Wk 2 - Risk Management Breakdown Structure Paper

Risk Management Breakdown Structure Paper

A project of the expansion of supply globally is a major one for the organization. The success of such a project will greatly impact the organizations competitive advantage as well as their profitability. However, many risks are involved that will need to be looked into to, ensure they are prevented (McNeil, Frey, & Embrechts, 2015).

The goals and objectives for effective risk management will include, recognizing risks and regulating if they can be evaded, reduced, spread, shifted or prevented. The objectives of risk management will include: Creating and implementing a global business risk management procedure that is intertwined with the strategic management process. This means that the risk management process is integrated with the organization’s strategy creation, ensure that strategies of the organization are known and well understood by the personnel, create key performance indicators that are consistent with the strategy and reward the handling of key risks.

More so, they should make sure that project ownership questions are handled clearly so that functions, roles, and authorities are clearly articulated. Ensure to create a process to monitor and evaluate the risk profile as well as recognize gaps in the management relating to the risks by organizational goals in the external and internal operating surrounding. Risk management strategies should also be defined to build and implement risk management abilities and to enhance them also. Information provided to decision makers should be evaluated routinely to help them manage the main risks as well as protect the shareholders’ interests.

Some of the tools and techniques that are used in risk management include ideas that are utilized to assist in controlling risk in an organization or in a project. They facilitate the identification, assessment, reduction or elimination of these risks. They could be formal or informal. The tools and techniques involved in this project include the following: flowcharts, checklists, standards, SWOT analysis as well as data gathering. The tools used are dependent on the risks identified.

The risk management process cannot be successful without the collaboration of the organization. A lot of assistance is essential from the other departments within the organization. The managers from the various departments should provide any information required by the risk manager so that he can evaluate it and pin point any risk exposures. Awareness should also be created among supervisors and employees of their responsibility in the stoppage of loss as well as their obligation to be accountable for following processes, attending risk control gatherings, and provide any suggested training.

The risk identification process is carried out so as to know the risks that may have an effect on the project and document their attributes. Historical information on prior such projects carried out can be very resourceful like project files. An organization that was involved in such a project and preserved records of the project outcomes, could be very facilitative in identifying risks. These could either be ultimate project reports or risk reaction plans. More so, designed lessons learned that define problems and their solutions or availability through the understanding of the project participants or other groups in the organization.

Other sources could be printed information like commercial files, academic readings, benchmarking among other available studies that could be available for other utilization areas.

The risk management documentation used is a risk register. The risk register originates with a risk management plan. The project director must look for feedback from the team members and investors as well as consumers. The register becomes useful as it registers identified risks, their seriousness and the activities to be taken. The best format for the register is a table as it usually portrays a good deal of information (Puil, & Weele, 2014).

Managers should look at risk registers as management techniques through a revision and updating procedure that recognizes, evaluates and handles risks to acceptable levels. The register offers a framework in which issues that are a threat to the delivery of the expected advantages are prevented. Activities are then initiated in order to reduce the possibility and the potential effect of particular risks.

It is usually a list that consists of all the risks recognized at the start of the project as well as at the time the project is undertaken. It usually categorizes the risks on the basis of the possibility of happening and the significance of the effect on the project. It also contains the plans from the beginning of every high-level risk and the consequent results. Its components are as follows: a special identifier of every risk, an explanation of every risk and the way it could have an impact on the project, an evaluation of the possibility it will happen and the possible significance of the effect if it actually happens, that is low medium or high, a classification of every risk in a risk evaluation table, the person in charge of managing the risk and a list of the intended mitigation activities.

The register should be available the whole time the project is taking place. Some alterations could often be made as the current risks are categorized further regarding to the success of the mitigating strategy and other risks are recognized.

The main aim of a risk register is to offer a valuable instrument for the management and reduction of risks that are recognized before and throughout the project, to record risk reduction as well as management approaches being followed in reaction to the recognized risks and their classification regarding possibility and significance. Offering the trustees, management board as well as funders a written outline from which the status of risk can be described is another purpose. It also ensures that giving of risk management issues to key investors takes place. It offers a platform for delivery of feedback in order to inspire the participation of the main stakeholders. It identifies the activities required for the execution of the risk management plan and related costs.

The development of a risk register usually comes when the following has taken place. Preliminary risks must be recognized and classified in terms of possibility and significance at the very start of the project. The risk evaluation usually forms part of the project proposal, and when the project is finally approved, the risk register is created.

The risk management process requires a good understanding of the project, key stakeholders, the various categories of risk management actions or their sources and either of the documents as follows; project proposal, project business case or project business plan (Turner, 2014).

Effective risk management acts a key part in the success of a project. They go hand in hand. It is very important to have a well-coped and measured approach to project risks. It provides for the opportunity to recognize risks and decide on how best to handle risks as well as other events that are unexpected on the project. There are important roles that the risk management process plays in the project success, and they include:

Risk management has an impact on all parts of the project as the budget, the timetable, the scope, the decided level of quality, communications and stakeholder participation, the success when the projects outcome is executed among others.

Risks could be dimensional. They could be either positive, that is, opportunities or negative which means they need to be mitigated.

Risk management is about those activities that demonstrate that risk management is a key priority for the project management team like being aware constantly of things that might occur, having a consensus on the strategies for all risks as well as working to prevent negative risks from happening while at the same time coming up with the best out of the opportunities of positive risks.

Risk management should be conducted from the beginning of the project, regularly discussed and evaluated and have all members of the project team participating. The way in which the team chooses to manage risks is very much dependent on project stakeholders’ appetite for risk.

Every identified risk requires being evaluated, whereby the strategy for handling it is agreed upon by all concerned parties.

Project risk management entails so much more than the project manager tracking risks in the risk register and sharing it when people ask about it (Walker, Grey, Raymond, & Cooper, 2013).

In conclusion, there are tremendous benefits in risk management of projects. Money among other things is gained when you handle uncertain project events in a proactive manner. The outcome is usually that reduce the effect of project threats as well as capture opportunities that happen. This ensures that the project is delivered promptly, with the planned budget, as well as with the quality outcomes demanded. Moreover, the project team will be more pleased if they do not have to rush to prevent or repair any failures that have already happened.

RISK BREAKDOWN STRUCTURE

RBS 0	RBS 1	RBS 2
0.PROJECT	Project risk	Business
		Contract relationship with customers and suppliers.
		Management
		Political
	Organizational risk
	Project Management risks	Cost estimates
		Schedule estimates
		Communication
	Technical risks
	Production risks	Manufacturing concerns
		Logistics
	Support risks	Maintainability
		Warranty
	External risks	Procurement:
		Material Availability
		Lead times
		Quality
	Market

References

McNeil, A. J., Frey, R., & Embrechts, P. (2015). Quantitative risk management: Concepts, techniques and tools. Princeton university press.

Puil, J. V. D., & Weele, A. V. (2014). Risk Management in Projects. International Contracting: Contract Management in Complex Construction Projects.

Turner, J. R. (2014). The handbook of project-based management McGraw-hill.

Walker, P., Grey, S., Raymond, G., & Cooper, D. F. (2013). Project Risk Management Guidelines: Managing Risk in Large Projects and Complex Procurements. Wiley.