conveyor robot manipulators work businessman in front of control panel analysis production development Risk management has a specific place in protocols and risk management models. In this article we will discuss the six steps to controlling risk for risk managers, as broken down in the PMBOK: planning, identification, qualitative analysis, quantitative analysis, response planning and monitoring.

In short, a risk manager should take the reins of the risk control process with a detailed plan; find out what the risks are that may affect team members and various units of the organization, assess risks from the perspective of the whole organization; create action plans to respond to each of the risks if they occur; and continuously monitor in order to improve the plan.

Risk management planning

Like any other aspect of project management, risk prevention and response in the case of risk occurrence should be subject to strict planning. Risk management is iterative, implying that the planning phase will be reviewed after each cycle.

More specifically, planning involves a series of essential decisions that will affect the following five steps. Choosing methodologies, assigning responsibilities, defining types and categories and risks, as well as allocating resources are some of the main areas of focus at this moment.

Risk identification

This step is to identify the risks that may affect the development of the project and understand their characteristics. It is essential to identify all risks that may potentially influence the project so that the necessary precautions can be taken and disaster can be avoided. Therefore, planning for all risks is essential. Do not ignore them but instead control them.

For the identification of risks, multiple systems can be used.

One of them is to use similar backgrounds, both in our company and in other companies that resemble by their activity or reach.

Another possibility is to use specific analyzing tools (Ishikawa diagram, flowchart or other types of specialized diagram systems) or other standardized analysis systems, such as SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).

Finally, if the first two possibilities are not feasible, you can resort to expert judgment.

After identification, it is important to proceed to classify risks that have been detected (Technical, external, organizational, management, etc.). Their influence on the project (mild, moderate or severe impact on the project), or the probability of the risk arising (low, intermediate or high probability).

Qualitative analysis

This analysis is used initially to filter risks and prioritize them in order of importance and severity. Although this analysis may not be the best in terms of accuracy and speed.

This type of analysis is also used for risks which need immediate attention. The urgency leads to an analysis that, despite not being the best in absolute terms, is most appropriate for the time available.

The results of this analysis should reflect in a risk assessment matrix.

Quantitative analysis

This is a more comprehensive systems analysis, but also the most complex and time consuming.

To perform a quantitative analysis, specific quantitative risk analysis systems should be used, such as mathematical simulations e.g. Monte Carlo.

A simpler option is to use a decision tree with which you can numerically illustrate the parameters derived for each choice.

If it is not possible to quantify the risks, you can turn to experts in the field to conduct an assessment.

Ideally, experts should be external to the project in order to prevent conflicts of interest. In addition, to avoid bias, the evaluation should be conducted blindly without knowing the outcome of assessments made by the other experts.

There are differences between this point and the assessment of experts in qualitative analysis. While in the former case, experts estimate the relative importance between different types of risks in order to focus on the most important, in the quantitative case experts, despite not having actual data, provide estimates as accurate as possible based on their experience and the results of other projects that they have led previously.

Risk response planning

When a threat is verified, the response must be preplanned and follow the correct procedure. Action plans must be drawn up when risk in the project is present in order to prevent its occurrence. This may include transferring it to an external agent or mitigating their effects, in the event that the risk occurs. Where risks cannot be avoided, in the event of circumstances beyond our control or scope, contingency plans should be developed that allow for coordinated and appropriate action.

Risk monitoring

To predict whether or not risks may occur it is necessary to know warning signs so that it can be anticipated. If this is not possible, monitoring mechanisms should be in place so that a risk in a project can be detected the moment it presents itself.

The purpose of these systems is to instil the attitudes of anticipating risks and having contingency plans in place, before the risk has significantly influenced the project.

In addition, self-monitoring the reaction to the risks and the occurrence of them can improve prevention measures, and thus reduce time and increase the efficiency of the reaction.

 

Here are some recommended articles:

Our new Risk Assessment Matrix is online

Keys to becoming a good risk manager

Risk management… The what, the why and the what to do

 

Juan Delgado

Blogger ITM Platform

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A guy looking in a binocular, standing on a pile of books, clouds, stars, apple, TrophyIf you want to become a risk manager, you will have to combine two types of training.

On the one hand, you must be a specialist in a particular field. For example, if you want to be a risk manager in the field of medicine or pharmaceuticals, you’ll need medical training, or hospital management training.

On the other hand, you need to acquire specialist training in risk management. Several institutions offer specific degrees in these areas.

Where to find risk management training

These are some of the major international institutions offering specific training in risk management.

Institute of Risk Management. Founded in 1986 in the UK with the aim of facilitating training and certification in risk management, it has international prestige and is one of the first institutions to grant degrees in this area. The diplomas offered are: the International Certificate in Enterprise Risk Management, the International Diploma in Enterprise Risk Management and Certificate in Risk Management in Financial Services. The price is around £1,000 for non-members.

Project Management Institute. The international reference for project management also has a specific course on risk management: the PMI Risk Management Professional (PMI-RMP). The certificate costs $670 (or $520 if a member of a PMI institute), and is obtained after a multiple choice test based on the PMI-RMP manual, which is available for free in this pdf.

The Chartered Insurance Institute. Also based in the UK, it is a comprised of approximately 120,000 members in societies in over 150 countries. It is the world's largest professional association in the field of financial planning and insurance. Although not dedicated solely to risk management, it provides accreditation in this and other areas.

If you’re hot for the more academic part of the issue, a host of Higher Education Institutions in the US offer Risk Management courses, from Stanford’s strategic decision and risk management courses to the PhD programs offered by Columbia University’s (Decision, risk and operations) or the University of Pennsylvania’s insurance and risk management. As you can imagine, this is the kind of PhD program that can be at least as rewarding careerwise as the most expensive MBA.

Of course, big firms and multinational corporations also have their say. If you’re interested in in-company training tailored to the needs of your organization and in implementing international standards like ISO 31000:2009, you can look up BSI’s risk management training courses or ASQs’ risk management essentials and implementation strategies.

Risk Doctor. Under the slogan "Exploiting Uncertainty Future", this website is the initiative of David Hillson, a celebrity in the field who calls himself the "Risk Doctor". It specializes in training for risk managers. Their slogan makes reference to precisely one of the functions of risk and project management: to turn adversity into strengths. On the page you can find plenty of resources, from books and scholarly articles to specialized webinars and videos of Hillsons’ conferences.

Constant Change

Even with good training and certification, risk management, like any other discipline, is subject to constant change and evolution. A professional who wants to stay up to date must constantly be looking for new sources of training and information. To do this, the internet is your best ally.

We recommend periodically visiting our blog where you can find up to date risk management and project items.

 

Here are some recommended articles:

Our new Risk Assessment Matrix is online

Keys to becoming a good risk manager

Risk management... The what, the why and the what to do

 

Receive the latest blogs directly into your inbox

 

two businessmen playing, try not to make the tower fall on the floorThe risk manager is perhaps a position that is not as well recognized as others, however it is essential for the successful development of a company.

The job of a risk manager is to identify potential risks that may affect the organization on multiple fronts: reputation, safety and economic feasibility, even investment security. Although it is common for a risk manager to specialize in a particular area, so as to detect and address potential risks in their corresponding field. For example, risk departments are essential in the banking sector, and insurance companies have risk assessment as one of their core activities. In these areas it is common to find risk directors and risk analysts.

The importance of proper risk management for the development of any economic activity has led to a specialized discipline often known by its acronym: Enterprise Risk Management, or ERM. COSO defines the discipline as follows: 

ERM is a process effected by an entity’s board of directors, management team and other personnel. It applies to the entire company in a strategic context, is designed to identify potential situations that may affect the entity, manage risks that are within the scope of its risk appetite and provide reasonable assurance to achieve the objectives of the entity.

 Enterprise Risk Management - Integrated Framework
Committee of Sponsoring Organizations of the Treadway Commission

If you are interested in this value proposition, you should know that the culmination of your professional development could come with the title of Chief Risk Officer (CRO). Although this managerial position is more common in the financial sector, large engineering firms also include them in their structure. A very interesting profile in the US, for example, is that of James Durree, Vice President of Risk, Ethics and Compliance at JACOBS. Durree’s career showcases the strong sectorial mobility of risk expertise: having started as a Risk Analyst at Abbot Laboratories, he then moved out of the healthcare industry and spent 21 years managing risk at Avery Dennison, a global packaging manufacturer. Durree’s last move to JACOBS placed him in front of the kinds of risks that are faced by primary process industries across a series of services.

In short, the risk profile of the specialist is so specific to the role that it can’t be confined to finance or insurance companies. Additionally, risk managers often require a strategic integration with project management. Depending on the size of the company and its organization, PMOs are likely to have access to a risk expert, although smaller or more horizontal companies may distribute that responsibility among regular project managers.

The position of risk manager has its own characteristics and expertise, combining technical knowledge with management experience and an important transversal competence: the ability to communicate and persuade. Therefore, to perform effectively as a risk manager you have to be comfortable taking up a central position, interacting with members of other teams within the company and with customers.

Once risks have been identified and assessed, risk managers work to implement procedures to overcome, transfer, or at least minimize them.

They must understand the objectives of the company, to always direct their efforts and make changes in the initial planning towards producing a product that provides the greatest customer satisfaction.

The result is a soaring new professional profile.

Tasks to be performed by the risk manager

  • Identify risks. Often, risk managers don’t have all the information they need, resorting to team workshops in which they share progress information and collect data from project units. In this case, the risk manager is the facilitator of conversations and a catalyzer of contingency plans.

  • Develop contingency plans. Once risks are identified, the risk manager is the person with the technical knowledge necessary to develop a contingency plan. It is possible that many details are beyond his competence and direct influence, so his work can sometimes be seen as internal consulting for the units that demand technical assessment.

  • Provide methodologies to identify and analyze the economic impact of the loss of any of the components of the organization, workforce changes, or any other damaging impacts.

  • Seek opportunities. The risk manager should select those enterprise opportunities that are more efficient for the company from a risk perspective.

  • Anticipate additional costs resulting from newly emerging risks through specific budget items. However, this should not prevail over realistic budget forecasts.

  • Work collaboratively with the board to maintain control over the objectives of each process, ensuring the end result meets customers’ needs.

Training and skills that a risk manager should have

The development of a risk manager will be different depending on the type of project or the type of risk that they will work with.

In addition to specific project management and risk training, a risk manager should be a subject matter expert of the project in which they will work. For example, if it comes to identifying risks in a project related to construction, it is appropriate for the risk manager to have experience in architecture or engineering. Only then will he be able to truly understand the market, challenges and opportunities that may arise during the execution of this specific project.

The professional profile of a risk manager also allows more varied training in other areas. In addition to project management, other measurable training studies include:

• Math

• Physics

• Statistics

• Business Management

• Financial and Actuarial Studies

• Economics

• Industrial engineering

For example, an engineer may have never worked specifically as a Risk Manager but have experience in construction or related engineering projects, and therefore in tracking tasks and managing projects. In this case, the lack of specific training in risks can be bridged by means of the transferable knowledge and skills developed in previous positions.

Besides the specific training in risk, a Risk Manager must have a series of non-specific, transferable competences, including but not limited to:

• Ability in problem-solving and decision-making

• Analytical skills and attention to detail

• Organizational skills

• Negotiation and persuasion skills

• Strong mathematical and quick calculation skills

• Business intelligence, to integrate risk calculations on the dynamics of development of the company.

If you wish to acquire the training and skills needed in the field of risk management, there are a number of institutions of reference in the US. One of the most renowned internationally is the Institute of Risk Management. Other prominent organizations are the International Risk Management Institute, or the Global Association of Risk Professionals. These organizations provide continuously updated courses and training qualifications.

Allies of a risk manager

In addition to the training and skills possessed by a risk manager, one of the keys to succeeding in the risk management field and transferring these assets to a company is the support of specific and advanced software.

In ITM Platform we work to provide a solution that allows you to maximize your productivity and complete projects effectively. You can start by testing the new online version of our risk assessment matrix tool, which you will also find in our integrated solution.

If you request a 14-day free trial on ITM Platform you can see just how easy it is to get custom reports, track tasks and perform the basic functions all risk managers need, including communication and coordination with all departments of the company.

Top 5 most read blogs on ITM Platform:

The Monte Carlo Method in Project Management

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Sacrificing a project or task when you realize that it is not developing properly can lead to giving more explanations than you would like, or managing the frustrations of the team. However, taking the necessary steps will allow you to rescue the project, save the final result, or even the company!

If both financial and human resources are assigned to a particular task it is because the expected results are worth it. Devoting efforts and resources to a fruitless task involves a twofold cost: firstly the wastage of these resources in a task that will not bring the desired result. On the other, it means less resources for other tasks or projects that could be better developed if they had the required resources.

Therefore, deciding to rescue a lost project or to abandon it within good time are difficult but essential decisions for a well-run company.

How to recover a seemingly lost project? In this article we answer this question.

41240696 - a two african-american businessmen. man on top is happy while sitting and man in bottom is sad while standing. rivalry concept. a contemporary style with pastel palette soft blue tinted background with desaturated clouds. vector flat design illustration.

Recognizing errors

The first step, though it may be obvious, is the most important. When a project goes wrong, the first thing is to acknowledge it.

In many cases, a way to know if the project can present problems during its implementation is to have completed the proper planning of risks and how to identify them. Identifying these risks, will allow you to take effective measures to rescue the project.

Additionally, before the implementation of the project there must be a series of planned milestones, which allow you to know if the end result will satisfy the established customer expectations. Of course, a task will require monitoring to ensure that goals are being achieved and deviations are forecasted in time. Do not forget to communicate with your client what your estimates are, either through regular reporting procedures or when there is a significant change.

The recognition of an error can serve as a starting point for analysis, both at the company or individually, in search of the aspects that can be improved.

Also, there is no single answer to the temporal dimension: if the risk is imminent, it may be important to launch the analysis during project implementation even if this may slow down the work. In other cases, the best phase for analysis is a post-mortem analysis.

If you want to know more, we recommend reading this article: How do I know if my project is on track?

If there are no other solutions, abandon the project 

Once you have identified that the project is likely to fail, the next step is to consider whether it makes sense to continue with it. As mentioned above, an active project inevitably consumes resources. It would be appropriate to consider whether it makes sense to continue to devote these resources to a project that you know will not get the desired results or if it is better to cancel the project and devote those means to other more viable projects.

The opportunity cost of keeping a failing project is the loss of resources which other projects could use in order to achieve the expected results.

A defeat on time can be a final victory. Therefore, identifying the risks and probabilities of failure of a project are essential to ensure the ultimate success of a global project or a company.

Seeking external support 

Sometimes it is difficult for oneself to find ones’ own mistakes. Whether it be pride or self-indulgence, we tend to think that what we have done is right, and overlook certain things.

An example is computer programmers. In most companies, when developing software programs, they are not tested on the same computer that they have been created. This is because they have observed that the review is more comprehensive and objective when performed by an external evaluator.

Self-evaluation tends to be more benevolent and more easily satisfied.

In addition, an outside observer, especially an experienced one, can make for a valuable and objective opinion.

It is possible that, entertained with superficial problems, we may be ignoring other deeper and more fundamental problems within the project. These are the essential problems that should focus all of our attention.

Pursue small victories 

Although completing an entire project can seem overwhelming and complex, often it is not necessary to do extraordinary things to get excellent results. A small victory every day can culminate in a final success.

What are those little victories? One of the secrets for daily excellence is quite simple: it is to meet each day with the corresponding tasks in the most appropriate manner, with the greatest effort and dedication. This daily combination of efficiency and effectiveness is the key to long term success.

Good engineers mastered this art: the face of such overwhelming projects as a bridge, an aircraft carrier or a new software, the secret is to analyze the ultimate goal, break it down into the smallest components as possible and organize work around those parts.

Instead of an incomprehensible goal lasting a few months, both the project leader and team members can focus on the day-to-day tasks at hand. The challenge of motivating the team can be attributed to the concentration of daily work, reducing the concentration of daily work therefore eliminates the anxiety about the complexity of the project and provides productivity-focused components.

Using more resources is not (always) the best answer 

Try to think of the attention and motivation as the psychological capital of the company. This has helped me to realize one important rule: to manage resources, the most important thing is not how much I have and can mobilize, but how to distribute and control them.

I do not want my employees to be distracted in trying to understand the whole project cycle and trying to juggle what they are developing as well as what the responsibilities of another unit are. I want them to focus on their own tasks, maximize their energy and motivation and achieve maximum productivity.

When transferred to financial, material or human resources, the standard is still true: the most important thing is not how many resources are used, but how they are distributed. Companies that achieve greater success are not those with more means and less input. Google started in a garage.

Resources are not the difference between a successful company and one that fails. The key is in how those resources, and projects that leverage them, are managed. If you want to stay competitive, ITM platform offers a simple management solution that allows you to make appropriate use of resources and bring your projects and your company success.

 

Top 5 most read blogs on ITM Platform:

The Monte Carlo Method in Project Management

Extra Extra Extra!

Three disastrous project management failures

The project in the face of adversity: what should a project manager do?

What is the Virtual Sock Management or Periodical Online Management?

 

Juan Delgado Moraleda

Blogger ITM Platform

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