance and control mechanism.
• Risk estimation is made in terms of the probability of occurrence and the possible consequence of the risks. Role
players need to use the result of the risk analysis process to produce a risk profile which gives a significance rating
to each risk and provides a tool for prioritizing risk treatment efforts.
• Risk evaluation is used to make decisions about the significance of risks and whether each specific risk should be
accepted or treated. The decision needs to be made based on the risk criteria which can include associated costs
and benefits, and regulatory requirements of dealing with each risk.
• Risk reporting and communication needs to be done at two levels: internal and external reporting.

32. Risk Management Strategies in Translation
• Risk avoidance (avoiding or eliminating the risk): during the process of translation, you come
across
a complex sentence and there is the fear that some part of the meaning implicit in the original text might
be lost or the reader would not be able to understand the meaning if the sentence is translated as a
complex sentence. Therefore, you decide to avoid the risk by breaking the original sentence and
transforming it into a complex sentence. Possible reward: avoiding misunderstanding, or achieving
communication! We call it "explicitation" or something that's being explained. However, we have to keep
in mind that explicitation is not exclusive to risk avoidance and may be used as a risk reduction strategy
in another context.
• Risk reduction/mitigation (reducing or mitigating the risk): while translating, you come across a
term which doesn’t have any equivalence in the target language and its translation turns into an
awkward
phrase. If you want to reduce the risk of miscommunication, you may resort to transliteration. Possible
reward: achieving communication!
• Risk transfer (outsourcing or transferring the risk): you have translated a book but you are not sure
About the market response and don’t want to budget for the publication. Therefore you can transfer the
risk by managing to convince a publishing company to publish the translation and pay the publication
expenses and in return you revoke your request for royalty. Possible reward: you get published!
• Risk retention (accepting the risk and budgeting for it): the publication company you work with,
does not accept to pay for the publication of a book you have chosen to translate or have already
translated; however for some reason, you are determined to translate and publish the book and decide
to take the risk and pay for the publication expenses. Possible reward: self satisfaction! Also you get

33. Case Scenario: Translation Project Description

34. Case Scenario: Financial Risk Profile

35. Case Scenario: Financial Risk Management Model

36. International Contracts: Effective Risk Mitigation Tools
• Payment for making capacity available.
• ‘Relief event’ technique applied in force majeure clauses for
allocating risk.
• Allocation of risk for uninsurable force majeure events.
• Shifting the payment risk analysis to the bank by using letters
of credit as primary payment vehicle.
• Escrowing of customer payments.
• Taking early environmental liabilities analysis.
• Managing default and step-in risks (direct agreements).
• Effective dispute resolution enforcement.

37. You Don’t Have to Manage Risk!
SURVIVAL IS NOT COMPULSORY

38. The greatest risk of all
is to take no risk at all!

39. Questions & Answers

40. Risk Management Process References
1. Alexander, Carol and Sheedy, Elizabeth. The Professional Risk Managers' Handbook. A Comprehensive Guide to Current
Theory and Best Practices (1st ed.). Wilmington, DE: PRMIA Publications (2004)
2. Baker, Mona. Corpus Linguistics and Translation Studies: Implications and Applications. Amsterdam & Philadelphia:
John Benjamins (1996)
3. Bernstein, Peter L. Against the gods: the remarkable story of risk. New York: John Wiley & Sons (1996)
4. Construction Industry Institute Website and Publications, The University of Texas at Austin
5. Douglas, Mary. Risk Acceptability According to the Social Sciences. Russel Sage Foundation (1985)
6. Fischhoff, Baruch. Acceptable risk. New York: Cambridge University Press (1981)
7. Frenkel, Michael. Risk management: challenge and opportunity. Berlin; New York: Springer (2000)
8. Gorrod, Martin. Risk Management Systems: Technology Trends (Finance & Capital Markets). Palgrave Macmillan (2003)
9. Hopkin, Paul. Fundamentals of Risk Management (2nd ed.). Kogan-Page (2012)
10. Hunt, Benjamin. Timid corporation: why business is terrified of taking risk. New York: J.Wiley (2003)
11. Institute of Risk Management/AIRMIC/ALARM. A structured approach to Enterprise Risk Management (ERM) and the
requirements of ISO 31000
12. International Association for Contract & Commercial Management, Website and Publications
13. ISO/DIS 31000 (2009). Risk management - Principles and guidelines on implementation. International Organization for
Standardization
14. ISO/IEC Guide 73:2009 (2009). Risk management - Vocabulary. International Organization for Standardization
15. Kenny, M. Introducing Corpora in Translation Studies. London/New York: Routledge (1991)
16. Kliem Ralph L. Reducing project risk. Aldershot, Hampshire; Brookfield, VT: Gower (1997)
17. Knight, Kevin W. The Pivotal Definition. An Interactive Workshop on the New Standards for the Management of Risk.
Better Practice 2012 Conference
18. Mayo, Deborah G. Acceptable evidence: science and values in risk management. New York: Oxford University
Press (1991)
19. Project Management Institute, Website and Publications
20. Ritzer, George. Globalization: The Essentials. NY: John Wiley & Sons (2011)

42. Risk Culture
The crisis played a significant role in the failure of key businesses, declines in
consumer wealth estimated in trillions of US dollars, and a downturn in
economic activity leading to the global recession and contributing to the
European sovereign-debt crisis. Problems with risk culture are often blamed
for organisational difficulties but, until now, there was very little practical advice
around on what to do about it.

43. What is Risk Culture?
A-B-C approach to understanding the risk culture:
• The Culture of a group arises from the repeated Behaviour of its members.
• The Behaviour of the group and its constituent individuals is shaped by their underlying
Attitudes.
• Both Behaviour and Attitudes are influenced by the prevailing Culture of the group.
Culture is more than a statement of values - it relates to how these translate into concrete
actions.
Risk culture refines the concept of organisational culture to focus particularly on the collective
ability to manage risk, but the wider organisational culture itself is an active backdrop
determining, and itself influenced by, risk culture.

44. Risk Culture: Case Study
Some key differences between national cultures are amplified by
the uncertain nature of risk. For example, in some cultures, 'yes'
means best efforts to meet a plan rather than the certainty of event
it means to others. Equally, in Eastern cultures, there is also a far
more developed sense of shame than there is in Western cultures
and this can have a significant effect on both managing and
reporting risks, with good and bad points attributable for each
cultural type.

45. Risk Culture: What Can We Do?
Although there is no single right way to measure risk
culture, there are a number of diagnostic tools available
that can be used to indicate and then track the risk
culture in an organisation. The mix of tools and the
order of their deployment will depend on the context of
the organisation and its risk management maturity.

47. Risk Management Tools
In the field of engineering where risks and hazards of technical systems are
considered, risk management has its roots in industries with high technological
complexity together with high demand in matters of safety, e.g. the nuclear,
chemical, aerospace and electronic industries. The purpose of risk assessment is to
provide information needed to support risk management in decision-making. Risk
assessment involves appreciating the risk associated with the operation of a system
through an analysis (risk analysis) and comparing it with present acceptability and
tolerance limits (risk evaluation). If the risk is unacceptable, risk reduction has to be
considered along with analysis of possibly new hazardous events.

48. Iterative Risk Management Process
A complete description of risk is an iterative process, usually beginning with the
application of qualitative methods and progressing towards quantitative if
necessary and appropriate. If a quantitative analysis of risk is to be carried out,
a probabilistic model of the system must be established. When the model plus
the data are established, the calculations can begin to estimate the system risk
and identify the critical components and events. The calculations can be carried
out through analytical methods or the Monte Carlo simulation.

49. Risk Analysis Process
Risk analysis is the systematic use of available information
to identify hazards and to estimate the risk of individuals or
populations, property or the environment. The purpose of
risk analysis is to define the system in mind, to identify
possible hazards and to estimate the risks.

50. Risk Analysis: Induction & Deduction Methods
• Preliminary Hazard Analysis (PHA) - coarse inductive and qualitative method used at an early
stage of a project to identify possible hazards. When necessary, the result from the analysis can
be used for more detailed analysis using methods such as Failure Modes and Effect Analysis
(FMEA), Failure Modes, Effects and Criticality Analysis (FMECA) and Hazard and Operability
Analysis (HAZOP).
• Checklists are one of the most useful tools of hazard identification, since they pass on experience
gathered during an extended period of time. They are generally applicable to management
systems and projects throughout all stages and should be used as a final check that nothing has
been neglected.
• Hazard and Operability Analysis (HAZOP) is a qualitative and inductive method to systematically
analyse how deviations in a system can arise, as well as an analysis of the risk potential of these
deviations.
• Failure Modes and Effect Analysis (FMEA) is one of the oldest and most frequently used
methods. It is an inductive, mostly qualitative analysis method used to reveal possible failures and
predict effects of these failures on the system.
• Failure Modes, Effects and Criticality Analysis (FMECA) is an enhancement of FMEA where a
criticality analysis is performed. Criticality is a function of the severity of the effect and the
frequency it is expected to occur at. The criticality analysis involves assigning a frequency to each
failure mode and a severity to each failure effect.

51. Event Tree Analysis
• Event tree analysis (ETA) is an inductive and qualitative method with the
possibility to be used quantitatively. One starts from a real or hypotetical initiating
event, identifies all the possible consequences and estimates their probability of
occurence. The events and their probabilities are visualised in a tree-like
structure. The question to be answered in the establishment of an event tree is:
what happens if...? Advantages with ETA are the possibility to include human
error in the analysis and the method is well suited for analysis of safety systems
and emergency routines to prevent accident event sequences.

52. Fault Tree Analysis
• Fault Tree Analysis (FTA) is a deductive logical diagram that shows the
relationship between system failure, a specific undesirable event in the
system, and failure of the system's components.
• The question to be answered in the establishment of a fault tree is: What
causes the undesirable event?
• FTA advantages are that the qualitative analysis gives a clear picture of the
accident event sequences through the logical diagram and the possibility to
evaluate the tree quantitatively to find the probability of the top event, FTA is
a method for both hazard identification and frequency analysis.

53. Risk Estimation Process
• Risk estimation - process used to produce a measure of the level of risks being analysed.
First, the possible causes of the hazard are analysed to determine the frequency of occurence, its
duration and its nature (quantity, composition, release characteristics, etc.). Secondly, the
consequences of the hazard's realisation are analysed, and involves estimating the severity of the
consequences associated with the hazard. Finally, the risk is calculated.
Three approaches are commonly employed to estimate event frequency:
• using relevant historical data;
• deriving event frequencies using analytical or simulation techniques;
• using expert judgement.
All of these techniques may be used individually or jointly.