The Project management can be define as the method of organizing the technique that changes are implemented efficiently within the organization. That is related to project which is a temporary endeavor that is design to create a sole product or service with a certain beginning and end result. There are many disciples that are inter related with each other like initiating, planning, executing, controlling and at the same time people should work as the team to achieve their goals. For example,many business organizations have their project managers interrelated with them (McNeilet al. 2015). Therefore, they plans the project, monitors them and takes corrective action when necessary thus, it helps to complete the project on time that in turn enhances their reputation.
On the other hand, Risk management can be defined as the identification of risk that are associated with the project. Risk can be various types like project failures, credit risk, legal liabilities, natural causes, disasters etc. as the negative events are considered as risk. Risk management generally reduces the resources thatcould have been spent on the opportunity costs that lies under positive events to get the profit (Glendonet al. 2016). There are many methods to identify the risk management that is categories as identification of threat, assessing the threats, determination of threats, reducing and prioritize the risk reduction measures.
The risk management is the part of the project management that plays a crucial role. If the project manager plans and manages the risk associated with the project then it could leads to success. But it is essential that project managers always plans for the uncertainties associated with the project and obtain consensus from the team members on how to handle the risk and other related events.
Critical analysis of the concept of the risk in the project management.
The analysis of the concept of risk in any project management involves identification of some factors, elements or information that a project manager must bear in his mind. This segment deals with all those information, which are required to be considered while scrutinizing, or studying risk that might involve in a project. In order to analyze the concept of risk management one must aware of the fact that what a risk in project management is. Thus, the Risk analysis is the method of identifying and management of potential problem that are associated with business initiatives or projects (Lam 2014). It is generally a complex process as it needs to be diagrammatically shown about finance data, marketing forecasts, project plans etc. that acts as essential planning tools during crisis. Analysis of risk is done critically during planning of the projects so that possible threats can be identify, taking decision about the project, improving and managing potential risk, equipment or technology failures etc. are done. Risk analysis can be identified from possible or existing threats such as human threats, operational threats, reputational threats, procedural threat, structural threats, political threats, natural threats, technical threats, project threats, financial threats or structural threats. These threats can be describe is several ways which are discussed in the very next paragraph (Hopkin 2017).
Human threats are those threats or risk that are related to humans such as illness, death, injury etc. operational threats are the risks or threats relating to disruption of supplies, failures in distribution etc. Theseare related during the operation of the project. Similarly, reputational threats are related to the reputation or goodwill of the company that may be loss of customers or employee confidence, damage to the market reputation etc. Again procedural threats may be related to the system of frauds, failures of accounts or internal system. Project threats are the threats thatare related to major threats like crossing the limits of budget, experiencing issues with product or service quality.Financial threats can be termed as those risks thatare related to finance like non-availability of funding, business failures, stock market fluctuation etc. Similarly threats relates to technical issues includes advancement of technology or technical failures. There are some threats thatare calledpolitical threats like that are in line with change in tax public opinion, foreign influence etc. Sometime there might be some natural failures such asbad weather conditions, disaster or disease thatcan be considered as Natural threats or risk. Structural changes are also considered that may leads to affects the staffs present in the company by the use of dangerous chemicals, poor lightning, falling boxes or any alike situation.
Measurement and ranking of risk:
Risk management process is used in order to reduce the risk of the problem as in the project planning itself many plans regarding risk are implemented. Projects often starts in a right direction but if somewhere problem arises in the middle then it goes off, as the project manager cannot works according to the plans. There are different types of levels where risk can be classified which are as follows (Pritchard and PMP 2014). Early identification of risk in the project like review of the risk that are associated with the help of project team management’s experience and knowledge, brainstormed potential risk and missed opportunity if the project is not completed on time and clarification should be done to each staff so that they may be responsible. The communication about the risk should be done among the staffs so that they can pay attention about the risk and perceives a view about it. Here sponsors should make decisions regarding the top risk that usually exceeds the commands of the project manager. Assessing the risk is an important factor in the risk management like when the risk is having negative impacts of being harmful then positive impacts also arises which is called opportunity that may lead the project team to grow by learning more from the experiences. Priority should be given to the risk according to the capacity of the project. Evaluation instruments must be there in order to prioritize and categories the risk so that it may not be the causes of big losses. Risk should be fully understandable along with its impacts of risk. As risk can occurs at different levels of the project, therefore identification of the risk should be there which would help to assess the solution related to the risk (Bromileyet al. 2015). During this process, management should also understand what the causes of the risk are and what factors that are responsible for the risk impacts. This in turn will gives valuable impacts about the project that in turn would help to optimize the risk levels effectively. Responses related to the risk must be developed that would help to identify the needs when at risk that is reduces likelihood of each risk, managing the risk; things that should be done to ensure opportunity that are not missed. Preventive measures should be taken to minimize the risk and convert into fruitful ideas into task in which the organization would be benefitted. Contingency plans should be ready which turns quick plans into action. Recording should be done so that if risk arises then effective responses may have been implemented.
Example of Risk Management
The project managers should learn from the history of the projects that have not been successful. This has provided valuable inputs for making the future projects a successful. The examples of the projects are given below:
The completion of the Panama Canal involved conducting of proper planning. The canal was successful as the project leaders faced risk head on and completed the project after considering all risk. It is important that all project managers should perform the work faster and efficiently to complete the projects.
Bank of America
In 2012, the bank has decided to increase the monthly charge of the customer. In that case the bank has faced greater opposition. The BOA thought that they could handle the problem but they did not expect the imagination. The bank did not expect that the announcement to reduce the charges would not be accepted by the people. The assessment of the risk went wrong but the bank recovered from the risk with the help of proper of risk management.
The risk management strategy of project:
Risk management plans should always develop from small issues or problem that may develop into problems. There are many types of risk management plans that comes into action by calculating the probability of the events, how that may be impactful, risk related with certain ventures and dealing process of the problem associated with the risk (Sadgrove 2016). As plans always helps to deal with the adverse situations when they arise. As in the project immaterial of the size carries lots of risk related to finance legal, physical or can non-financial. Thus having an effective risk management is the foremost to success to any project so there are few steps that should be followed in order to construct the project management strategy.
- Working on risk management should be understandable as risk can be both positive and negative at the same time in an events or series of events in one or more location. There are many factors that can analyze risk that are events, probability, impacts, mitigation, contingency, reduction, exposure etc. after identifying all the factors the amount of risk can be stated as threat, liability, severity (Kokset al.2015). These will determine when the pre-planned activity would takes place along with its changes .these can be also called exposure. Assumed risk is also apart where it is the decision of the management to proceeds after knowing all of its risk factors.
- Definition of the project should be very clear with the help of simplified model where risk and impacts should be listed as high, medium or low.
- Knowledge and ides about the project should be taken from several people who are familiar with the project and ask for the inputs about the risks that might happens during the projects, its impacts and consequences that may arise (Lorber 2014).
- Consequences of the risk should be properly identified during the conversation sessions.
- Irrelevant issues must be eliminated as it can act as a great threat in the later days. Likewise threats such as nuclear war, plague, pandemic etc.
- List should be done with all identified risk elements so that every members get aware of it.
- Probability must be assigned along with its impact as it will determine the category of risk as high, medium, low.
- Determination of risk must be done for the elements as it will helps to predict the values of the loss. Here analysis should be very flexible as designation by low, medium, high.
- Ranking of the risk should be done according to the importance and urgency.
- Modification strategies should be developed as it would decrease the probability that the risk may arise.
- In order to reduce the impacts contingency plans should developed. And it will be only applicable when the risk factor is high or medium.
- Investigation must be done of the effective strategies after the risk is over so that it may acts as model in the next project and evaluation should be done for the mitigation strategies along with the effective ratings (Reboredo 2013).
- Compute of effective risk as for example if the risk tends to medium after the management strategies it will become low. That denoted that there is a reduction in the risk through mitigation and contingency.
- Monitoring is an essential process after the risk is over, it may acts an ideal system where identification of risk elements were done, verified, solved as well. When the project will progress it will silently materialize and may affect the project.
Practices that might minimize the risk of the project:
The Practices must be done in order to control emergency and successfully executed risk management system. Many programshave been allotted in order to identify the risk early.
- Maintenance of the leadership priority and open communication where risk management should give priority throughout the program’s management level. here teams has work like they has to identify the risk when they will perceive in an open environment where risk information will be shared, management priority on wanting to know risk information in terms of programs ,reviews or meetings or else if the team feels the risk is low then they should not waste the time.
- Lacking consultant that should not passed on to staffs in risk management.
- Staff of all levels must be awarded and encourages for recognizing the risk in the program and contributing for it.
- Meaningful and actionable insights should produce with least burden so that a formal, presentable and repeated risk management process is done that balances complexity and data as well (Matyas and Pelling 2015).
- The program leaders must engage subject matter experts regularly in quick view throughout the project.
- Program management should integrate risk management into its project.
- Training should be given about the procedures of the risk management plans and practices should be there so as in the time of need no problems may arise with the staffs.
- Stakeholders must share all risk management items and problems during the time of execution.
- Risk should always be identified, measured and reviewed all time continuously so that no major points are eliminated during the major review.
- Risk consideration must be the core or central attention of program review.
- When working in groups, review boards there may arise conflicts regarding the risk management; at that point the broads/team may arrange a rescheduled program with other programmers when needed.
- Risk must be assigned only to the staffs with specialist in order to implement mitigation action and necessitate resources.
- Risk mitigation plans must be developed along with the program management. Criteria for success should be defined properly and monitoring their implementation in order to achieve success criteria outcomes (Penning-Rowsellet al.2014).
- Risk management can never be out contract.
- Advancement of technology or technical maturity with its future enthusiasm must be clearly understood.
- Risk management tools/data base should be maintained with current risk status information and dashboards should be employed for maintenance of reports status.
- If operational environment changes with the program technology then adaptability features must be introduced.
- Risk should be very clearly written using the conditions that are mandatory.
- The needs and nature of the program must determine the design of the risk management program inside which the risk management tools fit in.
There are others factors also which should be taken into consideration.
It is important to gain the trust of stakeholders that will clearly acts as base in risk reduction or acceptance reference on getting mission capabilities to the user. Many government manager have program management office that defines risk management process, tools or articles (World Health Organization 2017). These things are been used as starting tools for a specific approaches and plans for the individual programs or approaches. Some people becomes very knowledgeable about every risk that may be appear during the project including technical, operational, mitigations etc. communication of risk information helps to illuminate risk that may have impact across the organization which amplifies the benefits of mitigation that were shares among staff (When et al. 2015).
In order to conclude the entire discussion in brief it can be declared that risk analysis is a proven way of identifying and assessing factors that could negatively affects the success of a project or business. It always helps us to examine the probable risk that an organization might face and helps to choose whether to move with the decision or not. Risk analysis can also identify threats in various possible ways and estimates the like covering of those threats being understood. As values of the risk have been worked out so there possible ways are also found out to reduce the risk factors. This may include choosing to avoid the risk, sharing it, or accepting it while reducing its impacts. It is essential for the organization when working with the risk analysis they should be aware of all possible impacts which should be revealed while working on the project. This includes being mindful of the costs, ethics and people safety. As risk, management is a fluid process as here risk are always changing from high to low along with different aspects of the project. As today, if some risk is high as by probability on impacts, tomorrow it might change. While some risks completely drops off when risk management comes into action. As risk changes old risk may disappear and new risk may appear. Investigation is an important process in risk management, as it needs to be checked regularly and repeatedly. Inexperience project manager cannot be tolerated to handle large project. Completion of the risk valuation early on and in the project’s execution happens continuously during the projects lifecycle. Risk assessment allows to deals with the uncertain project events in a proactive manner. This in turn allows delivering the project on time, on budget and with quality results.
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