In 2014, I collaborated with EY to develop Russia’s first risk management business game. It was great fun, and as a result, we created a pretty sophisticated business simulation.
Participants were split into teams of 10, each person receiving a game card that describes their role (CEO, CFO, risk manager, internal auditor, etc.). At the start of the game, teams must choose one of four industry sectors (telecom, oil and gas, energy or retail) and name their company. The game consists of four rounds, and in each round, teams must make risk-based decisions. Each decision has a cost associated with it and a number of possible outcomes. Teams must analyze and document the risks inherent in each decision they make. The riskier the decision, the higher the probability of adverse outcome. At the end of each round, computer simulation model chooses a scenario and the outcome is announced to each team. Each decision has consequences, and the outcome may either make money for the business or lose money.
The aim of the game is to increase the company valuation by properly weighing risks and making balanced business decisions. The winning team is the one that increases its company’s value the most after four rounds.
This game was successfully played by participants at two risk management conferences, as well as postgraduate students at the Moscow Institute of Physics and Technology.
More information about the first game is available here: http://www.risk-academy.ru/en/risk-management-game-version-a/.
Risk Management Business Game 2015
In 2015, I started working with Palisade to develop something a little different.
Just like in the previous version of the game, the participants were split up into teams of 10. However, the game mechanics changed substantially. Each player still receives a card describing their role, but this time the card provides a complete history of the character’s role within the company and assigns each player a unique secret mission.
The aim of the game is to successfully complete a merger between large holding company and an innovative startup. The game, as before, consists of four rounds. The first round involves performing a risk assessment of the target company. Each team must identify 10 significant risks using only the information provided on the cards.
The second, third and fourth rounds are dedicated to the management of these risks. Each identified risk has between five and 10 possible mitigation strategies that can be selected by the team. Each team has a limited budget dedicated to risk mitigation, and each mitigation action has a cost.
The effects of each mitigation action selected by the teams was modeled using Palisade @Risk to determine whether it increases or decreases the value of the target company. The winning team is the one that increases the value of the target company more than the others and is then able to successfully complete the merger.
More information is available at http://www.risk-academy.ru/en/risk-management-game-version-b/.
Risk Management Business Game 2015 (Online Version)
With the help of eNano, we went even further and produced an interactive risk management business game (only available in Russian). This game combined an e-learning course and an interactive business simulator.
Each participant takes on the role of general manager of one of three innovative companies. They then receive tasks that need to be completed throughout the e-learning course:
- First, each participant needs to conduct interviews with AI colleagues in order to identify and document risks;
- Then, he needs to evaluate risks using the information presented. Note that just like in the real world, most of the information presented is biased;
- Then, he needs to make difficult decisions related to risk mitigation given a limited budget;
- And in the last step, participants need to develop an action plan designed to improve risk culture.
All of these steps increase or decrease the company valuation. You can find out more about this course at: risk.edunano.ru
Risk Management Game 2016
This game is the result of collaboration between Risk-academy, Palisade, Institute for Strategic Risk Analysis (ISAR) and Deloitte. Together we have created an amazing business game to teach nonfinancial management and staff how to perform risk modeling on day-to-day management decisions.
Participants will have to play the role of an aircraft engine manufacturing company. Each team has prepared a business case for a multimillion-dollar plant modernization. Unfortunately, the project plan have just been rejected by the board, so teams only have a couple of hours to conduct in-depth risk analysis and present updated an business case to the board.
The game is focused around risk modeling, requiring participants to identify and validate management assumptions, identify relevant risks, establish ranges and select possible distributions for each assumption, perform Monte Carlo simulation using Palisade @Risk and present the final results. All this has to be performed in limited time and with incomplete information… just like in real life. And just to add a little bit of drama, just like in real life, participants have to deal with unexpected “black swans” during the game.
The aim of the game is to prepare risk analysis for a multimillion plant modernization investment project. The team with the highest risk-adjusted rate of return wins.
This game has also become one of the modules in the risk management training run by ISAR. More information is available here: www.isar.institute (in Russian).
Due to lots of positive comments, the latest risk modeling game is now available in ENGLISH for pre-order in two versions: download the full game set for €199 or have it delivered to your office anywhere in the world for €299, with shipping in two to three weeks. Pre-order here: http://www.risk-academy.ru/en/risk-management-game-version-c/.
The latest game was both hard and entertaining, so we began talks with our partners to turn it into an online risk quantification championship. The games will require online registration, have downloadable content and require proper risk modeling. Championships will run once a quarter and winners will receive wonderful prizes.
More information will be coming soon.