NEED HELP WITH PROJECT RISK MANAGEMENT

Risk management Phase 1-5 Individual Project

Table of Contents Introduction 3 Project Outline 3 Project risk identification 4 Project risk assessment 6 Project Risks, Responses Strategy 7 Project Risks Monitoring & Control Plan 10 Project Risks WBS & Budget Updates 11 Project Risks, Communications Plan 11 References 12

The project that is planned by the company is to divest and move into a global perspective. Let’s ay for instance a possible expansion in the expansion of an oil refinery plant, such as a sulphur plant, my project will be to research Savage Gulf Sulphur Services. The project is supposed to ensure that the company will generate more revenue, and then it shall move into a global perspective. With the project, the company shall also increase its production due to large demand generated by the new market in the globe. Every project is faced with a certain degree of risk in the activities that it takes in an organization. It is important for organizations should carry out risk assessment procedures that are inclined in ensuring that an effective strategy shall be formulated to eliminate risk. This paper will discuss the risk management strategy and the processes that are taken in the management of risk in an organizational structure.

The project is it intended to increase the organized capacity and move into the global market structure. This will involve the purchase of new factors of production such as land, investors and business owners invest large amounts of capital to such investments. The project will also

Risk management justification

Risk management is identified and can be described as an assesment that has all these prioritization of risks, the management of risk could involve precise coordination and ecomonical application strategies with ereasons to minimize, control and monitor the probability and impact of unfortunate events. Risk management also helps in maximization and the act of realization of opportunities. In an organizational structure, risk management has a variety of functions which makes it an important department in an organization, based on the many roles that the risk management. This is the implementation of a strong and effective risk management and controls within securities firm, a helps in promoting stability throughout the entire firm. Risk management controls are divided into two categories. The internal and external control categories help in providing useful and effective control systems. The internal controls help in protecting the firms against market, credit, operational and legal risks. Secondly, it helps in protecting the financial industry from all the systemic risks in the organization structure (Merna, 2008)

Risk management is useful in protecting the firm's customers from enormous and large non-market related losses such as misappropriation of resources, fraud and firm failure. Such failures can result in enormous risk in the organization. Risk management also helps in the act or protecting the firm and its franchise from suffering adversely from reputational risk. If a company loses its reputation in a market structure, then it is subjected to incur heavy losses as customers and clients will not have the required. Risk management helps in promoting and inspiring confidence in people, hence attracting large number of clients who will in turn bring enormous business to the firm. An effective risk management also helps in risk management and control measures that help in the protection against serious and anticipated loss Loosemore, 2006).

The risk identification processes are categorized as the risks that are done to identify and also to categorize the risks that affect the development of a project. The risk identification process includes the development of a list of lists that are done with the risks, depending on the character of the project and its continuity. In non-complex projects that are characterized by low-cost projects with little uncertainty, the risks are commonly kept simply as a list of red flags items. In such situation, the items can be assigned to individual teams who are given the responsibility to watch throughout the project development process. Since risks are events that when triggered will cause problems or benefits the main and most effective place to start with risk identification process is the source of the problems and the problems of the competitors who are experiencing the same problem. The sources of risks can either be internal or external where the target risk management can use mitigation instead of management. The risk management and the process of identification. The problem analysis, identification involves risks that are related to the identified threats, the threats of losing money, accidents and the casualty threat of abuse and wrong use of confidential information or human errors. Such threats may be in existence in a variety of various entities where they do come in the form of customers, shareholders or even the legislative bodies such as they govern or even the board of governors (Loosemore, 2006).

When a problem source is well known then, the events that a source may trigger, or the events that can lead to a problem can be investigated. Such problems include an investor or a shareholder withdrawing during the continuity of a project that may endanger funding of the project. Such a move would lead to stoppage of the project due to lack of funds to support the activities that are carried out during a project. On the other hand, the access or vital confidential information ay be stolen by employees even within a closed network. Competitors may use such information that in turn will disadvantage the project. It is important to ensure that project information is kept in a secured area with a limited access control. Other natural calamities such as lightning that may strike an aircraft during a takeoff may make all people on board to be immediate casualties.

During the risk identification process, there are always varying processes that are conducted depending on the nature and the form of the project and the risk management skills of the team members who are involved in the project. However, it is true that identification processes begin with an examination of issues and concerns that are created by the project development team. The issues and concerns that are brought about by a project can be derived from an examination of the project description, cost estimates, design and construction, work breakdown and procurement plan. In the process the team should be able to identify and examine a project effect by reducing them to a level and detail that tends to permit a risk evaluator to understand the significance or any risk and identify its causes.

There are different methods that can be used in the process of risk identification. However, the method mainly depends on the culture, industry practice and the compliance. Among the commonly used acids include the scenario based risk identification method where the different scenario is created. The different scenarios may be the alternative ways to achieve an objective or an analysis of the interactions of forces in which a market or battle in the market structure. Any event that triggers an undesired scenario is then identified as a risk. Secondly the objective-based risk identification method where organizations and project teams have objectives. Any event that may endanger achieving an objective partly or completely is identified as risk. Other methods used include the risk chatting, common-risk checking and the taxonomy-based risk identification method.

After risk identification, the process of ascertaining the degree of severity, the probability of occurrence and the negative impacts and effects that may be caused by the risk is then conducted. The risk assessment process in carried with an aim of determining the qualitative and quantitative value of risk related to a concrete situation The assessment process is critical and useful as it helps in making the best-educated decisions in order to prioritize the implementation of risk management plan properly. A short-term positive improvement can result in long-term negative impacts. The fundamental difficulties in risk assessments are determining the rate of occurrence since statistical information is not obtainable on all kinds of past incidents. When dealing with intangible assets and property such as loyalty, it becomes difficult to attribute a given cost to them. Risk assessment should provide information to the management team in the given project, hence pointing the primary risks that are easy to understand and hence ensuring effective prioritization of management decisions

When a risk has been identified and effectively assessed, a quality and quantity of that risk is then established. The process of risk response plan is then laid out to plan for how each type of risk will be managed and who will handle the risk. A risk can either cause a negative or a positive impact, it is important to consider the two types of risk responses. In this process, a risk register that contains all the information that is gathered from the previous four processes and necessary to establish the most appropriate responses. Secondly, a risk management plan which acts as a risk tolerance for the project. The plan outlines how the management will plan the risk responses and how the risks are to be communicated.

The negative risk threats are responded by the use of different strategies that are done do reduce the frequency of the threat. Among the most commonly used include the avoidance strategy where the risk responses take the action up front to either reduce the probability to zero or the impact or even both(Merna, 2008). The response enables the risks to be sidestepped as a whole. An example might be that if a certain process is to be used in the creation of a product then the choosing of a different and in such case a low-risk process would remove the risk altogether. When a project or an activity is through to be more harm to the organization than good, then the project is avoided.

The transfer strategy where the risk is transferred to a third party so that they handle the management and the impact of a particulate risk. The strategy is normally done via a contractual agreement where the risk can be transferred to a third party giving the examples of the insurance company. In case of a risk than the insurance company shall cover the risk incurred during the time. The insurance policy paid is meant to cater for the cost of the impact that the company gets.

Lastly, the project managers can also choose to accept the risk that is posed by the project. Such decisions are arrived at after investigating the risk and establishing that the risk severity is relatively low. Additionally the risk can also either be in lowest terms or the impact, or its probability is also low. On the other hand, the cost and efforts of taking a different action are out of the proportion to the risk itself. Incase acceptance is selected as the response to the risk; then it should be documented and entered in the risk register. However, during the project continuity is is important to observe the risk and ensure that acceptance is still the most desired response to take (Merna, 2008)

On the other hand the strategies for the positive risks, opportunities ay involve exploiting the risk where the management ay tries to remove any uncertainty so that the opportunity is certain to happen. This can be done by training the team to have the required and desired skills that may enable the product and services to be enhanced in some ways hence getting more benefits. Training also helps in making the management effective in their work and hence raising their working morale. Secondly the project may also select to share the risk through the identification of opportunities presented by the project. The project then may be more likely to be informed of a partnership where the organization may invite a second and third party to share the revenue hence getting more funds to invest and diversify. This type of response is also commonly used when negotiating to win a contract and partnering may improve their chances of contract award.

Thirdly, the project managers may also choose to enhance the risk management where they may choose to depend on providing a clear and an unambiguous expression of each identified risk. The enhance strategy of risk response mainly focuses on the cause of the opportunity and then goes on to influence these triggers to augment the likelihood of the opportunity occurring. The strategy also leads to increase in production of good and services where the company will register increased sales hence more revenue. On the other hand, the strategy can also involve adding extra features to a product, hence increasing its market value through enhancing of its quality that intron creates customer loyalty and increased revenue stream.

After the establishment of the strategies that are to be implemented in the response in case due to the risk identified and assessed. The need to have a responsible plan is required. Every team member is given the responsibility of handling the risk. The team needs to be concerned with the activities of that are involved in handling and assessment of risk both near the beginning in the project building, planning and carry it on during the execution to detect new risk as more become known. An individual with expertise and experiences in differing NMBHrent leadership and particular areas are known where they are required to develop the mitigation plan for the identified risks. The management of risk, responsibility will then reside with the project manager who is tasked with the sole responsibility of monitoring the project progress including the progress on any work that is built. He also helps in minimizing or eradicating specific risks

The employees are allowed to make their different opinions on an adequate strategy to implement for risk management. However, the management should hold the duty to make the decisions that are meant to foster effective management of the project (Merna, 2008).

The need to keep track of the identified risks and also monitors the effects of the risks reins' and also to identify new or changed risks. Having an effective reporting mechanism in place and also to ensure that the risk is well covered is identified as the key reports and reviews. The effective monitoring and the control also involve creating the right conditions for the openness and the transparency in the project. The management should also listen to the opinions to ensure that the employees to not hide problems until the last possible minute. The project managers are also to communicate risk to the stakeholders this makes them be prepared in case of unseen and unprecedented occurrence. Since risk will remain at the scene, even if the management chooses to implement the avoidance technique. The process of creating a plan that will be used in controlling the effects brought about by risk is the most effective way. Risk should also be turned into an opportunity and a proactive approach made to the risk management in creating new opportunities for an organization. The analysis of acceptable and unacceptable risks may reveal one or even more potential unacceptable risks (Jordão, 2010).

This is the organization of a team's work into manageable sections that look at the hierarchical decomposition of the work that is to be executed by the project plan. Work Breakdown is divided into manageable chunks that a project team can understand at each level of work breakdown structure is meant to provide further details and definition of work. First the major functions in the projects are identified and defined. The sub-deliverables are then further decomposed by a single person is assigned the responsibility to share that the work is well catered for. The work packages mainly represent the lists of the task that the individuals are assigned. The cost perspective of these work packages is usually grouped and assigned to a specific department, which is meant to produce work. The departments are then defined in an organizational breakdown structure and then allowed a budget to produce the specific deliverables (Joint Technical Committee, 2004).

Budget updates act as the reminders that give information about the projects. In case of any change in the working on the projects, then the budgets are responsibility in ensuring that every member is aware of the progress of the work

Communication is a vital component in project development and risk management. This is because it enables people to provide the required skills as they are aware of what is required from them. Efficient and effective communication should be promoted in an environment.

1) Financial risk.

The project presents a certain percentage of financial risk (Kaplan, 2000). There is the uncertainty of whether the funds which are requested for the completion of the project will be enough or they will be depleted before the project can be completed. It is prudent for the project to be able to be contained within the available savings as well having the confidence that the project goals and objectives will be achieved within the set period of period (Thompson, 1994). This is a risk which can be mitigated by reviewing a similar project and using monitoring and verification methodologies to analyze the other projects so as to be able to have deductions which are relevant to the project being analyzed. Sensibility analysis is also important which will help in accounting for the variability in the assumptions made with respect to the costs of the project.

2) Strategic risk.

This a situation whereby a wide range of projects are competing for investment. This is the aspect which outputs the need to justify the validity of the project especially in financial terms. The project should be able to deliver on the specified corporate goals for it to be considered a viable project. In this area, the question of whether the funds will be used inappropriately hence hindering the projects ability to deliver on corporate goals arises (Kaplan, 2000). This calls for demonstration of how the project links to preexisting strategies and policies hence the need to follow processes outlined in the project specifications. A lot of strategic management is therefore required in mitigating this type of risk hence it calls for critical analysis.

3) The issue of operational risks.

This type of risk arises due to the fact there are new technologies and practices of project doing which are constantly cropping up. It is noted that the means of doing projects which were being used a decade ago are now obsolete and new means are constantly cropping up (Kaplan, 2000). The newer means are usually better and more convenient than their earlier ones albeit being more complex to understand and grasp (Thompson, 1994). The project which is meant to impact on the organization’s operations or operations quality can present high cost implications. It’s also prudent to as whether the project is affected by interruptions which ae normal to plant operations hence this calls for consulting with the relevant specialist expertise. Operational risks may also encompass smaller risks which might be related hence they should be looked into accordingly and have them addressed.

4) Safety risks.

Safety is also a consideration in all aspects of project processes (Thompson, 1994). Should the project present any safety issues then it’s prudent to show that safety assessment has been done and that the identified risks have been managed appropriately. In most organizations here will be the availability of a protocol which helps in safety risk assessment hence it’s essential to follow these protocols in the assessment of the project’s risk factors. This calls for the description of the risk and their mitigation strategies in the project case as well as the inclusion of relevant supporting information. Different projects pose different safety threats hence each and every projects risks should be analyzed on its own and have its safety specifications stipulated accordingly (Thompson, 1994).

5) Schedule risk.

This arises from the fact that using new technologies in the accomplishment of the project can lead to the using of more time than it was anticipated. In the programming of the time which a project will be based on, the consideration is usually based on past projects which may have been facilitated by other types of technologies which might not be in use at the present times (Kaplan, 2000). There is the possibility of the project schedule being stretched to points whereby the set time limits of the project are threatened. It is therefore prudent to have a certain grace period of time in which the project can be completed. During this time, the project’s completion is not harried although it is already stipulated that this is the period over which the project’s schedule ends at. In some cases, the schedule is not flexible enough to accommodate corrections done to the project after its completion or some additions to the project during its development stages.

6) Resource risks.

This is a risk which is majorly related to the allocation of resources to the project. Under allocation of resources is a very serious mistake which can lead to the project stalling half way hence this should be addressed before the onset of the project (Kaplan, 2000). Over allocation of resources is also not a good idea since some resources are perishable hence after they have been allocated to a particular project, it becomes difficulty to reallocate them to a different project. Existing facilities and resources should be sufficient enough to facilitate the completion of the project with respect to the set period of time and the available technology and methodology of project doing. It is noted that some resources have a limited life cycle hence their allocation should be aligned to the time specified by their life cycles (Thompson, 1994). This calls for strategic planning for the project.

7) Life cycle stage risks.

This is a situation whereby there is spending of insufficient time and resources on one or a group of the stages. In this case, there is the scenario whereby the project facilitator moves to subsequent stages before the completion of previous stages (Kaplan, 2000). This happens especially when there is some back ground information which is missing or is not in writing which prompts some specification of the project to be left behind. A lot of feasibility study needs to be done in order to be able to mitigate this type of risk. Care should be taken so that there is recording of all necessary ideas and that every detail of the project is put into writing to avoid the skipping of some stages or the processing to subsequent stages while some of the stages are not completed (Thompson, 1994). Some stages are usually interrelated hence the failure of one stage may lead to the failure of the whole project. Strategic management of the project is required whereby every stage’s goals are identified on individual basis hence there will be no way of skipping a stage without having accomplished its goals and objectives.

8) Requirements inflation.

This is an issue which is caused by the addition of more features into the project development which had not been identified when the project was being formulated. This new additions in most5 cases threaten the resources estimates allocated to the project as well as the time schedule allocated to the project. This is usually the case in situations whereby some feedback on the progress of the project is being given by a concerned party such as the project analyst (Kaplan, 2000). In this case, new additions to the project will be frequently be requested for hence by the time the project is being completed, the project will have surpassed its original specifications. This additions have the effect of stretching the time limit of the project and in cases whereby there are limited resources, it might become difficult to accommodate any additions especially if the additions calls newer or other types of resources (Thompson, 1994). This calls for limitations on the amount of additions which are allowed on the project during its development phase.

RISK ASSESSMENT GRIDS.

RISK ASSESSMENT.

PRÉCIS

In the analyzing of the projects risk assessment, eight risks were presented and discussed upon. This encompassed the requirement that the project’s potential risks had to be considered as well as being managed appropriately (Kaplan, 2000). The risks presented were those which were inherently associated with the project together with their analysis. This article will therefore be based upon those risks. There will be the discussion on the types of responses which can counter those risks as well as the thorough description for the responses advised upon as well as the presentation of additional tasks which can help in mitigation of the risks (Thompson, 1994).

PROJECT RISKS RESPONSES STRATEGY

The risks identified together with their responses are as follows.

· Financial risks. These are the risks which are associated with allocation of funds for the project. Problems arise if there is over allocation or under allocation of funds since the completion of the project depends on the availability of resources which entirely depend on the available funds (Thompson, 1994). The response strategy for this type of risk is carrying out extensive research on the financial aspects of the project, coming up with an effective budget and allocating funds with an additional money set aside in case of additional expenses (Kaplan, 2000).

· Strategic risks. This are risks associated with the difficulty in choosing which project to invest in and which will auger well with the corporates goals (Thompson, 1994). The response for this type of risk entails an elaborate demonstration of how the project will be able to link to the preexisting strategies of the corporation. This calls for strategic planning and management so as to be able to counter this risk.

· Operational risks. This is the risk which is due to advancements of technologies hence the operations of the project are affected by the technologies which are constantly cropping up (Thompson, 1994). This calls for incorporation of technical team in the project development and implementation. The developer of the project should be flexible with respect to the advancement of technology hence be able to embrace new ways of doing things.

· Safety risks. This are the adverse elements which can befall the project personnel during its development. This calls for safety assessments in all areas of the project development and implementation and have the risks managed (Thompson, 1994).

· Schedule risks. This are the risks of over allocation or under allocation of time for the project development and implementation. This calls for an elaborate time table and following the time table with commitment (Kaplan, 2000). A grace period should also be there in case of the stretching of the projects schedule. Care should be taken not to harry the project but to have a chronological advancement of the project through its stages.

· Resource risks. These are risks which are associated with under allocation of resources which are necessary in the development of the project (Thompson, 1994). This calls for effective planning and management so as to be sure that all the required resources are available whenever they are needed.

· Life cycle stage risks. This is the risk of spending insufficient time on some of the stages of the project hence leading to some stages being underemphasized on while others are overemphasized on. This calls for strategic management of the project and analyzing of each stages individually.

· Requirements inflation. In this case, addition of features in to the project which had not been planned upon. This calls for having rules and regulations governing on what can be added into the project and at what time (Kaplan, 2000). Strategic management is key in solving most of the requirements inflation.

THOROUGH DESCRIPTION OF THE SPECIFIC RESPONSES

In countering the financial risks, it is prudent to carrying extensive and comprehensive research on the requirements of the project. An elaborate budget which covers every aspect of the project together with the miscellaneous aspects should be drawn. For me, I recommend that the project is allocated more funds than the ones stipulated by the budget so as to be sure that lack of funds can never be the cause of the delay of the project (Kaplan, 2000). There should be an aspect of monitoring the project’s expenditure on the allocated funds so as to make sure that the budget is followed to the latter. The money spend on the project should also be accounted for to avoid wastage or inappropriate use of project funds. Sometimes it is also prudent to have a priority based approach of doing things hence the acquisition of the most important things should be done first so that there is no stalling on the project (Thompson, 1994).

Operational risks can be countered by having or seeking the knowledge of professionals who are good in the technology sector (Thompson, 1994). The advancements in technology have meant that the same means of carrying out projects which have been used in the past are becoming obsolete hence it is prudent for the person who is developing the project to be updated with the most efficient technological means to use. Help can be sought from professionals who are adapt with the issue so as the project can be produced at the best quality.

Strategic risks can be countered by embracing strategic management when coming up with the project. It is a fact that the project should be the best as far as representing the stakeholders interests are concerned hence strategic planning and choosing of the best project which will address the needs of the company in the best way (Kaplan, 2000). The choosing of the project should be done with a lot of consideration to details so that the stakeholders will not have any issue in committing to the project. The issue of schedule risks can be managed under the management. This will involve putting a strategic time table and have it followed to the later. The schedule will be broken down in to smaller aspects of the project which will be dealt with and analyzed as independent aspects of the projects which can build the project as a whole entity. The scheduling should be done in such a manner such that there is a grace period over which the project can be accomplished without harrying it through hence this will facilitate the project to be done smoothly (Thompson, 1994). The lifestyle risks can also be addressed at this point. This involves coming up with ideas which counter the problem of dwelling in one stage of the project development for more or less the time which is required to be spend there. Ibn this case, the stages should be allocated a definite time limits for their development and implementation. Some stages are interrelated while in others, you cannot proceed with the project unless you have completed previous stages hence a definite means of analyzing each stages development should be installed (Kaplan, 2000).

The management of safety risks is a factor which should be addressed with the seriousness it deserves. In some stages of the project development there might be situations which pose dangers to the project facilitator. Risk assessment is imperative in all stages of the project after which the management of those risks should be done effectively (Thompson, 1994). Every risk which has a likelihood of occurring should be addressed individually and have their chances of happening reduced as much as possible. In this case, prevention is the best thing to do hence any factor which might lead to the safety of people involved with the project being compromised should be dealt with accordingly (Kaplan, 2000). Safety gears should be bought where necessary. It is also prudent to have the personnel involved with the project being trained on safety aspects of the projects and also being trained on what to do in case of an accident.

Resource risks can be addressed either in the countering of the financial risks or on their own since in most occasions the availability of resources depends on the availability of funds. However, there are some resources which do not depend on the finance aspects and these are things such as the availability of the needed technical knowhow and support facilities (Thompson, 1994). In this case, it is prudent to carry out detailed research on the requirements of the project especially on all technical needs of the project. Every aspect of the project should have its various resource needs attached to it hence this will save the project facilitators a lot of stress in countering ineffective or under allocation of resources.

Requirements inflation can be countered by stipulating on what can be added to the project and at what stage. In some cases, the project is built by means of correspondences whereby an evaluator gives feedback on the development of the project as well as giving specifications on what should be improved on in the project (Kaplan, 2000). This can lead to many things being added to the project. Some of these additions are not stipulated in any of the project’s requirements hence this can lead into the project’s schedule being stretched as well as having the project’s finances being overwhelmed.

UPDATED MATRIX WITH THE INCLUSION OF THE IDENTIFIED RESPONSES

REFERENCES.

Kaplan R., (2000). The Strategy-Focused Organization. NY press.

T REFERENCES.

Robert Kaplan (2000). The Strategy-Focused Organization. NY press.

Arthur Thompson (1994). Crafting and Executing Strategy. Webley Press.

hompson A., (1994). Crafting and Executing Strategy. Webley Press.

schedule risks

resources risks

life cycle risks

requirement inflation

financial risk- have an elaborate budget and means of evaluating how funds are being used.

strategic risks- have strategic managemnt and research so as to ensure the project is worthwhile to invest in.

operational risks- seeking of proffesional knowledge on the advancement of the technology with respect to the project's requirements.

safety risks- sfatey assessments should be done and evry safety issue be addressed indivindually.

schedule risks-coming up with an ellaborate timetable and means to ensure it is followed completly.

resources risks- making sure that allocation of resources is done accordingly and having follow up means to ensure that every thing is done accordingly.

life cycle risks- coming up with means whereby every stage is treated as an independed entity and is allocated its time accordingly.

requirement inflation-coming with regulations which determine on what is to be added, when and by who.

financial risks

strategic risks

operational risks

safety risks