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Risk Management

Risks, unmanaged, invariably lead to a more costly solution and schedule delay

What is Risk?

Management of Risk in Workshops

Risk is anything that could affect a business, program or project in terms of cost and time, whether predictable or unpredictable.

Risk is a term that can mean different things to different people, and a clear understanding of what a risk actually is can be quite difficult to achieve. Common words related to risk include:

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"Hazard", "Source", "Cause"

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"Consequence", "Impact", "Effect"

There is no standard usage, as yet, of terms in risk management but all of the above relate in some way to "Cause" and "Effect" and provide a means to proper risk definition. The TEAM FOCUS Group uses its own RID approach to proper risk definition which enables everyone to understand precisely what each risk is, whether at the time of identifying it, or at a later date. Single word definitions are never adequate.

The TEAM FOCUS Group provides Risk Management Training.

The management of risk features in many workshops run by the TEAM FOCUS Group. The intent is usually, to follow a Qualitative Risk Analysis approach:

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To identify as many risks as possible that may influence a business, program or project, involving representatives from major stakeholders, and develop a Risk Register

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To classify such risks and also to identify interfaces

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To establish the relative significance of risks in terms of probability and consequences

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To establish for "significant" or "critical" risks, the options available to mitigate them, agreeing an action plan.

A Quantitative Risk Analysis approach can be used in addition:
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To assess their overall potential cost and delay, using statistical methods e.g. Monte Carlo method, Root Mean Squared method.

Risk Management and Value Management

Risk Follow up

Risk Management is about the avoidance of unnecessary cost and time. Value Management is about the enhancement of value, leading possibly to cost savings.

There are strong links between Risk Management and Value Management, inasmuch as failure to consider risks during Value Management may not lead to the best value solution.

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Was the project generated as a result of known risks?

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Can ideas focus on how to get round known risks?

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Evaluation criteria may need to address those ideas which are more risky

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Risk allowances should be included in life cycle costing to compare "like with like".

 

The golden rule is to "plan ahead" with the greatest benefit from risk management being at the start.

Having identified the significant risks and an action plan for them, there is no benefit unless there is a will to continue to review them and manage them so as to mitigate them.

The importance of the continued management of risks cannot be over-estimated, whether in business, whether in programs of work, or in projects.  Reducing risks increases reliability.

The TEAM FOCUS Group runs Risk Management Workshops for live projects and as training sessions. Further information can be obtained from The TEAM FOCUS Group practitioner nearest to you.

Copyright 2008 The TEAM FOCUS Group
Last modified: July 03, 2008