Risk Management, health & safety of Workers
Today we're talking about risk analysis how to analyze risk on your projects but before we start, I want to stop and look at the word analyze because so many times I hear people interchanging different words like risk identification risk management risk analysis there are three different words three different things so let the session today.
RISK ANALYSIS
We’re going to talk about the analysis and when we analyze the risk, we're examining methodically and why would we want to do this well. There are several enormous reasons. why first we're trying to avoid any potential litigations address may be any regulatory issues or comply with new legislation ultimately, we're trying to reduce our exposure and minimize the impact of any risk, so what are some insights that we've had in working with so many projects, well, first, we found that there's no lack of information out there about risk, but what happens is sometimes much of the information is very complex and can be quite intimidating, most of the industries have their own best practices and many companies have their own framework, and we found that the risk analysis can be done to extremes on some projects. It’s not done at all because they feel like they don't have any risk and then on some projects, it's done to the tenth degree. I mean think about it if we're sending a rocket to the moon with astronauts we want to protect those people, so let's look at where and when the risk analysis is done well if we look at the project management process.
RISK MANAGEMENT PLAN:
Groups the planning the process is where we look at the risk and it's done throughout the entire project so we develop our risk
management plan and identify
the risk and those are captured in our risk register so as a reminder the register identifies all the risks the affects the risk
response and the risk level.
PRIORITIES LIST OF RISKS
We’re ultimately looking at what the potential effects to the activity resource estimate the activity duration as to possibly the schedule, the cost estimates, budgets, quality and even the procurements, so when we take the risk register then we take those items and that's where we do the detail analysis and we do that in two parts the first part we perform a qualitative risk analysis and they are what we're doing is that's prioritizing the risk for further analysis or action depending upon the probability and the impact of those risks, the benefits of that are it helps to reduce the level of uncertainty of those risk on the project and allows us to focus on the high priority risk.
the second piece is performing the quantitative risk analysis and what that is it's a process for numerically and analyzing the effect of those risks on the project the benefit of that is it helps support in decision making to reduce the project uncertainty and again that can help us number one plan the risk responses and control those risks so those are some great reasons and a few tips on how to analyze the risk on your projects.
POSITIVE AND NEGATIVE RISK OF PROJECT:
Well, today we're talking
about positive versus negative risk
on projects but first, we want to talk about what risk really is, so risk is an uncertain event or condition that if it occurs can present a positive or negative effect
on one or more of the project objectives. So think
about if a positive effect on a project would be what we consider an
opportunity, a negative effect on the project would be considered a threat, so
think of opportunities could be too much of a good thing on a project and a threat being too much of a bad thing, so what's an example of these so an
opportunity on a project think of a possibly a marketing campaign for your the company, so you do a marketing campaign and the campaign ends up being more
successful than the project had planned for.
so you have to ask questions like what happens if we get more customers more subscribers what happens if we increase the demand and how are we going to handle that do we have the logistics in place for the shipping negative threat would be, what happens if you have a campaign and you do you have the orders and something happens, to the shipping maybe the trucks or the transportation something happens with the transportation, so that could be a threat to that marketing campaign, so let's talk about some strategies.
RISK MANAGEMENT STRATEGIES:
That we would use to handle the opportunities and the threats on our project so we look at the risk and let's take it the negative effects first, so what are these strategies for those negative effects or negative risks on our projects. First, we may choose to avoid the risk and what that means is we want to eliminate it totally, just make sure we don't incur that risk on a project, so we want to eliminate the threat and protect against the impact, we may choose to transfer the risk to a third party together with the responsibility or ownership of that risk.
Think of an insurance policy where you're actually having to pay the premium for someone to take that risk on, we also may choose to mitigate the risk and what that means is, we're trying to reduce the probability or the impact of that risk, and the fourth one is we may choose to accept it, and what that means is we acknowledge the risk, and we're not really going to take any action unless that risk occurs and then so let's look at the positive risks, that may happen on our projects and some strategies for those and first we may choose to exploit that risk meaning.
we want to ensure that opportunity is realized, if it happens we're going to seize the moment, we may choose to enhance its meaning, we want to increase the probability and the impact of the opportunity, we may choose to share it, and in this case for the positive risk, when we share means we allocate some of the ownership and responsibility to a third party, so that may be more like a partnership, where we partner with a company or firm, where we're using their experience for a certain thing, and then the fourth one is, we may choose to accept that risk meaning, we're willing to take advantage of the risk, if it occurs but we're not going to actually pursue it, otherwise so this is the difference between the positive and negative risk on projects, and some of the strategies
HOW TO MANAGE THE RISK IN PROJECT:
I heard there are
thousands of tens of thousands of members in the Institute and something like 30
members in your risk faculty do
that seems right to you okay but even so 30 risk specialists in New South Wales, we've got some work to haven't we and part of it, I think it is understanding what our contribution
really is, how we can add value to the business, how it can help our colleagues
to do their work more easily? Some people
call risk management, their business, prevention department you can't
do that because it'll all go horribly wrong be careful, and I think that's and
if you're a risk specialist,
you'll know that's absolutely not characterizing our contribution to the
business and Formula.
One driver has discovered that breaks help you go faster, brakes help you drive faster because you have a safer car and it's easier to stop when you need to, so you can actually go faster when you don't need to, and so actually risk management is offering us a facility like that, to understand where the boundaries and constraints are, and then we could within those constraints and boundaries with those risk appetites and risk thresholds, now then perhaps our businesses can just know that a little faster be more competitive and create more value, so I would encourage you, if you're a risk specialist and you know others, who are also interested in risk management, who are not part of the faculty than do get them involved, and come to events like this sign them up, because the risk management is really our opportunity to make a difference.
I've been involved in risk management for 15 years I started when I was very young that's a joke by the way you can laugh, it's fine I know it's been recorded but you know nobody will know who laughed but please do and if you can't laugh, that nonverbal are groups you know that help as well from this end, so I've been doing this for a very long time and the reason that I do risk management is that it works because risk management genuinely helps us, to understand the things that could drive us off-track, that could affect our ability to achieve our goals, our ability to succeed is, directly proportional to our ability to manage risk effectively, so we really make a difference or at least we should do and that's what gets me out of bed in the morning, whether it's as a speaker or as a consultant or trainer do some of the thought leadership work that I do is, to move that risk discipline forward and make it even sharp but even better focused, so that we can make more of a contribution, to our businesses and not just business but to wider society at large, and perhaps even in our communities because there are risks everywhere as you know, what we're going to do today is talk about risk in projects.
It’s a very particular application area some concepts I'm going to introduce to you may not be new maybe they will, we'll have to see but they don't just apply in the projects arena, so you will if you're not interested in projects you will find some aspects here, which were applicable elsewhere. There are standards as we know ISO 31000 but not just that's our generic risk management standard there's a six to one nine eight and update of IC sixty-one nine, eight coming out which is risk management in projects.
We’ve got a UK government standard we've got
Canadian government standards there are lots of standards and there's a lot of
activity here in Austin as you know in terms of and New Zealanders in the
standards area, so we have risk
management standards, we have risk
professional bodies, there's an institute
of risk management in the project world, there are project risk specialists bodies, we have an institute of operational risk; we have you know many specialists, risk professional bodies and we have a body of knowledge,
so you know people understand what
risk is, and what risk management
is, and the processes and so on. There’s quite a good infrastructure to
support that in terms of books and training courses, and academic courses you
can do doctorates and degrees in risk
management.
RISK MANAGEMENT AS a PROFESSION:
We’ve got consultancies we've got tools and so on, so the question that someone raised I think is quite interesting is risk management a profession I don't know how you feel about that when you go down to the pub at night or you're at a dinner party and suddenly says what do you do and the first day, you say I'm a risk management specialist, I'm a risk manager, if you dare to say that then what follows oh is, that insurance is that health and safety what exactly is that what do you do and then the question is how to do we answer the question in terms of profession, there's a lot of work on what a profession really is, and someone touched on some of those things, but one of them is public recognition, we all know what accountant is, and a doctor, a priest and a lawyer which is the traditional profession. Why don't people know what a risk manager is, I think maybe we're not, so close to being a profession, as we think we are and so you know maybe people see it's a bit like this bunch of cowboys, who try to scare people into giving us their money or their business?
It'll all go horribly
wrong if you don't come and talk to me kind of talk to me and I'll make it all
go away for you and sometimes our advice isn't really both well-focused either
you know we ought to do better than that don't you think the world's
a nasty place, that might have you go so you know we've got some work to do. I
think to persuade people that risk
management is a contributor and if we look at how projects how risk management is practiced in the
project arena, it's widely accepted all the projects.
Professional bodies, the project management institute the various associations the Australian Institute of Product Management, for example, will include risk management within their bodies of knowledge and were included in their certifications, and we basically know what it is and it's practiced right across industries different product types most countries and I've worked in different countries and most of them will have been practicing some kind of risk management, so you would expect with this kind of long history and a good understanding of what it is and how it works that everything should be okay in the world of risk in products.
RISK MANAGEMENT DRIVE TO SUCCESS:
Your experience here's the standards groups day to the chaos data which has been tracking product performance since 1994, and they divide projects into either succeeded they've met all of their objectives, failed they've met none of their objectives or challenged, where they've met some but not others a.nd this and some detail here, but you'll see we haven't really progressed very much in the last 20 years, we still get a fifth of our products failing outright nearly half of our projects are failing in some aspect and only around a third are actually succeeding. So something isn't going right in the world of projects and risk management is supposed to help us risk management, in theory, drives us to success.
Whether it's in the world of projects or in the world of business or in the wider world, why is that well because projects like the rest of life are risky, actually risk is embedded into every project because projects are unique and complex they're based on dependencies, and assumptions they're trying to create something, that's never been created before, within a series of conflicting constraints, very often things change during the lifetime of a project, and projects are done by people every characteristic of a project is risky, and so the project risk management ought to help us, to identify and manage that risk, and risk management should help us achieve our goals in projects because it focuses on our objectives.
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