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Volume 8 · No. 3 · October 2004

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Collaborative Risk Assessment: Transcending Time and Space

Marc Dominus, CCSA
   Director
   Protiviti Inc.
Chicago, Ill.

The following is a summary of a presentation delivered by Marc Dominus at The IIA's Emerging Trends Conference in Palm Beach, Fla., August 17.

Because the future is inherently unknown, the best people can do to make informed projections is study the past and evaluate the present. In a corporate setting, risk self-assessment processes are being used to incorporate the knowledge of those closest to the sources of uncertainty into strategies that serve to mitigate risk and improve operations. But with budget, time, and geographic constraints facing many organizations, how can this be accomplished most effectively?

The self-assessment process — a blend of art and science — is the interaction of thoughts and ideas with the analysis of quantifiable data and the tools to perform such analysis. No matter how good the science is there is no substitute for the art of person-to-person communication and collaboration in a risk-assessment process. Ultimately, people in the organization hold the key to understanding corporate risks by getting the right people together to provide new insights to better information.

In the past, it may have been adequate for one individual to make key strategic and tactical decisions within an organization. Today, and increasingly into the future, the complexity of the business environment makes it unlikely that any one person has all of the knowledge necessary to solve big problems. Consequently, people will need to collaborate in groups, which is often easier said than done. Time and budget constraints, corporate cultures that stifle discussion, and geographic separation can all work against collaborative risk assessment. The constraints are especially great now, with the demands placed on public companies by the U.S. Sarbanes-Oxley Act of 2002 and the general demand that companies do more with less.

To enable and empower decision-making, tools have emerged to help overcome barriers to effective group work, enhance collaborative efforts, and improve risk assessment processes. Thanks to computers, teleconferencing, and Web technology, people in different time zones and on different continents can collaborate despite geographic barriers.

FACILITATED WORKSHOPS HELP GROUPS WORK EFFECTIVELY

As auditors, we make decisions based on data and analysis. However, there is a powerful social aspect of decision-making that affects this analysis. How we feel about the person delivering the information, how we feel at the moment we make a decision, the context of our personal and professional lives at any given moment, even lighting and room temperatures all impact decision-making. When risk assessment occurs within the context of a social process, participants make up their minds as individuals, but decide on actions as a group.

Using a facilitated workshop, organizations can make more effective decisions, using four key components:

1. Information gathering. Information gathered in advance of the session is integrated with the group's knowledge through brainstorming, team activities, and interaction.

2. Clarification and discussion. Facilitated clarification of terminology, defining issues, and active discussion among all participants helps ensure consistency in language and understanding.

3. Alignment through consensus. Electronic voting, team presentations and facilitation, and work groups provide the means for consensus on key issues.

4. Commitment to action. Results are analyzed and discussed for agreement on specific commitments to action.

Facilitators often need to overcome unique barriers for the self-assessment workshop to succeed. Examples of barriers that can be effectively managed with proper planning include:

• Number of people. As the size of a group increases, the number of conversations necessary to reach consensus increases. Facilitators can use manual techniques, such as round-robin discussion or electronic voting tools, to manage a group's interaction so that all participants are effectively heard.
• Short-term memory limitations. In the ebb and flow of discussion, important points can be forgotten, misunderstood, or jumbled with other thoughts. The sheer number of discussion items can tax memory limitations. A designated recorder can use a flip chart or computer worksheet to create an ongoing record of discussion items so that participants can "stay in the moment" rather than becoming distracted by taking detailed notes of every discussion point and decision.
• Differences in the meaning of words. Words or phrases often mean different things to different people. The clarification of definitions is an essential task for successful group collaboration. Working with participants who speak different native languages complicates matters further. A facilitator with global experience can assist participants with definition clarification to overcome such issues.
• Different beliefs and paradigms. Cultural backgrounds and personal experiences shape everyone's beliefs and approaches to problems. For a group to focus on the real differences in perspectives, they must ensure each participant has a common understanding of issues and definitions. An experienced facilitator can mediate between beliefs and mental models to help people arrive at a common understanding, which is where the value of collaboration is realized.

The strength of self-assessment in groups comes from the ability to harvest collective knowledge, share information across organizational units, and clarify differences in perspectives. They can also stimulate insight and discovery, create alignment through consensus, and save valuable time.

BREAKING DOWN BARRIERS

With today's technology, information can be gathered and recorded faster than ever before. A well-orchestrated online survey can be completed at any time or place, and physical separation is hardly an issue. Using online tools for performing surveys, voting, and self-assessment processes, workshop participants can focus on brainstorming and analysis, while the software performs administrative tasks such as rating and ranking risks, recording narrative commentary, and tallying teleconference votes. These tools help provide more effective interaction between individuals and among work groups, supporting real-time teamwork and project management.

Prior to administering an online survey, it is important to schedule a group meeting to establish purpose, approach, organizational commitment, and expectations. Effective, tested instructions that describe the purpose and context of the self-assessment will reduce participant error and provide for smooth administration. It is important to clarify the level of participant anonymity and articulate the amount of time it will take to complete the survey. If the survey is too lengthy, participants may not give the questions serious thought, resulting in automatic or overly positive responses, while others may avoid answering the questions at all. Because confidentiality concerns can undermine accuracy, the technology should use a secure third-party server and require users to create their own passwords.

To reduce ambiguity in the survey questions, avoid merging two disconnected topics into one question. To more easily measure responses, facilitators should create a numbered scale with an odd number of choices to allow for a neutral response. Using labels to assist in interpreting the scale is helpful as well, but be careful not to lead respondents to a specific response.

Video or voice-based conference calls and webcasts are other tools that can effectively reduce geographic barriers, but can also be challenging for both the facilitator and participants. When initially using any kind of meeting technology, expect to have a learning curve. Adequate planning and keeping things simple will help the meeting go smoother.

There are various ways to effectively manage the process to enhance the participants' online-meeting experience:

• Correspond with each participant in advance to confirm participation. Ask them to send a qualified designate if the primary attendee cannot participate.
• Greet participants as they come online, keeping a record for the attendee roster.
• While waiting for everyone to join, engage in small talk as you would in a face-to-face meeting waiting for everyone to gather round the meeting table.
• In the meeting introduction, restate the objectives and desired outcomes.
• Set a time limit for each agenda item and stick closely to it to keep the group focused on the objective.
• Designate a person to keep time and take notes.
• When using webcast or video conferencing tools, avoid focusing the camera on only the person talking. Bring other items into the picture when appropriate.
• Upon conclusion, gather notes and summarize proceedings for all those involved to keep commitments fresh in the minds of participants.
• Follow up with a to-do list for the assigned participants soon after the meeting is over.
• Have a fallback plan with on-call technical support at each site.

With the many communication tools and applications designed for facilitated Web and online workshops now at an auditor's disposal, barriers previously vexing geographically dispersed participation can be largely overcome. This technology is not a replacement for people meeting together in the same room, but can substantially improve communication, group interaction, and decision-making under the appropriate circumstances. Now there are ways to bring people from around the world together to collaborate, get their views on corporate risks, and work together to mitigate them.

Marc Dominus has been with Protiviti for two years. With more than 12 years of enterprise risk management and risk assessment experience, he has facilitated more than 80 risk, strategy, and innovation workshops.

A version of this article was published on Protiviti's KnowledgeLeader: Internal Audit and Risk Management Community Web site.