Risky business

Global mining giant Rio Tinto is rolling out award winning risk management software Active Risk Manager throughout its business after signing an enterprise deal with Active Risk.
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Staff Reporter

Published in the August 2011 Australia’s Mining Monthly

Rio Tinto uses the program centrally and first purchased the ARM software licenses and services in 2008 to support the RioRisk program.

ARM is a single repository for risk and opportunity-related information that underpins business performance and meets growing governance, risk and compliance requirements.

Active Risk, previously called Strategic Thought Group, addresses these requirements with software and services that can be implemented across all industry sectors.

Implementing ARM enables a risk aware culture to be embedded in an organisation and allows the board to communicate established risk management methods.

ARM enables the identification, communication, analysis and mitigation of risks and opportunities available in both quantitative and qualitative formats.

The technology enhances risk management effectiveness because it eliminates traditional paper-based or spreadsheet approaches which can be unreliable, often with little audibility, security and data integrity.

“This [paper-based] approach is no longer valid,” Active Risk executive chairman Lynton Barker said.

“It can expose senior management to fines, shareholder wrath, press scrutiny and even jail terms if they cannot prove that they have treated risks to the business in a serious and systematic way.”

Barker said companies had often purchased risk management software packages to meet specific departmental or regulatory needs and ended up with an excess of incomplete and overlapping systems.

“This can leave glaring gaps but also lead to risk fatigue throughout the organisation as employees are asked to complete repetitious risk and compliance surveys and assessments in a plethora of different formats,” he said.

Rio Tinto employees will have access to ARM functionality as part of the global take up of the RioRisk program.

This follows successful pilots at a range of locations with varied needs at its London headquarters and sites in Australia, Iceland and Africa.

The RioRisk program covers the design of company-wide risk management processes, how the design is embedded in businesses and operations and provides an infrastructure and support system.

ARM provides a major part of the risk infrastructure piece in the overall RioRisk Program.

By building additional functionality into the ARM software it ensures Rio Tinto can implement its risk management process into all business operations around the globe.

“The board recognises that risk is an integral and unavoidable part of doing business that while risk carries threats, it also offers opportunities,” Rio Tinto chairman Jan du Plessis said in the Chairman’s Report from the company’s 2010 annual report.

“Our processes for handling risk effectively are embedded throughout our organisation and are essential for maintaining our competitive advantage.”

Rio said it fostered a risk aware corporate culture and was committed to managing risks at all levels of the organisation.

Working closely together, Active Risk developed “risk workshop” capabilities so Rio could capture, record, and assess risk information from a range of locations, including the front line.

Once the need to add a risk workshop capability to the ARM functionality was recognised, Collaborative Workshop Solution was developed to provide an offline workshop capability.

This enables the collection of risk and opportunity information from frontline personnel who are often based in inhospitable and dispersed locations.

CWS can be used standalone without the need for internet connectivity with the central system.

“The information collected in the workshops is later uploaded back to the central ARM repository to maintain the overall enterprise view of risks and opportunities,” Barker said.

ARM was awarded the Risk Management Application of the Year at the Global Risk Management Awards 2010, which is organised in conjunction with the Institute of Risk Management.

“This particular application was judged to be a winner as it demonstrated good use of technology in a particularly challenging setting and pushed forward the sphere of risk management tools,” judges said when presenting the award.

Strategic Thought Group was founded almost 25 years ago as a specialist strategic consulting firm.

When the company identified a developing need for robust enterprise-wide risk management software, it launched ARM.

Since that 2001 launch it has completely focused on risk management and recently rebranded as Active Risk to reflect this.

With offices located in the UK and the US, Active Risk services customers worldwide through a network of technology partners.

Following survey results about the evolving needs of the risk management market, Active Risk developed a product road map for the next three years.

“We see an increasing demand for an enterprise-wide approach to risk and opportunity management services by a single software solution, which will also encompass governance, risk and compliance needs,” Barker said.

“More ‘risk-mature’ organisations are looking to rationalise the range of software packages which they have acquired over time to provide an enterprise-wide view.

“Organisations newer to the game are aiming to replace spreadsheet and paper-based methods.”

Down the track, Active Risk plans to focus on providing more strategic reporting to the board and senior management from risk information databases. This will transform what was once seen as a cost to the business into a tool to inform strategic decision making and improve business performance.

“This can leave glaring gaps but also lead to risk fatigue throughout the organisation as employees are asked to complete repetitious risk and compliance surveys and assessments in a plethora of different formats.”

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