We decided that it was time to upgrade ALARP to AHLARP (As High/Low as Reasonably Practicable) and being visual thinkers, decided that it was time for a new model. Along the way, we came up with new acronyms, including RTP. RTP stands for 'Risk Tipping Point' and builds on Malcolm Gladwells concept of a tipping point. It's the point where positive risk starts to outweigh negative risk.
Whether we talk about IT projects, business activities or saving an endangered species, it is fair to say that without some input of resources/effort, the initiative is more likely to fail than to succeed. Putting this into ISO31000 speak, we would say that 'objectives are unlikely to be met'. Simply putting resources into something is of course, no guarantee that it will succeed, but it's fair to say that (assuming some level of planning and quality) the more resources we put in, the lower the negative risk and the higher the positive risk.
|Figure 1: AHLARP Model|
AHLARP becomes the conceptual area where our risk strategies are achieving the optimal range of benefits for a given range of resource inputs. This infers what we already know from experience, that there is no single perfect point for risk/reward optimization, but rather a range where we are trying to balance resource (cost) with positive risk (potential benefit) and negative risk (potential loss).
Accepting that there is rarely if ever, a single point where likelihood and consequence form a point value (eg: "this risk as a 57.6% likelihood of generating $123,000 benefit") we can look at illustrating risk across a spread of outcomes. Figure 2 below, illustrates the likely spread of outcomes if we apply insufficient resources (or quality) to manage a risk.
|Figure 2: Inadequate resources increase the likelihood of negative consequences|
|Figure 3: Applying management resources to shift risk outcomes towards the positive|
|Figure 4: Range of 'prudent' investment|
|Figure 5: 'Prudent' is context driven|
The more volatile a risk is, the more resources need to be applied. If the green and red lines in Figure 1 have a lot of potential ranges, it's going to be expensive to stay consistently within the AHLARP zone.