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Chapter_10_Operations_and_Risks_.pptxBM301 – Entrepreneurship and Innovation
Fall Semester 2019
Dr. Nouf Al-Bazie
Dr. Abrar Al-Enzi
Chapter 10: Operations and Risks
Overview
Operations Management
Risk Management
Operations Management
Key Activities
These are the activities that are important in producing the company’s value proposition.
Examples:
Consulting
Designing
Web development
Driving
Key Resources
Key resources include everything needed for the business model to succeed and the value proposition to be delivered.
It includes strategic resources needed to launch, maintain, and improve the business, product or service.
Examples:
Intellectual property
physical and financial assets
Office space
Computers
People (staff)
Internet connection
Car
Electricity
Key Partnerships
Key partners are external people or organizations that support your business.
Examples:
Partnerships
Suppliers
Joint ventures
Operating Plans and Critical Paths
Operating plans identify major processes and critical paths needed to complete a project. One method that can be used to monitor a project is a Gantt chart.
Gantt charts are a project planning technique used to present the timing of each task required to complete a project.
Benefits of a Gantt Chart
Helps in planning tasks that needs to be completed.
Demonstrate task schedules.
Allows to plan the allocation of resources needed to complete the project.
Helps to manage the dependencies between tasks.
When undertaking a project, Gantt charts are useful to monitor the progress of the project and take actions when needed.
How to Develop a Gantt Chart
List all the tasks needed to complete the project.
Note the duration for each task.
List all task dependencies, if any. A task dependency is when one task cannot start until another one has been finished. Example: Task B cannot start until Task A is complete.
By completing the chant chart, you will be able to identify the longest and shortest tasks needed to reach the end of the project without impacting the project schedule.
Gantt Chart Sample
Risk Management
Introduction
Preparing a risk assessment gives a better understanding of the kinds of risks that the company might face and its possible consequences.
Risk management is an ongoing process that involves identifying, assessing, mitigating and monitoring the impact of the risk event.
Risk Identification
The first step in completing a risk assessment is to identify the risks associated with the project.
Examples:
Technical
Cost
Schedule
Financial
People
Risk Assessment
After identifying the risks, the second step is to evaluate the probability of each risk happening and its impact on the organization.
Risk assessment involves two dimensions:
Probability
Impact
Probability
The probability aspect of risk assessment involves deciding how likely is the risk going to occur.
There are three categories of probability:
High probability: the risk might occur once every one to two years
Medium probability: the risk might occur once every three to five years
Low probability: the risk might occur less frequently than once in five years.
Impact
The impact aspect involves considering the amount of risk effect on the organization, client or project.
There are three categories of impact:
High impact: the organization might be forced to terminate activities as a result of a failure or occurrence defined by the risk
Medium impact: the organization would continue but the risk will have significantly effected its performance, timescales or costs
Low impact: the impact would be small and easily managed at a relatively routine level within the organization
Risk Assessment Matrix
Risk Mitigation
After the risk has been identified and evaluated, the next step is develop the most appropriate actions to reduce or eliminate the risk
It can be done in the following ways:
Risk Elimination: develop actions that would eliminate the risk or reduce it to an acceptable level.
Risk Reduction: is an attempt to reduce the risk by increasing internal control, training or supervision depending on the nature of the risk.
Risk Transfer: is a risk reduction method that transfers both internal and external the risk to another party.
Risk Acceptance: simply accept all risks, but plan to manage or monitor the risk and put in place. This strategy is adopted if it is not possible to address a specific risk in any other way.
Risk Monitoring and Control
Monitoring and control is a method used to determine how well is the risk management plan is designed in terms of tracking potential risks, overseeing the implementation of risk plans, and evaluating the effectiveness of risk management procedures.
Risk Management Example
| Risk Area | Risk Identification | Risk Assessment | Risk Mitigation |
| Health and safety | Significant accident or incident | Probability: Low Impact: Medium | Define appropriate health and safety policies and review them regularly Record and report all accidents/incidents and ensure lessons are learnt. |
| IT | Complete loss of IT services due to computer or power failure | Probability: Low Impact: High | Ensure all equipment has automatic local back-up Ensure all data is regularly backed-up and filed by each operator |
