Author Topic: Project Risk Management  (Read 5513 times)

engineer

  • Jr. Member
  • **
  • Posts: 88
    • View Profile
Project Risk Management
« on: February 11, 2010, 11:11:29 AM »
All projects are essential and every project has its own risk elements. Commencing from initiation to post completion of the project, the degree of risk grows within, as does the haze of uncertainty, thus proper project risk management can make a difference.

Risk inevitably comes with any project. It resides in the project as a contrary and hinders as an adversary. Enclosed within, the compound constraint of time, budget, workforce and multiple quantifiable and non-quantifiable determinants; a project marches towards its success and the risk factors follow until project execution.

To be precise, “risk” in a project management is the threat or possibility that an action or occurrence will unfavorably affect a project’s potentiality to achieve its objectives. Any counter event and adverse causes that can become an obstacle are risk factors.

However, inside the project management line of attack is the term “risk” this term is considered as a negative component resembling an occurrence that will adversely affect the goal of the project. Nevertheless, in the optimistic and neo project management approach, “risk” can be considered as a prospective occurrence or a productive event; if handled and executed properly it may lead to achieve enhanced objectives, improved and advanced.

Project risk management is the procedure of determining or evaluating risk and developing strategies to manage it, and is concerned with identifying risk and putting in place policies to eliminate or reduce these perils.

Project risk analysis is the detection and quantification of these probabilities and collisions of events that may harm the project. The risk analysis process identifies risk in advance, and the risk management process established methods of avoiding these risks thus reducing the impacts that may occur.

Risk Detection

Risk detection is an initial step in the risk management course. As these potential hazards occur causing problems in its kinetics there needs to be a plan for identification. To identify these concealed threats at their origin before their occurrences whether they are quantifiable or non-quantifiable is the foremost groundwork; this groundwork is the risk identification course of action.

Risk detection starts with tracing risk sources as a root cause, and its source branches including internal to external and primary to secondary.

Some of the most common risk detection methods in project risk management are as follows;

1. Objective Oriented Risk Detection

2. Scenario Oriented Risk Detection

3. Taxonomy Oriented Risk Detection

4. Regular Risk Inspection

Risk Evaluation in Project Risk Management

Once the risk detection process is concluded, then they must be evaluated for their latent severity for loss, and its likelihood for hazards. In project risk management, each risk should be exploited independently as they vary from simple to complex results.

Generally, plain risk can easily be quantified, while those risks of probabilities are unfeasible to enumerate; thus in the evaluation process it is significant to take a finer presumption to accurately accentuate the implementation of the risk management remedy. Moreover, the primary problem in risk evaluation is lack of statistical information and scientific evidences for determining the pace of risk events that may occur.

Conversely, gauging risk is often quite a complicated process, although numerous formulae are being followed; a popular yet simple formula is;

Project Risk = Accident X (Probability X Impact)

Or

Project Risk = Accident Probability X Accident Impact

Here, risk is directly equivalent to “probability of accident” multiplied by the “impact of accident”. In opposition, project risk management is less reliant only on the type of formula pursued, but more reliant on the risk occurrence and on how risk management is employed.

However, in general a systematic tactical plan that should be prearranged for risk management is as follows:

Risk: Description of the Actual Risk

Impact: Impact on the Project if the Risk Occurs

Possibility: Possibility of Loss if Risk Occurs

Action: Action Remedy to Reduce the Impact

Cost: Cost if the Risk Occurs

Once risk is identified and evaluated, there are four major practices that need to be followed to prevent a failed remedy, they are:

1. Risk Evasion: Avoidance of the Risk Altogether

2. Risk Diminution: Reducing the Degree of Risk through Precaution Measures

3. Risk Retention: Accepting the Degree of Risk with Loss

4. Risk Relocating: Transferring the Risk to Another Party

Hence, in the combat of project risk management etiquette, a precedence procedure should be tracked, whereby risks with the maximum loss and the maximum probability of evils should be handled first; vice versa to those with minimum risk.

Project risk management is the tactic of methodically applying lucrative action for diminishing the effect of hazard to the project. Risks are never fully avoidable due to exterior elements and limitation of financial and practical margins. However, with the acceptance of a certain degree of risk and the arrangements of its counter to tackle it, the risk at hand can be recompensed.

All risks can never be fully avoided or mitigated, therefore all projects have to accept some level of residual risks, but if the risk is handled with mythological and proficient approach referring to statistically and scientific information then risk rewards.

Engineer Forum

Project Risk Management
« on: February 11, 2010, 11:11:29 AM »

engineer

  • Jr. Member
  • **
  • Posts: 88
    • View Profile
The Principles of Risk Management
« Reply #1 on: February 11, 2010, 11:12:37 AM »
Understanding how to identify and treat risks to an organisation, a programme or a project can save unnecessary difficulties later on, and will prepare managers and team members for any unavoidable incidences or issues. The OGC M_o_R (Management of Risk) framework identifies twelve principles, which are intended "not ... to be prescriptive but [to] provide supportive guidance to enable organisations to develop their own policies, processes, strategies and plan."
Organisational Context

A fundamental principle of all generic management methods, including PRINCE2 and MSP as well as M_o_R, is that all organisations are different. Project managers, programme managers and risk managers need to consider the specific context of the organisation in order to ensure thorough identification of risks and appropriate risk treatment procedures.
The term 'organisational context' encompasses the political, economic, social, technological, legal and environmental backdrop of an organisation.
Stakeholder Involvement

It is easy for a management team to become internalised and forget that stakeholders are also key participants in everyday business procedures, short-term projects and business-wide change programmes.
Understanding the roles of individual stakeholders and managing stakeholder involvement is crucial to successful. Stakeholders should, as far as is appropriate, be made aware of risks to a project or programme. Within the context and stakeholder involvement, "appropriate" concerns: the identity and role of the stakeholder, the level of influence that the stakeholder has over and outside of the organisation, the level of investment that the stakeholder has in the organisation, and the type, probability and potential impact of the risk.
Organisational Objectives

Risks exist only in relation to the activities and objectives of an organisation. Rain is a negative risk for a picnic, a positive risk for drought-ridden farmland and a non-risk for the occupants of a submarine.
It is imperative that the individual responsible for risk management (whether that is the business leader, the project/programme manager or a specialist risk manager) understands the objectives of the organisation, in order to ensure a tailored approach.
M_o_R Approach

The processes, policies, strategies and plans within the M_o_R framework provide generic guidelines and templates within a particular organisation. These guidelines are based on the experience and research of professional risk managers from a wide range of organisations and management backgrounds. Following best practices ensures that individuals involved in managing the risks associated with an organisation's activity are able to learn from the mistakes, experiments and lessons of others.
Reporting

Accurately and clearly representing data, and the transmission of this data to the appropriate staff members, managers and stakeholders, is crucial to successful risk management. The M_o_R methodology provides standard templates and tested structures for managing the frequency, content and participants of risk communication.
Roles and Responsibilities

Fundamental to risk management best practice is the clear definition of risk management roles and responsibilities. Individual functions and accountability must be transparent, both within and outside an organisation. This is important both in terms of organisational governance, and to ensure that all the necessary responsibilities are covered by appropriate individuals.
Support Structure

A support structure is the provision within an organisation of standardised guidelines, information, training and funding for individuals managing risks that may arise in any specific area or project.
This can include a centralised risk management team, a standard risk management approach and best-practice guidelines for reporting and reviewing organisational risks.
Early Warning Indicators

Risk identification is an essential first step for removing or alleviating risks. In some cases, however, it is not possible to remove risks in advance. Early warning indicators are pre-defined and quantified triggers that alert individuals responsible for risk management that an identified risk is imminent. This enables the most thorough and prepared approach to handling the situation.
Review Cycle

Related to the need for early warning indicators is the review cycle. This establishes the regular review of identified risks and ensures that risk managers remain sensitive to new risks, and to the effectiveness of current policies.
Overcoming Barriers to M_o_R

Any successful strategy requires thoughtful consideration of possible barriers to implementation. Common issues include:

Established roles, responsibilities, accountabilities and ownership.
An appropriate budget for embedding approach and carrying out activities.
Adequate and accessible training, tools and techniques.
Risk management orientation, induction and training processes.
Regular assessment of M_o_R approach (including all of the above issues.
Supportive Culture

Risk management underpins many different areas and aspects of an organisation's activity. A supportive culture is essential for ensuring that everybody with risk management responsibilities feels confident raising, discussing and managing risks.
A supportive risk management culture will also include evaluation and reward of risk management competencies for the appropriate individuals.
Continual Improvement

In an evolving organisation, nothing stands still. An effective risk management policy includes the capacity for re-evaluation and improvement. At a practical level, this will require the nomination of an individual or a group of individuals to the responsibility of ensuring that risk management policies and procedures are up-to-date, as well as the establishment of regular review cycles of the organisation's risk management approach.
( Source: projectsmart.co.uk)

Bubbylayree

  • Newbie
  • *
  • Posts: 2
    • View Profile
    • Magic Shops
Re: Project Risk Management
« Reply #2 on: July 09, 2010, 11:05:36 AM »
In study, every thing is essential nothing is optional.

kp_rose

  • Newbie
  • *
  • Posts: 2
    • View Profile
Re: Project Risk Management
« Reply #3 on: September 08, 2010, 09:21:19 AM »
A risk is something that may happen and if it does, will have a positive or negative impact on the project. A few points here. "That may happen" implies a probability of less then 100%. If it has a probability of 100% - in other words it will happen - it is an issue. An issue is managed differently to a risk and we will handle issue management in a later white paper. A risk must also have a probability something above 0%. It must be a chance to happen or it is not a risk.

The second thing to consider from the definition is "will have a positive or negative impact". Most people dive into the negative risks but what if something goes right?








hypnosis Minnesota
depression Minnesota
anger management Minnesota
« Last Edit: September 08, 2010, 09:21:53 AM by kp_rose »