New Zealand

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  • Service: Advisory, Risk Consulting, Internal Audit, Risk & Compliance Services, Risk & Compliance
  • Type: Business and industry issue
  • Date: 16/09/2011

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Souella Cumming

Souella Cumming

Partner - Risk & Compliance, Government.

+64 4 816 4519

Risk Consulting

Risk management should be embedded within the culture of the organisation so that everyone is focused on managing and optimising risk.

The main event – managing the risk of RWC 2011 

Souella Cumming, Anthony Crummy

Souella Cumming, Partner, Risk and Compliance, KPMG

 

The risk management framework applied to RWC 2011 provides some interesting insights and lessons for understanding and managing of risk from a governance perspective.

 

95,000 plus international visitors, our challenging geography and the limitations of our infrastructure - little wonder that risk management and contingency planning had to play such a significant role in the preparation for Rugby World Cup 2011.

 

    Rugby New Zealand 2011 recognised right from the outset the importance of establishing a robust risk framework and this has been one of the enduring features of the planning so far.

     

    A leading practice framework was adopted early on, based on the Australian and New Zealand Standard, AS/NZ 4360 (now ISO 31000 Risk Management Standard) . This has helped shape the approach to risk management for all aspects of the Tournament. All the parties involved, the IRB, RNZ 2011 and the many Government agencies involved, used the same framework and this soon allowed a whole-of-Tournament view on risk to be developed. 
     

    So, what are some of the insights from a governance perspective?  Well, broadly they fall into three categories:

     

     

    Single view of risk

    Most organisations have a wide range of stakeholders with differing views of risk and how it should best be managed. For RWC 2011 this included not only the IRB, RNZ 2011 and the Government agencies, but also sponsors, local authorities and suppliers of services to the Tournament.

     

    Firstly, each organisation identified and assessed the risks specific to them.  These risks were then consolidated and re-assessed together. The output was then a consolidated, whole-of-Tournament risk profile that formed the basis for on-going monitoring and reporting. One of the challenges with this approach was the aggregation of the risks and the potential for organisations to defer responsibility to someone else. This was addressed by ensuing responsibility for the management of the risk remained with the ‘owning’ organisation.


    The development of the whole-of-Tournament risk profile also meant dealing with organisations in a particular sector that would normally compete with one another. Initially this showed as reluctance to openly share risk information. To counter this, a series of forums involving a broad range of stakeholders was held throughout the country. Connections and interdependencies between organisations were found and collaborative groups formed to look at the risk from a systemic basis.


    One example was seen in the utilities sector. Many of the utilities companies were looking to put a ‘works moratorium’ in place around RWC 2011, however the dates for these varied from council to council and between companies. A direct outcome of the discussions was to establish a common moratorium period making sense from both a risk management and a contingency planning perspective.


    Integrating risk management into planning and reporting

    A feature of the risk management approach was the integration of risk thinking into all aspects of the planning for the Tournament. This helped to ensure that the right level of resource was applied to integrating risk at the right time in the Tournament.


    As an example, infrastructure was identified as a key risk area back in 2006. The importance of key infrastructure, for example the stadia, to the success of the Tournament was such that senior resources were assigned to help manage the risk. In the case of Eden Park, as the redevelopment programme progressed, the assessment of the risk decreased and this was reflected in the reporting to the board.


    Regular updates were made to the risk reports focusing on the management of the risk and how this was reducing the risk level.


    Risk Appetite

    Internationally much is known about risks in organising events and this traditionally includes a significant focus on managing health, safety and security risks. In this context risk appetite is generally very low – and event planning reflects this. The structure used for the planning and delivery of RWC 2011 reflected a corporate model which influenced the approach to risk management. From a risk appetite perspective a key factor was reputation risk.

     

    The significance of RWC 2011 to the New Zealand economy, and to New Zealand 's reputation as a tourist destination led to a broader view of risk than traditional sporting events. The risk appetite not only drove the risk response but also impacted on the level of reporting. High level governance arrangements were established that included Government and Board level oversight of the risks and their management, and regular reporting was established.


    Risk management was certainly taken seriously; senior level engagement and support of the approach to risk was critical to ensuring that the risk approach was successful. Risk was seen as an integral part of decision-making at a management and governance level, as a result there was a high level of engagement and the right level of resource applied to the risks.


    Contingency planning

    Running alongside the risk management process has been a focus on contingency planning. For businesses and Boards this area is often overlooked. There is no question that the earthquakes in Christchurch had a significant impact not just in Canterbury but throughout the country. This means there is more awareness of the need to have robust contingency plans in place.

     

    For RWC 2011 the contingency planning was shaped by two key features:

     

    The time critical nature of much of the Tournament. Many of the situations that could arise will need to be dealt with immediately and, other than analysing the event for potential for impact on upcoming events, there is little more that need be done.

     

    For RWC 2011 the 48 match days will be critical. The time period 90/90/90, this being 90 minutes before the match starts, 90 minutes of play and 90 minutes post match, is critical in terms of making decisions to delay or cancel matches and ensuring fans get to and from the stadium safely and on time. Decisions will be made at an operational level and only significant impacts will be escalated, as there is no time to call together a more traditional decision-making body. If the debrief after the match indicates some issues that are likely to impact future matches then these will be assessed and an appropriate response put in place – for example, enhanced bag checks etc.

     

    The limited additional capacity that exists to respond to major events. During RWC 2011 many organisations will be operating at full, or near full, capacity. If an incident occurs that requires significant additional capacity the ability to respond is limited. Transport is a good example with most air travel operators running at full capacity during critical stages of the Tournament.

     

    If the weather closes an airport and Rugby fans need to make alternative arrangements they would expect buses or rental cars to be available. However, buses and rental cars may already be committed. In this situation a more co-ordinated whole-of-Tournament response may be required.

     

    To ensure that the structures for dealing with incidents and the decision-making arrangements are well understood there has been a significant focus on scenario testing. This covered all the organisations involved in the Tournament from the match venues, the local authorities to the power and transport suppliers.

     

    It was critical to establish:

    • clear lines of accountability (especially who is responsible for responding to an event)
    • ensure financial and operational delegations are in place and understood
    • detailed, clear escalation protocols.

     

    A common response during the scenario testing has been ‘well, that couldn’t happen here’. The scenarios were all based on real events, either in New Zealand or overseas, and an outcome of the scenario testing was a better appreciation of the impact that a decision by one party can have on another.

     

    Risk management is an important governance responsibility. RWC 2011 has highlighted some focus areas that apply across any organisation. The key is to use risk management disciplines as an integral part of decision making and reporting rather than as ‘an add-on’. In this way the right decisions are made and resources applied in a way that fit the board’s risk appetite.

     

    One of the most common questions asked through the risk management process is how the risk of the New Zealand team’s performance has been managed. Our response?  Well, risk is all about uncertainty, and we’ll know the answer when the final whistle blows on the 23 October.

     

    (The above article was published in The Boardroom magazine September 2011)

     

 

 

 
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