1st Edition

Risk Monetization Converting Threats and Opportunities into Impact on Project Value

By Glenn R. Koller Copyright 2012
    328 Pages 36 B/W Illustrations
    by Chapman & Hall

    328 Pages 36 B/W Illustrations
    by Chapman & Hall

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    Risk Monetization: Converting Threats and Opportunities into Impact on Project Value addresses the organizational, political, cultural, and technical issues related to implementing a successful risk assessment, management, and monetization process. Suitable for readers in any organization or area of expertise, the book assumes no prior background in risk assessment, management, or monetization.

    With more than three decades of experience in risk-process implementation, the author first explains the benefits of the risk-monetization process and how risk matters are generally not handled properly in contemporary organizations. He then introduces the terms and definitions essential to making risk monetization successful in a project. The text goes on to give examples of risk-monetization techniques applied in a variety of settings before discussing the typical risk situation for most projects and the shortcomings of conventional processes. It also describes how risk identification, assessment, management, and monetization processes are set up in an ideal environment as well as in imperfect situations. The final chapter focuses on how investment decisions are made based on the monetization and ranking of risks.

    Enhancing your project’s value, this book offers step-by-step practical guidance on identifying, assessing, managing, and monetizing both threats and opportunities so that risk impedes the bottom line as little as possible. It shows you how to convert probable risks into positive impacts on the chance of success and/or profitability of any project.

    What’s the Point?
    Skipping the Fundamentals for Now
    Some Acronyms
    A Focus on Success and Value—Not on Reducing Uncertainty
    Many Contributing Disciplines
    Many Views of Risk
    An Aim to Integrate Risks
    Surprise! Integrated Impact Is Almost Always Alarming
    Where We Would Like to Be

    How Risk Information Traditionally Is Handled—The Good, the Bad, and the Ugly
    Risk Registers and Their Many Implications

    The Fundamentals
    Decide for Whom You Are (Really) Working
    Be Clear as to "What Is the Question?"
    Be Certain of the Right Level of Support
    What I Assume
    Some Definitions

    Spectrum of Application for Monetization
    Environmental Projects
    Health and Safety
    Risk Monetization of Legal Matters
    Other Project Types

    Without Risk Monetization, What Typically Is Done
    Project Envisioned
    Incomplete Representation
    Don’t Tell Me What to Do!
    Poor Translation of Qualitative Data into Quantitative Data
    One, Two, Three—Go!
    Little or No Risk Integration
    Use of the "Boston Square"
    Data Gathered from Those with Vested Interest
    Faulty Forecasts
    Lack of Organization
    Mitigation of Threats
    Initial Budget Estimates
    Initial Schedule Estimates
    Risk Interpreted as Uncertainty
    Poor Risk Communication
    Piecemeal Presentations
    Determining the Reduction in Probability and/or Impact
    Not a Consistent Deciding Body
    Rewarding Activity

    One Route to Risk Monetization—The "Perfect World" or "High Control" Path
    Try to Be Unfashionably Early
    Appoint a Risk-Process Proponent
    Have "The Talk"
    Don’t Underestimate the Upheaval
    Decide How Sensitive "Soft" Risks Will Be Handled
    Have the Conversation about Risk Acceptance
    Determine What Has Already Been Done and Establish Rapport
    Establish a High-Level Story about Why This Is Being Done
    Design a Risk-Monetization Process That Fits with the Existing Culture and Workflows
    Establish That There Will Be Only "One" Risk Register
    Prepare for Risk-Identification Workshop (RIW)
    Opening the RIW
    Start Identifying Risks
    Assessing, Valuing, and Ranking Risks Prior to Monetization
    Mitigation/Capture Actions
    Some Post-RIW Activities
    Implement Sustaining Actions

    Another Route to Risk Monetization—The "Already in Progress" or "Imperfect World of Low Control" Path
    Some of the "Perfect World" Stuff Applies
    "Risk Analyses" Already Done

    Risk Monetization
    A Warning and Justification for Monetization
    Setting the Stage
    The Monetization Process

    Appendix: Summary of the Journey from Risk Assessment to Monetization and More

    Selected Readings appear at the end of each chapter.


    Glenn R. Koller is a risk advisor at a major corporation. In 2008, he retired after 30 years as the head of the Major Project Risk Group at a major energy company. He holds two international patents on statistical routines and earned his Ph.D. in geochemistry/geophysics from Syracuse University. Dr. Koller’s research interests include all aspects of risk and uncertainty analysis, management, monetization, and training.