ITIL® 4: Costs and Risks (eLearning 6/25)

Summary

This video lesson covers essential concepts of costs and risks in a service management environment. It explains costs imposed on consumers (e.g., service fees) and costs removed through efficiency or automation. The discussion also introduces risk management, explaining how it involves making balanced decisions, not just avoiding negative outcomes. Using relatable examples, such as deciding whether to take an umbrella based on weather forecasts, the video emphasizes the importance of aligning risk levels with organizational goals. The lesson sets the stage for understanding the service value system in the upcoming session.

Takeaways

• 😀 Costs are the amount of money spent on a specific activity or resource, including charges from service providers, licenses, and compliance costs.
• 😀 Costs imposed on the consumer include charges for services like coffee, train rides, or HR services.
• 😀 Some costs are removed from the consumer, such as savings generated by automation or service improvements.
• 😀 An example of cost savings is insulating a house, which reduces electricity bills.
• 😀 Risk is defined as the possibility of an event causing harm, loss, or difficulty in achieving objectives.
• 😀 Risk can also refer to the uncertainty of outcomes, including both negative and positive possibilities.
• 😀 Understanding risk doesn't require complex knowledge—everyday decisions, like whether to carry an umbrella based on weather, demonstrate basic risk management.
• 😀 Risk management involves balancing potential consequences, such as deciding whether to carry an umbrella to avoid getting wet or losing it.
• 😀 Different organizations have different levels of risk tolerance, depending on their industry and objectives (e.g., aerospace vs. innovation-driven sectors).
• 😀 Risk management is about understanding and managing the appropriate level of risk based on the organization's context and objectives.
• 😀 The next lesson will focus on the Service Value System (SVS) in ITIL, showing how principles and concepts come together to create value for service providers and consumers.

Q & A

What are the two types of costs discussed in the script?

The two types of costs are 'costs imposed on the consumer' and 'costs removed from the consumer'. The first involves charges from service providers, while the second refers to savings, such as those gained by automating tasks or reducing energy bills.

Can you explain what 'costs imposed on the consumer' are with an example?

'Costs imposed on the consumer' are the expenses consumers pay to access services, such as the price of a coffee, a train ride, or a new computer. These charges are typically set by service providers but can also include other fees like local taxes.

What does the script mean by 'costs removed from the consumer'?

'Costs removed from the consumer' refer to savings or expenses that no longer need to be incurred due to a service. For example, insulating a house reduces electricity costs, or automating processes saves time and resources.

How is risk defined in the script?

Risk is defined as the possibility of an event causing harm or loss, or making it more difficult to achieve objectives. It can also refer to the uncertainty of outcomes, which includes both negative and positive potential outcomes.

What does the script suggest about understanding risk in a simple way?

The script suggests that risk is easier to understand than it seems. For example, deciding whether to take an umbrella based on the weather forecast is a form of risk management. It's about making a balanced decision based on the likelihood of various outcomes.

How does the concept of risk relate to the decisions we make in everyday life?

Risk management in everyday life involves balancing the consequences of different outcomes. For instance, taking an umbrella to avoid getting wet or choosing not to take one to avoid losing it or carrying it unnecessarily reflects this balance of risk.

What are the factors that influence how much risk an organization is willing to take?

The level of risk an organization is willing to take depends on its environment and objectives. For example, an airline maintaining engines will be risk-averse, while a company focused on innovation or research might be more willing to accept higher levels of risk.

How does risk vary depending on the type of organization?

Risk varies based on the type of organization. A service provider in a highly regulated industry, like aviation, will be more risk-averse, while organizations in fields like marketing or R&D may be more inclined to take calculated risks for potential rewards.

What is meant by a 'risk profile' in the context of the script?

A risk profile refers to the acceptable level of risk that an individual or organization is willing to take. It is not about eliminating all risk, but about making decisions that balance potential rewards with the likelihood and severity of negative outcomes.

What is the purpose of the service value system mentioned in the script?

The service value system is a framework used to connect the various concepts of service management, such as costs and risks, in a structured way. It aims to create value for both the service provider and the consumer, ultimately improving service delivery.