RISK MANAGEMENT MARKET & SOCIAL RESEARCH

Overview Risk Management is about maximising the realisation of opportunities – enabling the buyer to make informed decisions The Risk comes from uncertainty in the market place such as; financial markets, legal liabilities, credit risks, project failures, natural disasters, deliberate adversarial strategies from competitors The Management typically includes knowing and understanding risk and therefore acting accordingly such as; transferring risk to another party, avoiding the risk, reducing the negative effect or knowingly accepting some or all of the consequences of risk Management relies on being fully informed and therefore making informed decisions

Risk Management is a process The Management of Risk Risk Management is a process Risk Management relies on informed decision making as part of the process The more informed you are – the less the risk All human activity has some form of risk – decision making is just one of them Risk is about possibilities not certainties. The more informed the decision, the more certain the decision becomes Market and social research is an informing tool moving decisions further up the certainty scale

Step 1 – Identification of Risk What is known needs to be known What could go wrong uncertainty to certainty Assumptions V Fact think we know to definitely know Buyers of market and social research are looking to identify and mitigate risks relating to decision making – to make informed decisions

Step 1: Identification of Risk There are many sources of risk to consider. Typically they fit into the following categories: Economic risk – value of $AUD, world economy Political events – change of government Technology implications – changes in technology Regulatory – changing Acts and Regulations Resources – investment of resources In order to quantify these risks, buyers need reliable data to make informed decisions

Step 2: Risk Quantification / Risk Assessment In order to quantity or assess a risk, the risk needs to be analysed. To quantify risk, consider the following:

Step 2: Risk Quantification / Risk Assessment Once the risk cause is determined – give the risk a measure of significance Probability / Likelihood of the risk impacting on the business decision making

Step 2: Risk Quantification / Risk Assessment Impact / Consequences of the risk occurring. How bad could it be?

Step 2: Risk Quantification / Risk Assessment

Step 3: Risk Treatment (Control) Risk treatment is the final step of risk mitigation or informed decision making If you need market and/or social research to make an informed decision or develop a strategic direction - the following risk mitigation options may apply Elimination of Risk – eliminate the unknown Risk avoidance – not making a decision Transfer Risk - limitations Retain or Accept the Risk – knowledge of what is being accepted

Step 3: Risk Treatment (Control) The scope of a market or social research project must provide sufficient and appropriate reliable data to enable the company to move closer to or achieve a decision / strategy Unknown Known Unsure Sure Unwanted Wanted

Step 3: Risk Treatment (Control) Risk management processes can be used by a buyer to: Determine the nature and context of the actual research required to give the information needed Aid in selecting the research provider Both the scope of the research process and the capability and reliability of the research provider need to be ‘risk assessed’ as part of the overall risk approach

Step 3: Risk Treatment (Control) Risk factors in selecting a research provider should consider: Assured Quality – Capability and assurance of a quality outcome KPI: ISO 20252 / 26362 Fitness for Purpose – Scope of the project is matched to the best fit of the organisation KPI: Project management and Panel Management or BOTH Project Knowledge Management – Knowledge and capability of project management team KPI: QPMR Project Due Diligence – Secure and robust due diligence in business strategy KPI: AMSRS / AMSRO Privacy Principles / Code of Professional behaviour

Case Study State support and some State funding A Federal Government Agency is developing a 3 year strategy document dependent on: State support and some State funding Support in principle from sporting associations Support by environmentalists What are the risks associated with this strategy? State funding – political affiliations (Federal Government / State Parties) Support from sporting groups at a cost Unlikely support from environmentalists

Case Study What is the most significant risk? Are all these factors a risk? Is enough known about State Government views sufficient to make an informed decision? What is known about sporting groups? What is known of the views and likely acceptance by environmental groups and particular lobbyists? Quantify the Risk By determining the level of known risk (calculation) the need for further data (market or social research) can be determined. The scope and objectives of the brief can be quantified, providing the necessary informed decision making process.

Select the Research Provider Do I need quality assurance standards to ensure a quality outcome? If so, what quality assurance standards do I need? ISO 20252 – Project Management ISO 26362 – Panel Management What level of due diligence is needed for the project? QPMR – Knowledge Management AMSRS / AMSRO – Strategic Risk Management

Summary Risk Management is a process of determining how to move the unknown to the known. This applies to all facets of business. Market and social research provides an enabling tool to mitigate risks associated with good business decision making practices.

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