Assignment 2: Risk Management Plan

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The Project Manager is responsible for reviewing and maintaining this Risk Management Plan throughout the project, to ensure that the risk process remains appropriate to deal with the level of risk faced by the project. Project description and objectives  The British petroleum company is an organization that deals with gas and petroleum products. The main objective of the project to prioritize a comprehensive approach to anticipate, identify, prioritize, manage and monitor the portfolio of business risks impacting the company. The scope and objectives for the British Petroleum Project are summarized as follows: The scope of the project is that the companies have mechanisms that includes saving on time, ensuring they have a cost effective plan to ensure that they are able to take risky measures that have the benefit of producing effective measures to protect the business (Petroleum, 2014).The British petroleum company needs to also involve investment of technology, skilled labor and also ISO Certified. The basic objectives of the project are to ensure there is a successful flow of business and also protect other people from potential explosions from the firm's factory. AIMS, SCOPE AND OBJECTIVES OF RISK PROCESS  The British Petroleum Project risk management process aims to manage all foreseeable risks (both opportunities and threats) in a manner which is proactive, effective and appropriate, in order to maximize the likelihood of the project achieving its objectives, while maintaining risk exposure at an acceptable level. "Acceptable risk" is defined for the petroleum Project as a clear definition of how much risk is acceptable to key stakeholders such as the project sponsor (Cooper, 2014)  The risk process will aim to engage all project stakeholders appropriately, creating ownership and buy-in to the project itself and also to risk management actions. Risk-based information will be communicated to project stakeholders in a timely manner at an appropriate level of detail, to enable project strategy to be modified in the light of current risk exposure. The risk management process will enable project stakeholders to focus attention on those areas of the project most at risk, by identifying the major risks (both opportunities and threats) potentially able to exert the greatest positive or negative Influence on achievement of project objectives. PROJECT SIZE  The project size is determined by the amount of money that has been invested. The petroleum company project is worth 100000 us dollars hence the size of this project is that of a large project. This affirms that we need an extended risk management process in this situation. The risk management process covers all activities undertaken during the lifetime of the company. Therefore, it is important to perform project sizing to determine the length of time and resources that will be required to successfully complete the project. Therefore, it is important to perform project sizing to properly plan on the time and resources required to complete various components of the project.  The requirements stability for this project was the lowest because there are clearly defined objectives for the project. The risk assessment for the refinery plant was done and the areas that need improvement clearly defined. The market sector regulatory characteristics score was the highest because the oil and refinery business is one of the most regulated industries. Safety in this business is a major concern and there are some strict measures that the company will be required to take into consideration throughout the project. The set project value for this risk management plan is $100,000; hence, it had a low score according to the criterion set by Hilson.  The project duration and resources are both medium and there is an acceptable level of post project liability exposure identified. Post-project exposure may arise from the risk of failure of any applied safety strategies, but the chances of this occurring are relatively low. Based on this sizing, it is likely that the set budget of $100,000 will be enough for the completion of the project. This sizing will also be effective in determining the type of ATOM risk management process to be used. RISK TOOLS AND TECHNIQUES  The following tools and techniques will be used to support the risk management Process on the British petroleum Project is  Initiation  This is actually the time whereby one begins a project. It is the process of outlining the scope and objectives of the project and also how the project will be undertaken. One can also set up a project team and also hire team players who will assist in ensuring this process is a success.  Identification  Here, we are able to identify and outline potential risks that could affect the British petroleum company and also be able to understand the consequences of taking a risk i.e. what is the expected outcome of the choice bearing in mind that choices have consequences. Each of the members will give some of the issues they believe pose a risk to the project and would need to be included in the risk mitigation process. The project team will also analyze the risks that have been identified by the previous risk assessment reports by third party organizations. Some of the risks that can be identified include lacking management supervision, employee safety behaviors, and repairs and servicing needs for the company's tools, machinery, and equipment. Assessment  This is processing to identify potential hazards and analyze what could happen if a hazard occurs. A business impact analysis (BIA) is the process for determining the potential impacts resulting from the interruption of time sensitive or critical business processes. To do this you need to think about what might cause harm to people and decide whether you are taking reasonable steps to prevent that harm. This is known as risk assessment and it is something you are required by law to carry out. Regulations require particular control measures. Your assessment can help you identify where you need to look at certain risks and these particular control measures in more detail. These control measures do not have to be assessed separately but can be considered as part of, or an extension of, your overall risk assessment (Aven, 2016).  An example of the risks identified is employee education. During the risk identification, it was found that the employees failed to apply the safety protocol when operating the company's tools and machinery and also in the day-to-day operations at the company. This is an indication that the employees either do not understand the safety protocol or its implementation. This factor poses a risk to the employees and the company's property because it increases the chances of the occurrence of the risks and also reduces chances of mitigation of safety risks in case of their occurrence (Mun, 2015).  Another risk identified at the company is the maintenance investments. The company has been spending a limited amount of resources to repair and service its equipment and machinery. The company's poor investment on safety has caused the wear and tear of some of its equipment increasing the risks of hazard. Some examples of the identified issues with the equipment and machinery include broken alarms, thinned pipes, chunks of concrete falling, and bolts dropping. Risk Reviews and Reporting To ensure effective mitigation of the identified risks it is important to review and report the results to the stakeholders. This ensures proper monitoring of the risks to ensure that strategies to manage any issues experienced are applied effectively. The risk review process will include an analysis of the risk register and the planned treatment plans, the project performance data reviews, project schedule progress, and the status of the project deliveries produced. A risk report summarizing the risks and opportunities and the latest status of the mitigation actions will be generated bi-annually to make the risk monitoring more effective. This will help to ensure that the relevant stakeholders understand the status of the risks and the strategies that the company has put in place to maximize the safety of the employees and its property Probability and Impacts The probability and impact matrix are a tool used to prioritize risks. This tool uses the combination of the probability and impact scores of individual risks to determine the process that should be taken to handle the risks. This Defines scales for probability and impact to be used for this project. The probability scale below may be used unchanged, but the impact scales must be replaced with values specific to the particular project and which reflect agreed risk thresholds for this project. Looking at impact versus probability is common in order to categorize and prioritize risks as some risks may have a severe impact on projects objectives but only happen on rare occasions, while other have a moderate impact but occur more frequently. SCALE PROBABILITY +/- IMPACT ON PROJECT OBJECTIVES TIME COST QUALITY VHI >90% >20 days >$200K Very significant impact on overall functionality HI 71-90% 11-20 days $101K- $200K Significant impact on overall functionality MED 51-70% 4-10 days $51K- $100K Some impact in key functional areas LO 31-50% 1-3 days $10K- $5K0 Minor impact on overall functionality VLO 11-30% <1 day <$10K Minor impact on secondary functions NIL <10% No change No Change No change in functionality RISK THRESHOLD   Risk threshold is an amount of risk that an organization or individual is willing to accept. For example, for your project a 100000 USD cost overrun is acceptable to your organization, but anything more than that is not acceptable. As per the 6th edition of the PMBOK Guide, "Risk threshold is the level of exposure above which risks are addressed and below which risks may be accepted." The risk threshold is a further step in the risk tolerance; you can say that it quantifies the risk tolerance with a more precise figure. In risk tolerance you have limits, but in risk threshold you have a clear figure. For example, this organization cannot allow taking a risk for slippage (or impact) for more than 100000 US Dollars. To determine the risk threshold, you will hold interviews and conduct meetings with stakeholders to find their risk appetite, then you will analyze their risk tolerance, and lastly, you will define the risk threshold. Finally, the Risk threshold is like a quantified limit beyond which your organization cannot go. Threshold is like an end. Conclusion The risk management plan is very pertinent as it will enable the petroleum company to put in place measures that will be able to ensure that even if it undertakes risks this will be risks made after a deep analysis of a problem that needs to be solved by the company or a mechanism that once achieved it can bring profits to the company.   REFERENCES Aven, T. (2016). Risk assessment and risk management: Review of recent advances on their foundation. European Journal of Operational Research, 253(1), 1-13. Cooper, D., Bosnich, P., Grey, S., Purdy, G., Raymond, G., Walker, P., & Wood, M. (2014). Project Risk Management Guidelines: Managing Risk with ISO 31000 and IEC 62198. Wiley Global Education. Mun, J. C. (2015). U.S. Patent No. 9,020,857. Washington, DC: U.S. Patent and Trademark Office. Petroleum, B. (2014). BP energy outlook 2035. BP stats, Jan. Risk Management Plan 2 RISK MANAGEMENT PLAN 1 Risk Management Plan Elhousany Abosamra Dr. Steven Englehart Project Risk Management: BUS-519 07/29/2018 Introduction This document is the Risk Management Plan for the British petroleum Project, defining the risk management process to be employed throughout the life of this project. The Project Manager is responsible for reviewing and maintaining this Risk Management Plan throughout the project, to ensure that the risk process remains appropriate to deal with the level of risk faced by the project. Project description and objectives The British petroleum company is an organization that deals with gas and petroleum products. The main objective of the project to prioritize a comprehensive approach to anticipate, identify, prioritize, manage and monitor the portfolio of business risks impacting the company. The scope and objectives for the British Petroleum Project are summarized as follows: The scope of the project is that the companies have mechanisms that includes saving on time, ensuring they have a cost effective plan to ensure that they are able to take risky measures that have the benefit of producing effective measures to protect the business (Petroleum, 2014).The British petroleum company needs to also involve investment of technology, skilled labor and also ISO Certified. The basic objectives of the project are to ensure there is a successful flow of business and also protect other people from potential explosions from the firm's factory. AIMS, SCOPE AND OBJECTIVES OF RISK PROCESS The British Petroleum Project risk management process aims to manage all foreseeable risks (both opportunities and threats) in a manner which is proactive, effective and appropriate, in order to maximize the likelihood of the project achieving its objectives, while maintaining risk exposure at an acceptable level. "Acceptable risk" is defined for the petroleum Project as a clear definition of how much risk is acceptable to key stakeholders such as the project sponsor (Cooper, 2014) The risk process will aim to engage all project stakeholders appropriately, creating ownership and buy-in to the project itself and also to risk management actions. Risk-based information will be communicated to project stakeholders in a timely manner at an appropriate level of detail, to enable project strategy to be modified in the light of current risk exposure. The risk management process will enable project stakeholders to focus attention on those areas of the project most at risk, by identifying the major risks (both opportunities and threats) potentially able to exert the greatest positive or negative Influence on achievement of project objectives. PROJECT SIZE The project size is determined by the amount of money that has been invested. The petroleum company project is worth 100000 us dollars hence the size of this project is that of a large project. This affirms that we need an extended risk management process in this situation. The risk management process covers all activities undertaken during the lifetime of the company. Therefore, it is important to perform project sizing to determine the length of time and resources that will be required to successfully complete the project. Therefore, it is important to perform project sizing to properly plan on the time and resources required to complete various components of the project. The requirements stability for this project was the lowest because there are clearly defined objectives for the project. The risk assessment for the refinery plant was done and the areas that need improvement clearly defined. The market sector regulatory characteristics score was the highest because the oil and refinery business is one of the most regulated industries. Safety in this business is a major concern and there are some strict measures that the company will be required to take into consideration throughout the project. The set project value for this risk management plan is $100,000; hence, it had a low score according to the criterion set by Hilson. The project duration and resources are both medium and there is an acceptable level of post project liability exposure identified. Post-project exposure may arise from the risk of failure of any applied safety strategies, but the chances of this occurring are relatively low. Based on this sizing, it is likely that the set budget of $100,000 will be enough for the completion of the project. This sizing will also be effective in determining the type of ATOM risk management process to be used. RISK TOOLS AND TECHNIQUES The following tools and techniques will be used to support the risk management Process on the British petroleum Project is Initiation This is actually the time whereby one begins a project. It is the process of outlining the scope and objectives of the project and also how the project will be undertaken. One can also set up a project team and also hire team players who will assist in ensuring this process is a success. Identification Here, we are able to identify and outline potential risks that could affect the British petroleum company and also be able to understand the consequences of taking a risk i.e. what is the expected outcome of the choice bearing in mind that choices have consequences. Each of the members will give some of the issues they believe pose a risk to the project and would need to be included in the risk mitigation process. The project team will also analyze the risks that have been identified by the previous risk assessment reports by third party organizations. Some of the risks that can be identified include lacking management supervision, employee safety behaviors, and repairs and servicing needs for the company's tools, machinery, and equipment. Assessment This is processing to identify potential hazards and analyze what could happen if a hazard occurs. A business impact analysis (BIA) is the process for determining the potential impacts resulting from the interruption of time sensitive or critical business processes. To do this you need to think about what might cause harm to people and decide whether you are taking reasonable steps to prevent that harm. This is known as risk assessment and it is something you are required by law to carry out. Regulations require particular control measures. Your assessment can help you identify where you need to look at certain risks and these particular control measures in more detail. These control measures do not have to be assessed separately but can be considered as part of, or an extension of, your overall risk assessment (Aven, 2016). An example of the risks identified is employee education. During the risk identification, it was found that the employees failed to apply the safety protocol when operating the company's tools and machinery and also in the day-to-day operations at the company. This is an indication that the employees either do not understand the safety protocol or its implementation. This factor poses a risk to the employees and the company's property because it increases the chances of the occurrence of the risks and also reduces chances of mitigation of safety risks in case of their occurrence (Mun, 2015). Another risk identified at the company is the maintenance investments. The company has been spending a limited amount of resources to repair and service its equipment and machinery. The company's poor investment on safety has caused the wear and tear of some of its equipment increasing the risks of hazard. Some examples of the identified issues with the equipment and machinery include broken alarms, thinned pipes, chunks of concrete falling, and bolts dropping. Risk Reviews and Reporting To ensure effective mitigation of the identified risks it is important to review and report the results to the stakeholders. This ensures proper monitoring of the risks to ensure that strategies to manage any issues experienced are applied effectively. The risk review process will include an analysis of the risk register and the planned treatment plans, the project performance data reviews, project schedule progress, and the status of the project deliveries produced. A risk report summarizing the risks and opportunities and the latest status of the mitigation actions will be generated bi-annually to make the risk monitoring more effective. This will help to ensure that the relevant stakeholders understand the status of the risks and the strategies that the company has put in place to maximize the safety of the employees and its property Probability and Impacts The probability and impact matrix are a tool used to prioritize risks. This tool uses the combination of the probability and impact scores of individual risks to determine the process that should be taken to handle the risks. This Defines scales for probability and impact to be used for this project. The probability scale below may be used unchanged, but the impact scales must be replaced with values specific to the particular project and which reflect agreed risk thresholds for this project. Looking at impact versus probability is common in order to categorize and prioritize risks as some risks may have a severe impact on projects objectives but only happen on rare occasions, while other have a moderate impact but occur more frequently. SCALE PROBABILITY +/- IMPACT ON PROJECT OBJECTIVES TIME COST QUALITY VHI >90% >20 days >$200K Very significant impact on overall functionality HI 71-90% 11-20 days $101K- $200K Significant impact on overall functionality MED 51-70% 4-10 days $51K- $100K Some impact in key functional areas LO 31-50% 1-3 days $10K- $5K0 Minor impact on overall functionality VLO 11-30% <1 day <$10K Minor impact on secondary functions NIL <10% No change No Change No change in functionality RISK THRESHOLD Risk threshold is an amount of risk that an organization or individual is willing to accept. For example, for your project a 100000 USD cost overrun is acceptable to your organization, but anything more than that is not acceptable. As per the 6th edition of the PMBOK Guide, "Risk threshold is the level of exposure above which risks are addressed and below which risks may be accepted." The risk threshold is a further step in the risk tolerance; you can say that it quantifies the risk tolerance with a more precise figure. In risk tolerance you have limits, but in risk threshold you have a clear figure. For example, this organization cannot allow taking a risk for slippage (or impact) for more than 100000 US Dollars. To determine the risk threshold, you will hold interviews and conduct meetings with stakeholders to find their risk appetite, then you will analyze their risk tolerance, and lastly, you will define the risk threshold. Finally, the Risk threshold is like a quantified limit beyond which your organization cannot go. Threshold is like an end. Conclusion The risk management plan is very pertinent as it will enable the petroleum company to put in place measures that will be able to ensure that even if it undertakes risks this will be risks made after a deep analysis of a problem that needs to be solved by the company or a mechanism that once achieved it can bring profits to the company. REFERENCES Aven, T. (2016). Risk assessment and risk management: Review of recent advances on their foundation. European Journal of Operational Research, 253(1), 1-13. Cooper, D., Bosnich, P., Grey, S., Purdy, G., Raymond, G., Walker, P., & Wood, M. (2014). Project Risk Management Guidelines: Managing Risk with ISO 31000 and IEC 62198. Wiley Global Education. Mun, J. C. (2015). U.S. Patent No. 9,020,857. Washington, DC: U.S. Patent and Trademark Office. Petroleum, B. (2014). BP energy outlook 2035. 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