Bowtie Analysis: Connecting the Dots Between Risks, Root Causes and Impacts
What is Risk?
In light of the COVID-19 pandemic and its widespread social, financial and economic impacts, I’d like you to take a moment right now to think about what ‘risk’ means to your business. Seriously, just take a moment.
Your business’s unique risk exposure will ultimately depend on a wide variety of factors including your operations, industry, regulatory requirements and workforce characteristics, just to name a few. These factors combine in complex and unpredictable ways, creating risks that can be difficult to anticipate and control. But with the fate of your workers, your community and your business potentially at stake, it’s essential that we understand precisely how these factors shape your business’s risks so we can manage them effectively.
Risk Analysis Techniques
There are a variety of risk analysis techniques available to help identify and quantify workplace risks. These techniques typically fall into two categories, top-down and bottom-up.
Top-down risk analysis techniques rely on looking at individual risk scenarios and working out how they might be caused, what impacts they may have and what controls would minimize those impacts. Top-down analysis is the best option when a business knows the risk scenarios that may be encountered, and has the experience to map out and control those risks.
Bottom-up assessments start by documenting all the elements of a system or process, identifying all possible interactions between those elements, quantifying the likelihood and severity of those interactions, then implementing the controls necessary to minimize the risk level.
Top-down, bottom-up. Seems pretty straightforward, right?
For either of these two approaches to work, we must also clearly identify the root causes and potential impacts of risks, understand how effective our controls are, and be able to trust that everyone has a shared understanding, acceptance and ownership of the risk management activities we’re performing. Without all three of these, we might as well save our breath.
If we really want to create a more complete understanding of the risks facing our business, we need to take a more sophisticated approach to risk analysis and control. That’s where bowtie analysis comes in.
An Introduction to Bowtie Analysis
Bowtie analysis is an advanced risk analysis technique that gives users the ability to not only evaluate the probability and severity of risks, but also document risk causes, quantify potential risk impacts, assign and monitor risk controls, and systematically evaluate the full spectrum of factors that contribute to your organization’s overall risk exposure.
In addition to centralized planning, coordination and tracking of risk management activities, one of the biggest advantages of bowtie analysis is that the bowtie structure creates a visual illustration of the linkages between risk causes, events, impacts and controls. In essence, bowtie analysis offers a detailed map of workplace risks so that stakeholders throughout the organization can easily understand their sources and consequences.