Identifying Root Causes Of Mismanaged Risks

Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.

Risk management is a continual process that is used by every person throughout their day. It is an autonomous activity, that when an individual is presented with a situation their brain assesses the associated risk and quickly makes a determination as to whether that risk is acceptable; based on the potential benefit or the possibility of an adverse outcome. For just one person, this can be a difficult process and without preparation, the outcome is reliant on chance, as in a toss of a coin. This describes a basic reactionary process; the goal is to develop a proactive stance that eliminates, mitigates, or defers the effects of unknown and unexpected disruption events.

To monitor risk within a team, it is essential to understand and identify what risks can occur whilst working on a project. As a line manager, involving the team and getting their input on what concerns them about this project or task will help identify any potential risks (Obeng, 2007). Two examples below to illustrate how I identified and monitored risk.

Each team lead should be responsible for their team, and each team should be held accountable for the risks involved in their department. They should be aware of the elements of the project they are responsible for delivering and make them accountable by holding review meetings each week to measure progress.

Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering

Risk or threat is common and found in various fields of daily life and business. This concept of risk is found in various stages of development and execution of a project. Risks in a project can mean there is a chance that the project will result in total failure, increase of project costs, and an extension in project duration which means a great deal of setbacks for the company. The process of risk management is composed of identifying, assessing, mitigating, and managing the risks of the project. It

* There are three (3) schools of thought regarding risk. The first considers the positive and negative aspects of risk, but sees them as separate. The second group believes that there are benefits from treating threats and opportunities together, while the third school does not label uncertainties, but addresses uncertainty as part of “doing the job.” Argue the value of having a risk strategy despite the cost associated with it. Include an example to support

Within the case study “Is the Rookie Ready?” by Sarah Green, both a unit head and project manager face the challenge of performing rushed risk analysis. The context of this case study will be used throughout the remainder of this paper and the details are described in the sections that follow.

Project Risk Management – identifies potential risks (good and bad) that can affect the objectives of the project.

In order to perform project risk management effectively, the organization or the department must know the meaning of the risk clearly. With regards to a project, the management must focus on the potential effects on the objectives of the project, for example, cost and time (Loosemore, Raftery and Reilly, 2006). Risk is a vulnerability that really matters; it can influence the objectives of the project

Risk perception is the person’s subjective uncertainty about what she could lose or gain from a transaction (Cox & Rich, 1964). In a similar vein, Ricciardi (2008) defines perceived risk as “[…] the subjective decision making process that individuals employ concerning the assessment of risk and the degree of uncertainty”. Risk perception is related to the amount, possibility, and exposure to loss (MacCrimmon & Wehrung, 1988), to confidence in individually assessed probabilistic estimates about the degree of situational uncertainty (Sitkin & Weingart, 1995), and to lack of information (Weber, 2004). “The practice of perception is a technique by which people categorize and understand their sensory intuitions in order to provide an assessment of their surroundings with the recognition of actions” (Ricciardi, 2008).

It can be intensified by the tendency that people evaluate highly possible and unlikely events very extremely, that is, regard high probability as certainty and very low probability as impossibility (Kahneman and Tversky, 1979). The non-linear probability weighting function is shown in Figure 1. Risk undervaluation is mainly attributed to overconfidence, which is the tendency to exaggerate the predictive ability and assess the situation over-optimistically (Rizzi, 2010). According to Lichtenstein and Fischhoff (1977), experts are more prone to be overconfident than nonexperts because of the awareness of their knowledge. This was reflected by managers’ overreliance on quantitative risk models without understanding their limitations.

Hubbard is very contemptuous of much of the Risk Management practiced by organisations. Do you agree with his comments and suggested methods of managing analysis of risks?

One well accepted description of risk management is the following: risk management is a systematic approach to setting the best course of action under uncertainty by identifying, assessing, understanding, acting on and communicating risk issues. In order to apply risk management effectively, it is vital that a risk management culture be developed. The risk management culture supports the overall vision, mission and objectives of an organization. Limits and boundaries are established and communicated concerning what are acceptable risk practices and outcomes. Since risk management is directed at uncertainty related to future events and outcomes, it is

The point that Kippenberger (2000) is making in his article titled ‘there’s no such thing as risk free project’ is that almost everything we do in a project involves a risk of some kind – by so saying, it is therefore essential that we are prepared or able to deal with risks. Most literature puts emphasis on the negative connotation that the word ‘risk’ carries. For instance, Chapman and Ward (2003) provide the meaning of risk as: hazard, chance of bad consequences, loss, and exposure to chance of injury or loss. Galway (2004) defines risk as an event which is uncertain and has negative impact, and similarly, Martin (2008: 38) defines risk as the ‘chance of something occurring that has an adverse effect on the project’. This negativity highlights the fact that problems can occur or things can go wrong and it is therefore important to have a systematic approach to managing them. Therefore in project management, risk management is necessary to increase the chances of the proposed project succeeding.