| |
| Ideas for more successful risk management in regulation | August 2006 |
 |
Risk tools help assess terrorist threatTHE THREATNew York harbor has become scarier since 9/11 with the emergent threat of Al Qaeda terrorists using the port to smuggle in a nuclear weapon in a container or sinking a ship in the harbour cutting off fuel supplies to the eastern seaboard. The Harbor Commission's response is a case study in the use of risk assessment tools for identifying and analyzing risks in logical systematic ways, tools that complement rather than replace the experience of seasoned inspectors and investigators, helping regulatory staff differentiate between shipments that seem to be deserving of equal attention but are not. RISK ASSESSMENT TOOLS SUPPORT SEASONED INVESTIGATORSWilliam Finnegan, in a recent article in the New Yorker Magazine, outlines the response of the Harbor Commission to the terrorist threat and illustrates some of the benefits of using risk assessment tools, which include: - Faster decision making - More clarity and logic to support decisions - Better communication about decisions - Improved consistency and fairness - Improved use of investigator resources (costly investigations can be targeted to address the most serious threats) - Improved use of information management resources (determining what information needs to be collected and reported for effective decision making) CHANGING CIRCUMSTANCES REQUIRE DIFFERENT APPROACHES"New York harbor is vast, antiquated, Mob-ridden and notoriously hard to police. With 5,300 foreign boats docking there each year, how easily could Al Qaeda buy its way in?" Finnegan asks. Prior to 9/11, threats originated with the Mob. In risk terms, these threats were of relatively low consequence and frequent. The Mob wanted to perpetuate its business. To do so, most of its activities had to fly below the line of risk tolerance. If the negative consequences associated with its activities became too great, law enforcement would step in and "business as usual" would become more difficult. After 9/11, with the threat of terrorism, the Commission has recognized that it must have a risk strategy to deal with the low probability of a high consequence event, a threat that must be mitigated because the consequence is intolerable. COMBINATION OF RISK FACTORS TRIGGER INVESTIGATIONSThe Commission chose a risk assessment tool developed by the National Targeting Centre in Virginia. It's a tool with 3,000 rules for evaluating data. Finnegan quotes a former port official, "If somebody wants to try something, they have to be very careful to avoid any historical anomaly. We have 20 years of entry data. We know how much a hundred bales of cotton should weigh. Our targeting system will tell us if this is the eight thousandth time we've seen this commodity from this importer from this port - but this time there is something different about it. Each rule in the targeting system has a derogatory weight to it. So if this is an unusual commodity to be coming from - paint from Syria, say - then that's points. Points pile up to trigger an exam [before the ship gets to the harbor.]" Prior to the implementation of this risk assessment tool, when the Commission was dealing with the frequent but low consequence type threats, local officers inspected ships and containers in the port and made a call based on their experience and observation. Now everything goes through this targeting system. The Harbor Commission is able to direct its inspection and enforcement efforts in a way that corresponds with the priorities of a changed world. Finnegan's article can be found in the June 2006 issue of the New Yorker. If you are a regulator who manages risk, you may find it interesting reading. | |  
This 12-lane expressway can be a risky place or a safe one. Put yourself in the position of the risk manager who has limited resources to mitigate the risks and make this highway a safer place. ABOUT THIS NEWSLETTER How do you decide which risks to tackle first and what technologies will be most effective in reducing these risks? And what resources are available to help you do the best possible job? Welcome! This is the first issue of Risk Assessment Monthly a newsletter dealing with issues involving highways, health, crime, and terrorism, for example - issues that matter to people and even more to risk managers. Many regulators are advanced in their use of formal risk management strategies and tools. But the diversity of regulation and specificty of subject matter stifles communication between regulators. Perspective is everything when it comes to risk management. Our plan is to search for good risk management stories in the public domain and provide you with a broader perspective. WE INVITE YOUR COMMENTS We welcome feedback on ways to make this newsletter more valuable for you. 
RICHARD PAGE ABOUT US We help regulatory organizations manage risks more effectively by developing strategies and tools to target risks that matter. ACTION ITEM: Examine your ability to identify and target the risks that really matter to you. Are you satisfied with your ability to carry out your mandate? I would be happy to talk to you about how to better focus your resources on key risks by using a risk framework. Contact RICHARD PAGE at Regulatory Solutions Group by phone at 416-261-2690 or by email. |
Risk Assessment is a monthly publication of Regulatory Solutions Group, risk professionals. Check out our website at RegulatorySolutionsGroup.com Comments and questions are welcomed and should be addressed to: | |
| |