Benefits of Risk Management
Benefits of Risk Management. Project Goals and Objectives 3
Section 2 – Risk Scope, Components, and Value 3
2.1 Scope of the Risk Management Plan 3
2.2 Risk Management Plan Components 3
2.5 Evaluate and Assess the Risks 4
2.6 Qualitative and Quantitative Processes 4
Section 3 – Risk Analysis and Assessment 4
3.4 Risk Data Quality Strategy 5
Section 4 – Corrective Action and Monitoring 5
4.3 Corrective Risk Management Strategy 6
Risk Monit oring and Control Example 9
Section 1 – Introduction to the Plan
In the case study “An exploratory study of understanding project risk management from the perspective of national culture,” the significant risk identified is the culture risk. Culture risk is the possibility for a company’s operations in a country to struggle due to variations in language, customs, conventions, and client preferences.
1.1 Benefits of Risk Management
A good project risk management plan allows project managers to look at the entirety of their project and what could go wrong. It helps them develop other strategies for various budgets and timing. The benefits include;
I. Risk culture reflects the shared values, goals, practices, and reinforcement mechanisms that incorporate risk into an organization’s decision-making processes and risk management into its operating processes.
II. Identifying and Evaluating Problem Areas: – A thorough project risk management plan will provide you with a comprehensive view of your project and any possible problems. That way, you’ll be able to focus your (and your stakeholders’) attention on the project’s weak points and conduct frequent status checks, peer reviews, and audits to keep the project on track.
III. Risk management plans give you an early warning of potential risks or issues, enabling the team to prepare and take the required steps to mitigate problems before they become severe and cause irreversible damage.
IV. Accurate Budget Estimations: – You can forecast potential problems if project risk management is mapped into your schedule and cost planning. It will assist you in allocating a contingency budget for each domain, such as cost, time, and resource, resulting in less waste and higher quality.
V. Focused Approach: – Because risks are being actively tracked and controlled, teams may concentrate more on their given tasks. Furthermore, the project team may quickly address problems, assuring project success.
1.2 Project Goals and Objectives
I. Develop a common knowledge of risk across diverse functions and business units to manage risk efficiently across the organization.
II. Gain a more profound knowledge of risk to gain a competitive edge.
III. Make provisions to protect the organization against the unexpected gain.
IV. Develop and strengthen capacities to effectively respond to low-probability, high-impact, catastrophic risks.
V. Improve the management of internal resources to save money.
VI. Increase the efficiency of capital allocation.
VII. To encourage the creation of curricula that is culturally responsible and responsive.
VIII. To make learning the attitudes, skills, and knowledge needed to function in many cultures in different countries more accessible.
1.3 Company Background
Construction projects company background
In construction projects, three national cultures are selected for investigation in the case studies: Chinese, Polish and Singaporean. Cultural influence is critical for successful risk management. Therefore, the goal of the Case study was to find out how contractors’ risk management was influenced by their culture. According to Liu et al.(2015), Four projects in China, Poland, and Singapore were chosen as case studies; the contractors highlighted significant risks, including land acquisition risk in the foreign country, and they outlined risk management strategies in each scenario within the framework of Hofstede’s theory. To demonstrate the link between culture and risk management, according to Liu et al. (2015, p.565), Corporate culture influences enterprise risk management (ERM) and then affects project risk management (PRM).
The findings showed that national culture influences contractors’ risk perception and ways of management; risks were perceived differently by the same contractor under different host cultures (Liu 2015 et al., p. 572).
Impact on the plan
The result indicated that different national cultures perceive and manage project risks differently. According to Liu et al. (2015), Based on Hofstede’s theory and culture model, it is suggested that IDV and UAI are the foci of the cultural impact, while PDI, LTO, and MAS also contribute (574). The host country’s national culture impacts its risk management styles (Liu et al., 2015). It is critical to have this information to strengthen the risk management practices of multinational contractors.
The project plan will help determine the need to mitigate the risk identified by Liu et al. 2015 to help an organization deal with cultural risk.
Significant risks identified from the four projects in the case study
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Stakeholders in the case study are the Chinese contractors
Project stakeholders include; The management, Project manager, project team
Stakeholder’s role
The management Stakeholders provide practical and financial assistance to the project. The Risk Project Managers Provide a system for determining and analyzing the economic impact. They examine how to mix retention programs by utilizing realistic and cost-effective options. They also
Prepare risk management, budgets, and records maintenance for future reference. According to Pritchard (2014), project managers are not solely responsible for the project management but take responsibility for the outcomes.
Stakeholder impact
Stakeholder management is unquestionably critical to a successful project relationship. Stakeholder management entails forging positive relationships with all stakeholders and understanding how their efforts contribute to the project’s overall success.
1.4 Risk Identification
All stakeholders and the project team will continuously identify risks during the project’s lifetime. The project manager will log the identified risks into the Risk Register.
The Project Team will use several techniques with the scrum team, subject matter experts, and stakeholders:
1. Interview
2. Meeting
3. Brainstorming
4. Requirements Analysis
5. Project Documentation Review
6. Delphi Technique
7. Internal Groups
The team will conduct a special risk identification session for the following events
in addition to ongoing identification:
1. During a review of the release plan.
2. Analysis of risk breakdown structure (RBS).
3. Analysis of work breakdown structure.
4. When a change request is approved.
5.
6.
7.
8. Outside the Project Team, t
he Project Manager is also in charge of recognizing risks. The project manager will frequently evaluate and analyze the company’s Risk Categories. The project manager will use Risk Breakdown Structure (RBS) since it has been widely accepted as a valuable tool for
structuring the risk process.
Quantitative analysis
It’s not cost-efficient to perform a Qualitative Risk Analysis for this project. However, in exceptional cases, the Project Team may calculate the monetary value of critical risks and develop a decision tree.
Qualitative analysis
This process aims to list risks that require a proactive response. We should also identify urgent risks that need an answer right now. Finally, the Project Team should assess all risks in the Risk Register and determine the Probability and Impact level of the risk’s effect on the project.
The project team will spend an adequate amount of time assessing the risks. The project operates under the dedicated team model. Therefore, we will represent a risk’s impact on the team’s effort.
As we assess the risk, we calculate risk management efforts within the project’s boundaries and cost.
References
Liu, J., Meng, F., & Fellows, R. (2015). An exploratory study of understanding project risk management from the perspective of national culture. International Journal of Project Management, 33(3), 564–575.
Pritchard, P. P. E. C. L. (2014). Risk management: Concepts and guidance, fifth edition. Auerbach Publishers, Incorporated.
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