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RISK MANAGEMENT CONCEPTS
Risk is inherent in all project services and activities.
Risk can be managed. All are responsible for Risk
Management.
Goals of Risk Management The fundamental goal of risk management
is to enhance project effectiveness at all levels, while preserving assets and safeguarding health and welfare.
Additionally, the risk management process can identify and exploit opportunities that provide the greatest return on our investment of time, dollars, and personnel.
Risk Management Goals
ConservePersonnel &Resources
MaxCapability
Prevent orMitigate Loss
Advance orOptimize Gain
Evaluate andMinimize Risk
Evaluate andMaximize Gain
Identify, Control andDocument Hazards
Identify, Control andDocument Opportunities
Participants will: Adopt Risk Management as part of
project philosophy and integrate Risk Management into project planning at all levels.
Develop a systematic approach to risk management that allows for more consistency in the decision-making process.
Session Goals
Key Concepts of Risk Management. Risk Management Principles. Six-Step Risk Management Process. Levels of Risk Management. Implementation Exercise.
Session Agenda
Risk Management Principles
Accept no unnecessary risk. Make decisions at the appropriate
level. Accept the risk when the benefits
outweigh the costs. Integrate Risk Management into
project management philosophy and planning at all levels.
Risk Management Principles
1. Accept no unnecessary risk.All project activities and daily routines involve risk. You must accept necessary risk to successfully meet your objectives. Unnecessary risk comes without a corresponding return, in terms of real benefits or available opportunities. Risk Management is dedicated to exposing and avoiding unnecessary risks.
Risk Management Principles
2. Make decisions at the appropriate level.Those accountable for the success or failure of the project or any component must be included in the risk-decision process. This establishes clear accountability. Managers must ensure that subordinates know how much risk they may accept and when they must elevate the decision to a higher level.
Risk Management Principles
3. Accept the risk when the benefits outweigh the costs.Even high-risk endeavors may be undertaken when there is a clear knowledge that the sum of the benefits exceeds the sum of the costs. Risk Management is about controlling risk, not avoiding all risk.
Risk Management Principles
4. Integrate Risk Management into project management philosophy and planning at all levels.Integrating risk management into planning as early as possible provides the decision-maker the greatest opportunity to apply Risk Management principles. Usually, it reduces costs and enhances Risk Management's overall effectiveness too.
Risk Management Process
Step 1: Identify the HazardA hazard is any real or potential condition that can:
impair project effectiveness; cause injury, illness, or death to
personnel/clients; or cause damage to or loss of
equipment or property.
Risk Management Process
Step 2: Assess the RiskQuantify and qualify the probability and severity of loss from exposure to the hazard.
Risk Management Process
Step 3: Analyze Risk Management MeasuresInvestigate a variety of actions which will either reduce or eliminate the risk.
Transfer? Control? Eliminate?
Risk management Process
Minimize risk through transfers Risk and insurance programs Campers Accident insurance Personal responsibility of participants
Insurance Isn’t “The Solution”
Coverage is limited Some losses (i.e., fatal injury) are
“unthinkable” or “unacceptable”
Risk management Process
Minimize risk through controls Training Policies and procedures Emergency response plans
Controls prevent or mitigate loss Training is a form of control Know how to get help Policies and procedures are forms of
loss control Reporting incidents of violent or
threatening behavior Drug and alcohol controls Behavioral expectations (student
handbook) Vehicle usage policy
Risk management Process
Risk management Process
Control participants Control the environment Raising awareness before a
loss Positive aspects of activity Safety and security
Risk management Process
Eliminate risk Risk Management is about controlling
risk, not avoiding all risk. Eliminating risk can result in
eliminating benefits.
Risk Management Process
Step 4: Make Risk Management DecisionsThe appropriate decision maker uses cost versus benefit analysis to choose the best control or controls.
Maximizing opportunity=Good things happen
Minimizing risk=Bad things don’t
Risk Management Process
Step 5: Implement Risk Management Measures
Plan the implementation of measures and the commitment of resources to:
Minimize risk Respond to a loss
Example: vehicle usage policy
Risk Management Process
ACT Get insurance Contract templates Communicate controls Prepare for loss Respond to loss Manage emergencies