Risk management is all about keeping your risk under control. The more controlled your risk is, the more flexible you can be when you need to be. Traditionally, risk management was thought of as mostly a matter of getting the right insurance. However, this impression of risk management has changed dramatically. With the recent increase in rules and regulations, employee-related lawsuits and reliance on key resources, risk management is becoming a management practice that is every bit as important as financial or facilities management.
In Projects, risk management is the art and science of identifying, analyzing, and responding to risk throughout the life of a project and in the best interests of meeting project objectives. The project risk management process should not have to be complicated or time consuming to be effective. As a result of following a simple and proven approach that implicates seven steps taken at the beginning of each project, the project team can prepare itself for whatever may occur. Notwithstanding, there will always be changes and there may still be surprises, but the end result is that they are fewer.
... information. Their other organizations in which standards are given for risk management projects, including: National Institute of Standards and Technology (NIST), Department of ... : The undersigned acknowledge they have reviewed the Risk Management Plan for the project. Changes to this Risk Management Plan will be coordinated with and approved ...
The first tep of the project risk management process is to have each person involved in the planning process individually list at least ten potential risk items, step two, it is required to collect the lists of project risks and compile them into a single list. Coming to step three that needs assessing the probability (or likelihood), the impact (or consequence) and the detectability of each item on the list. Reaching to step four, it is necessary to divide the planning team into subgroups and to give a portion of the master list to each subgroup. Each subgroup can then identify the warning signs for its assigned list of project risks.
Step five deals with the same subgroups to identify possible preventive actions for the threats. On the other hand, step six is for the same subgroups to create a plan that includes the actions one would take if a warning signs or a risk were to occur. Finally, step seven in planning the project risk management process is to determine the owner of each risk on the list. With a tough economic forecast front and center, the following are risk management resolutions which can help to improve the bottom line. • • • • • • Tie risk management to corporate solvency.
Evaluate the indirect loss costs associated with each injury or accident. Take the rifle approach to safety. Buy employment practices coverage. Prepare now for the hard insurance market. Eliminate dead weight and Rely on your broker or agent. Risk Management Strategy On focusing to formal risk management efforts on operational risk exposures, it is essential to consider the Analyze ways to control any data-security risks, develop management strategies to minimize the frequency and severity of these risks and to identify the operational risks in everyday business activities further to take steps to minimize them.
For instance, financial companies, restaurants and other businesses that handle large volumes of cash should be aware of the likelihood of crime and take steps to prevent operational loss. For risk management methodology we have to consider the following: 1. Define the risk management methodology to be used: A. Risk Identification B. Categorize Risks C. Risk Impact Assessment D. Prioritize Risks E. Risk Response Planning F. Risk Response Tracking. G. Monitor Risk 2. Define assumptions that have a significant impact on project risk 3.
... IS projects facilitate this need (Sumner, M 1999). Project Management Success requires excellent project management. The first step of any project plan ... allocation which involves the application of standard business techniques to allocate and control the financial and resource ... and understanding of the project risk (Bailey, 1998).Information Systems Planning Models Project managers may choose to ...
Define the roles and responsibilities unique to the Risk Management function 4. Define Risk Management Milestones 5. Define risk rating/scoring techniques Page 2 6. Establish risk thresholds 7. Define risk communications 8. Define risk tracking process Risk Management and Project Selection Techniques Two commonly used project selection techniques are Benefit Measurement Models and Mathematical Models, i. e. (Mathematical Models used for extremely complex projects).
In the workplace, Benefit Measurement Models are more often used.
Some techniques in this category are: (1) Cost-benefit analysis: Which provide a net gain. Typically, the net gain is proportional to the risk level, i. e. the higher the risk, the higher the gain. (2) Weighted Scoring models: Risk of Incompletion is a factor that needs to be considered when comparing projects, using the Weighted Scoring Model for Risk Management and Project Selection to help you select a project. (3) Cash flow analysis: Takes into account the payback period, AND (4) Time Value of Money: Uses Net Present Value (NPV) and Internal Rate of Return (IRR).
Generally, the higher the NPV, the better the project is. There are positive risks in every project that require knowing how to respond to them. Risk Management and Project Selection should also account for positive risks. Risk Identification Risk identification is the process of understanding what potential events might hurt or enhance a particular project. The customary origins for project risks (Sources of Risks) are: performance, scope, quality, technology issues, environment, safety, health concerns, cost, schedule uncertainty and political concerns.
Categories of Risk include market risk, financial risk, technology risk, people risk and structure/process risk. Risk identification tools and techniques include: The Delphi Technique: This technique is a very unethical method of achieving consensus on a controversial topic in group settings. It requires well trained professionals who deliberately escalate tension among group members, pitting one faction against the other, so as to make one viewpoint appear ridiculous so the other becomes “sensible” whether such is warranted or not.
Interviewing Brainstorming: Generating many radical, creative ideas SWOT analysis: Provide information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operate. As such it is instrumental in strategy formulation and selection. The diagram shows now a SWOT analysis fits into an environmental scan. Case Study: International Programs, Risk Assessment and Allocation for Highway construction management International Technology Scanning Program: Bringing Global Innovations to U. S.
... Project management consists of several types of activities (Wikipedia, n.p.): Planning the work Assessing risk ... ; Project success is correlated with thorough analyses of the need for project deliverables; Project managers ... course of development, a process of achievement, a process of constant progress. Success ... , cannot be controlled 100%. Cost The cost of project is usually calculated from the time ...
Highways This study was developed as part of implementation plan to aware of risk management techniques and to begin the process of incorporating elements of risk management and to represent the uncertainties of estimates for cost and time to ensure strong and realistic budgets for publicly financed projects. The study get across a belief that active risk taking is just as important as risk mitigation, the agency poses three questions: Does the agency have adequate and dynamic processes in place to identify existing and new Page 3 risks faced? Does it have the right balance of arrangements in place to deal with these risks?
Does it have an adequate framework for risk analysis and evaluation to support decisionmaking processes? Risk Management Process: The six primary steps in project risk management are Identification, Assessment, Analysis, Mitigation, Allocation, Tracking and updating. When risks are understood and their consequences are measured, decisions can be made to allocate risks in a manner that minimizes costs, promotes project goals, and ultimately aligns the construction team (agency, contractor, and consultants) with the needs and objectives of the traveling public.
After the risks are identified, they were classified into groups of like risks. Classification of risks helps reduce redundancy and provides for easier management of the risks in later phases of the risk analysis process. These issues were resulting from an examination of the project description, work breakdown structure, cost estimate, design and construction schedule, procurement plan and general risk checklists. Risk characteristics were defined in a number of ways, one example that has transcended risk management in a number of technical fields: known, known-unknowns, and unknown-unknowns.
... knowledge areas: project integration, scope management, cost management, time management, human resources, communication, quality, risk and procurement (Charvat 64). Each of the nine process described also fall ...
Applying these characteristics to the elements of a conceptual cost estimate provides a good illustration. As a conclusion, the risk identification process identifies and categorizes risks that could affect the project. Risk Assessment: Risk assessment based on this study has two aspects. First it determines the likelihood of a risk occurring and second judges the impact of the risk should it occur. Risk assessment is fundamentally a management activity supported by persons familiar with risk management activities.
Transportation projects are complex endeavors, and risk assessment for transportation projects is likewise a complex process. It should be carefully considered the likelihood of a risk’s occurrence and its impact in the context of project conditions and circumstances. The goal of this assessment is to recognize the significant risk challenges to the project and to initiate an appropriate management response to their management and mitigation. Risk Analysis Methods: The selection of a risk analysis requires an analysis of what input risk measures are available and what types of risk output measures are desired.
By selection traditional methods, it concentrates primarily on developing cost contingencies for projects. On the other hand, Monte Carlo methods require knowledge and training for their successful implementation. Risk Mitigation and Planning: When risks are understood and their consequences are measured, decisions can be made to allocate risks in a manner that minimizes costs, promotes project goals, and ultimately aligns the construction team. Common strategies were implicated; avoidance, transference, mitigation, or acceptance.
Formalizing risk mitigation and planning throughout a highway agency will Page 4 help establish a risk culture that should result in better cost management and better allocation of project risks. Conclusions: A successful risk monitoring system was included for identification of new risks, and effectively manages the contingency reserve. The construction management scan provided insights into the advanced awareness of risk assessment and allocation techniques in other countries. A number of U. S. and international agencies were employed as case studies for the development of this document.
... combination of project management and product success. Three means that are frequently used to show that the project was successful are; cost, schedule and ... environmental sensitivity in this case (Subhankar 2003, pp. 56 – 70). Risk is inevitable; it is like a natural thing. The risky ...