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Executive Intelligence · Risk and Resilience

Risk Interdependency Analysis

Shows recorded dependencies between risks, processes, systems and suppliers.

Demonstration: Fairholme Holdings (fictional) · Diversified holding company. Fictional data and a scripted answer.

The situation

Organisation
Fairholme Holdings (fictional)
Who is asking
Chief risk officer
Industry
Diversified holding company
What happened
Each business reports its risks separately, and the CRO suspects a single event could set off several of them at once.

The question asked

If one risk materialises, which others does it set off, and which become the real exposure?

What it reads, and who can see the result

  • Risk register with links registerRisks and which can trigger which.
Reads
The register with the links the risk owners recorded.
Does not read
Incident detail or personal data.
Permission
Risk function access.
Who sees it
The CRO and the audit committee.

Try it

Fail one or more items and see what stops and what only degrades, worked out by following the dependencies.

Choose what materialises. Hard dependencies stop with it; soft ones carry on, degraded.

  • Macro event.
  • External.
  • Costs rise in local currency.Depends on: Sharp currency fall (hard)
  • Operations stop.Depends on: Cyber incident (hard)
  • Needs margin and cash.Depends on: Import cost spike (soft), Core systems outage (soft)
  • Follows an outage.Depends on: Core systems outage (hard)
  • Follows service failure or breach.Depends on: Customer service failure (hard), Breach of a lending covenant (soft)
materialises
0
Stops as a result
0
Degraded
0
Unaffected
7

The answer

Simulated answer. Written for this fictional case, not produced by a live model. Only the figures in it are computed, from what you decided above.

If none: 0 further risk(s) follow and 0 are strained.

Following the recorded links, none sets off none and strains none [S1][S2]. The risk with the widest reach in this map is Cyber incident, which sets off 3 other(s).

Risks reported separately look manageable; chained, the cyber incident reaches reputation through two routes. The register's links are the thing to improve, because a link nobody recorded is a cascade nobody is ready for.

Relies on: S1 · Risk register with recorded linksS2 · Group stress scenarios

Review and approval

The chief risk officer decides. Approving adds the chosen cascade to the group stress scenarios. It does not change any risk rating or control.

Not ready to approve. Fail at least one item first, to see what depends on it.

In the product this is a different person with the right permission. Here you play that role to see the rule.

What it produces

registerDraft, not approved

Cascade for the stress scenarios

  • Widest reach: Cyber incident (sets off 3 risks).
  • Scenario: none sets off none.

Limits of this example

  • Only links the owners recorded are followed.
  • Shows reach, not size: a long chain of small risks is not a large one.
  • This is a scripted demonstration on fictional data. No model was called and no real organisation, person or result is shown.