the Risk Management and Engineering (RBT) department of KIVI (Royal Institute of Engineers) studies high-profile events, analyses them and tries to find ways to better manage technical risks. Earlier, I wrote a column about a case by Dick Bartelse, which he presented at the last symposium. How to successfully consider risks as challenges? Uncertainties can be overcome by turning them into certainties. Risk as a challenge, was my talk. It elicited many reactions.
by John van der Puil
In the case of Dick Bartels, former director of Procurement at AKZONOBEL, a coating division deliberately seeks out technical risks. Managing risks is then seen as taking on challenges. A customer asks for a coating for the back of its newly introduced phone device that protects but also feels like rubber. The Koreans at Huwan Huwan call it "Rubber Feel". The idea is novel; it's all about feeling. That cannot be specified in a technical sense. I have responded to an earlier comment by Prof Dr Arjan van Weele. See my column 43, Risks as a challenge - How do you do it?
Response from my cousin Jan Gerard van der Puil, Msc, MBA:
The contract is too one-sided. The probability/risk split is unreasonable. Renegotiate or don't. Another reason to better divide the risk between client and contractor, because if things go wrong, so it's all at risk. The downside is very high. As an aside, this is additional info not in the case.
Reply to Jan Gerard,
In the coating division, these "specials" are 8% of sales. But the profit (they claim) is significant. One does not want to miss out on these special orders. Compare an investor with a portfolio in which he puts solid investments, but he takes a limited (8%) high risk in the expectation that his profit on it will also be high.
For example, a client's wife came from Saudi Arabia, who had ordered a yacht of 30 metres a 1 million pounds sterling per linear metre in NL. She showed her pink nail polish and asked if Brosserdeel would supply the paint for the yacht to the yard in this colour. The company had never before made this colour in this type of special coating. When it succeeded, they were able to get a price that was prohibitively high. That compensated for many failures.
By-product of this policy: the laboratory and R&D remain at work. Its costs are partly covered by that special revenue.
But I admit: according to the laws of classical risk governance, you are right.
Marian Wanders
Wed, Nov 20, 12:44 PM (2 days ago)
to me
Dear John,
How interesting again: it reads like a thriller !!
Does such a company now also have a permanent risk manager on the payroll or does someone do it "on the side"....... ??
Dear Marian,
Just assume that a good system of risk management is maintained.
Rob Schouten
Nov 21, 2019, 10:53 PM (12 hours ago)
Managing risk is seen in the case as facing challenges. The dynamic management of those challenges described in the column raises the question of what is the relationship, the difference and the dividing line between managing the uncertainties and challenges of what is being undertaken 'ongoing' from an entrepreneurial perspective and explicitly naming and managing the resulting risks? Consider also the distinction between 'regular' management and risk management. "It's all-in a day's job" in the eyes of some project managers. And therein lies perhaps the greatest risk.
Finally:
Project managers on the list of identified risks. Good proposal.
We hereby close the discussion on this case that made a lot of noise.
John van der Puil
Member Branch Board RBT
Member Programme Committee.
