RiBsheet™
RiBsheet™ is a means of assessing and communicating the impact of decisions on a project or organisation. It was founded on very simple premises: that risk is capital is staked conditions of uncertainty, and that there is a trade-off between the risks that a company is exposed to, and the associated potential returns.
RiBsheet™ communicates business risk by presenting statistical predictions of risks and returns in a format that is analogous to a traditional accountancy balance sheet - the name ‘RiBsheet’ is in fact derived from ‘Risk Balance Sheet’.
It allows interpretation of the future risks and returns associated with an activity and the uncertainty regarding these risks and returns, in the context of the current position of a business or project. It is dynamic, and should be updated, for example, as a project progresses.
Deceptively Simple
The RiBsheet™ itself is very simple – and intentionally so. The product was designed to communicate and assess complex decisions in as simple a format as possible, delivering the key information to a company’s high-level decision-makers, whilst also serving as an equally effective tool for communication with shareholders.
Behind the RiBsheet™, however, there is an extensive amount of analysis– describing major risks and the sources of risks, as well as allowing in-depth analysis of the major uncertainties facing an organisation. The complicated costs associated with risk are assessed – such as tax effects, liquidity problems, capital adequacy and insolvency, constrained capital investment and market signaling issues.
Benefits
By assessing the major risk factors, RiBsheet™ facilitates compliance with reporting requirements, such as the Operating and Financial Review (OFR) that large companies are obliged to perform.
Therefore, RiBsheet acts as an effective aid to corporate governance, by ensuring that decisions are made based on the best information available at the time. Aside from simply ensuring that it is possible to practise good corporate governance, the product has been designed to facilitate its demonstration, on a number of levels. Between directors and investors, for example, it provides a means to justify investments and decisions, through the simple-to-understand ‘risk balance’ figure.
This simple measure of performance allows a consistent framework to be applied across a wide variety of decisions. The RiBsheetTM approach and methodology is used not only to assess the undertaking of projects, but can also to be applied to decisions such as insurance, maintenance scheduling and project risk management.