Questions:
Provide your rationale for the following question: Given that risk registers are commonly used tools to manage and control risks, why do many projects fail?
Prepare an outline of a strategic risk plan for your chosen project based on the findings from your selected risk register.
Explain how this outline can inform your regular project reviews in order to build the project’s risk profile. In your analysis, explore the following questions:
Where in the life cycle of projects should risks be identified?
What processes should be used to ensure that risk registers and other elements of a risk response plan are updated to reflect an accurate risk profile throughout the entire project?
What role should stakeholders play in the development of risk registers?
Risk management in projects helps in identifying, managing and quantifying risks. Every project involves some extent of risk. The projects that use new technology faces a problem because the technology fails to deliver the result as expected. The projects that complicated face the problem of estimating the costs and time. Even the simplest and the smallest projects involve some extent of risk (Kotetunov and Yu 2016).
Development and implementing the overall risk plans and procedures will evaluate all the activities towards developing a proper strategic outline of the company towards designing some of the important factors, which will constitute towards operating a proper business practice in the operations (Pritchard et al 2014).
Risk management can be defined as measuring the consequences and probability of not achieving the goal of a defined project. In simple words, risk management helps in minimizing the level of risk for a given expected level of performance, actively monitoring during the execution of the project and developing a plan of response (McNeil et al 2015). With the rapid development of the technology and increasing competition, different firms use different tools for identifying risk, and they are brainstorming, influence diagrams, checklist, cause and effect diagrams, etc (Lam and James 2014). In order to evaluate all these particular activities in a proper manner the following points needs to be analyzed in a proper manner, which includes the following point.
Using poor quality: Many managers perform poorly during the most critical process of risk planning. It involves identification of risk and development of strategies that are useful for the organization (Sadgrove and Kit 2015).
The existing tools are highly complex: When the complexity and the size of the project increase the required effort for planning the risk also increases, thus making the existing tools complex to use (Patanakul and Shenhar 2012).
The authority of the project manager is low: Functional managers have the required authority and information for most of the processes of risk management. This may limit the capability of the project manager to manage the process of risk management effectively (Bessis et al 2015)
Low effectiveness perceived: Different studies have ranked the project management low in identifying the crucial success factor of the project. Whereas different studies that have advocated the effectiveness of project management suffers from different drawbacks (Kotetunov and Yu 2016)
The objective of the risk management system is towards developing a proper operation of all the business plans and activities, which will evaluate all the business operations in an executed manner. The application of a proper risk management system is the simplest way towards understanding that the identification of the risk management needs to be developed properly.
Applying the standard Risk register template helps the organization in managing complexity and preventing failures so that the project becomes more flexible, efficient and less risky (Hopkin and Paul 2014). This part of the assignment highlights the benefit of the risk register template and they are listed below:
Consistency: consistency is achieved when the manager conforms to integrated and logically ordered standard. The risk register template helps in providing a simple and quick framework, which is easy to understand and makes sure that all the elements that are necessary to manage and access risk are included. This allows the organization to achieve a consistent quality level, repeatedly (Kendrick and Tom 2014).
Compactness: A tubular format makes it easier for the management to view all the issues at a glance. Distilling the complex and huge information into a compact form allows the management to break down the crucial information so that they can deliver it to their audiences in a clearer way. Moreover, the stakeholders and the team members will not go through the lengthy documents for searching the required information. Therefore, providing them with compact information will help in encouraging risk awareness and sharing of knowledge (Bessis and O’Kelly 2015).
Concision: Risk Register Template is a tool that forces the management to be concise, while making all the points. The risk register template includes exactly the information that is important; no less and no more, which helps in saving time and energy (Burke 2013).
Commitment: It is not the duty of the project manager to manage risk. The project manager uses the structured template to identify the activities for treating risk and assigning those activities to the owners of the risk. By doing so, the manager gets the commitment of the stakeholders and wider team to own and manage risk (Carroll and Buchholtz 2014). This also helps in increasing awareness of the overall risk associated with the project.
Completeness: There is a space for everything in the risk register template. Not a single element is ignored in the process of risk management inadvertently (Christofferse 2012). This helps in maximizing the ability of the management to manage the risk of the project holistically.
Control: When the risks associated with the project are listed coherently, completely and consistently, with a commitment to initiate plan then only the management can track and control the risk (Haimes 2015). This helps the manager to control their risk management process quality.
Communication: Clarity in communication is the core of any successful management. The result of the above benefits is that it helps the manager in communicating clearly with the stakeholders and the team members about the risk involved in the project and how they will be monitored, controlled and managed (Hopkin 2014).
Risk of different managerial as well as operational activities can be identified with the application of different kinds of situation Analysis tools. There are different kinds of situation analysis tools which majority of the company irrespective of the nature as well as purpose of the business needs to evaluate all the important activities.
It is impossible to manage risk if the manager does not know what they are and whether they exist or not. The first step is to highlight the risk and define them in detail or a properly structured format. It helps in identifying the factors that affect the firm’s ability to achieve their goals and objectives, defining them and assigning ownership (Rebitzer 2015). The risks during the project life cycle should be conducted before the implementation of the project, after and during the implementation of project. The risk is identified at the initiation phase or ta the first phase itself. The risk identification should continue at each phase of project life cycle as the problems can arise anywhere and anytime (Kendrick 2015).
The development of a proper situation analysis tool includes the notion of SWOT Analysis and the notion of PESTEL Analysis. The application of both the SWOT Analysis and the application of PESTEL analysis will evaluate both internal as well as external analysis of the organization. There are five important steps, which needs to be identified in a proper manner, which will evaluate the overall risk management tools that are reflected in the following part of the study. Identifications and analyze exposures, examine risk management techniques, selections of risk management techniques, implementation techniques and monitoring results are some of the key activities which are included in the overall study.
Processes that should be used to ensure that risk registers and other elements of a risk response plan are updated to reflect an accurate risk profile throughout the entire project are:
Identification of risk: It is impossible to manage risk if the manager does not know what they are and whether they exist or not. The first step is to highlight the risk and define them in details or a properly structured format. It helps in identifying the factors that impact the firm’s ability to achieve their goals and objectives, defining them and assigning ownership (Rebitzer 2015).
Assessment: After the identification of the risks it is important to examine them regarding the impact and likelihood. It is crucial for the organization to monitor the probability of risk and its aftermath in the case of occurrence of the risk. This step help in identifying the risks which are of higher priorities and more attention is given to such issues (Christoffersen and peter 2013).
Treatment: After the assessment of the risk it is important to define approaches to treating each risk (Kendrick 2015). After the process of assessment, there may be some risks that require no actions, they just need to be monitored, but there will be some risks that are not acceptable and need immediate action to reduce, prevent and transfer that risk.
Reporting: Reporting at every four stages of the risk management lifecycle, is the core for making a decision and executing strategies (Kotetunov 2016). Therefore, it is important to define the reporting framework at the early stage of risk management process.
It is evident that effective communication in the workplace plays a crucial role in maintaining a safe environment in the organization. Therefore, the involvement of the stakeholders, especially the staffs plays a paramount role in assessing risks (Lam 2014). The employees of the organization have a good idea of their work area and the risks that are involved. The stakeholder of an organization may include managers, clients, staffs, supervisors, unions, government organization shareholders and other representatives of the employee.
Key personnel may involve individuals that are either internally or externally related to the organizations, and they have the responsibilities in the process of risk identification (McNeil, Frey and Embrechts 2015). It is important for the key personnel to be skilled at identifying risks and should have the ability to determine the true nature of the risks (Kerzner and Harold). They also need to view the situation and should be able to communicate the problem effectively.
It is important to understand the involvement of different parties, while identifying the risk and controlling the hazards. Communication helps in creating an environment that encourages the employees to come forward and present their ideas without hesitation.
Involving and consulting the employees within the organization will help in motivating the employees and will encourage them to contribute continuously to the process of risk management (Patanakul and Shenhar 2012). Thus helping the organization in identifying and managing the risk and help in the further growth of the organization.
The stakeholders provide the assistance in identifying the problem determine the same, consequences of the risk and determination of the impact of the project. Stakeholders play a key role in planning process. The roles of stakeholders change throughout the project life cycle. Risk register helps the risk management plan in understanding the nature of risks that an organization faces. Since the stakeholders play an important role in project it is essential to inform and sign an agreement with them regarding risk (Kotetunov 2016). The main role of stakeholders is in planning process where the planning activities include identification of the objective of project, availability of the required resources and proper allocation of the resources for utilization and best outcome. The main benefit of involving stakeholders in the planning process of the project is that there is low risk of distrust and an increase in commitment for the fulfillment of the project objectives and the processes. The success and the failure of the project depend on the planning and contribution of the stakeholders. Involvement of the stakeholders in risk register is essential for the best outcome of the project (Pritchard and PMP 2014). . In an organization, the stakeholders have different jobs and these jobs differ in the way the stakeholder wants to have information communicated to them (Carroll et al 2015).
After the identification, assessment and defining a process for treating risks, it is not possible for the management to leave the risk (Kerzner 2013). The risk requires a continuous reviewing process because risk can change anytime, as it is evolutionary. This particular process is crucial for the proactive management of risk.
The notion of the overall monitoring system will ensure the management to match with the plan activities with the operational activities. If there is, a mismatch between the planned activities with the original activities proper measures needs to be applied. A variety of tools used is limited: In the present world, there exists wide varieties of tools to manage risk, but in reality, most of the project managers use ranking of risk events as their primary and only tool for managing risk. The main reason for the 2008-2009 global financial crisis was the belief that securitizing the loans help in reducing the financial system overall risk (Bessis et al 2015).
The first key element is checking the transparency of the risks. The second tool is ERM that is enterprise risk management that helps in guiding a project. It is essential for the full team working on the project to get actively involved. Once the risk is identified it should be recorded by the person concern. It is also essential to document the risk that is followed by the IPT. Identification of risk is the first or preliminary step in the life cycle. Identification of risk in the lifecycle project is known as risk management.
Reference List
Bessis, J. and O’Kelly, B., 2015. Risk management in banking. John Wiley & Sons.
Burke, R., 2013. Project management: planning and control techniques. New Jersey, USA.
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
Christoffersen, P.F., 2012. Elements of financial risk management. Academic Press.
Haimes, Y.Y. ed., 2015. Risk modeling, assessment, and management. John Wiley & Sons.
Hopkin, P., 2014. Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers.
Kendrick, T., 2015. Identifying and managing project risk: essential tools for failure-proofing your project. AMACOM Div American Mgmt Assn.
Kerzner, H.R., 2013. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Kotetunov, V.Y., 2016. Risk management in projects. Cherkasy University Bulletin: Economics Sciences, (1).
Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative risk management: Concepts, techniques and tools. Princeton university press.
Patanakul, P. and Shenhar, A.J., 2012. What project strategy really is: The fundamental building block in strategic project management. Project Management Journal, 43(1), pp.4-20.
Pritchard, C.L. and PMP, P.R., 2014. Risk management: concepts and guidance. CRC Press.
Rebitzer, G., 2015. Introduction: Life Cycle Management. In Life Cycle Management (pp. 3-6). Springer Netherlands.
Sadgrove, M.K., 2015. The complete guide to business risk management. Ashgate Publishing, Ltd..
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