The goal of Risk Management is to identify, assess, and resolve risk items before they become threats to a specific project or to the organization as a whole. Risk Management plans should include short-term and long-term risks to project schedules, costs, and the functionality, adequacy and quality of project deliverables. Risk Management is an integral part of the overall quality assurance effort necessary to minimize the major sources of rework, schedule and cost overruns, and performance and quality degradation.
PRINCIPLES OF RISK MANAGEMENT
- Risk management should create value.
- Risk management should be an integral part of organizational processes.
- Risk management should be part of decision making.
- Risk management should explicitly address uncertainty.
- Risk management should be systematic and structured.
- Risk management should be based on the best available information.
- Risk management should be tailored.
- Risk management should take into account human factors.
- Risk management should be transparent and inclusive.
- Risk management should be dynamic, iterative and responsive to change.
- Risk management should be capable of continual improvement and enhancement.
CATEGORIES OF RISK MANAGEMENT
Risk Management consists of the following two broad categories of activities i.e…
- Risk Assessment
- Risk Control
- RISK ASSESSMENT
Risk assessment consists of risk identification, risk analysis, and risk prioritization.
- Risk Identification
It involves identifying items or events (such as changes in customer requirements or development technologies) that might have a significant negative impact on the project. These items or events might be identified through risk identification checklists, through reporting by project participants, through comparison with historical data, or through contingency planning to accommodate “Murphy’s Law.”
- Risk Analysis
It employs decision analysis, cost risk analysis, schedule analysis, reliability analysis, and similar techniques and models to analyze identified risks.
- Risk Prioritization
It employs quantifying the risks and risk exposure, and using statistically based decision mechanisms.
- RISK CONTROL
Risk control consists of Risk Management planning, risk resolution, and risk monitoring.
- Risk Management Planning
It uses information buying, risk avoidance, risk transfer, and risk reduction to achieve its goals.
- Risk Resolution
It techniques include appropriate staffing decisions, detailed multisource cost and schedule estimation, monitoring, prototyping, requirements benchmarking, and simulation.
- Risk Monitoring
It provides timely risk visibility and resolution. It incorporates techniques such as milestone tracking, tracking of top risks, and regular risk reassessment. Risk Management plans, like human resources initiatives, are living documents that will be updated as new risks are identified and addressed.
Risk Assessment and the HR Executive
As defined above, risk assessment consists of identification, analysis, and prioritization.
The HR executive may identify a risk and a specific need that is not being addressed. For example, there is a deviation between what should be occurring operationally and what is occurring. This deviation is causing productivity to drop slowly but steadily. Upper management is aware of this drop in productivity and is motivated to rectify the situation.
The HR executive having identified a risk, the drop in productivity for example, goes on to define the risk in terms of the human element. This is the underlying cause of the drop in productivity. Perhaps the line manager is not communicating effectively with staff.
The HR Executive and Risk Control
The HR executive has a vital role in controlling risk. A major component of Risk Management planning is risk avoidance. Many risks can be avoided by controlling and planning the human side of the corporate equation. Succession planning, adequate severance and outplacement, executive coaching and development will ensure that an organization has the means to deal with current and future challenges .Risk resolution and control are important responsibilities for HR executives. Identifying crucial attributes for key executives within an organization, coaching and developing these attributes and monitoring the executives on an ongoing basis will help to minimize and resolve potential areas of risk such as employee turnover, low morale, potential litigation from misunderstandings arising between staff and management and negative publicity due to any of these or other human issues.
Follow all of the planned methods for mitigating the effect of the risks. Purchase insurance policies for the risks that have been decided to be transferred to an insurer, avoid all risks that can be avoided without sacrificing the entity’s goals, reduce others, and retain the rest.
If risks are improperly assessed and prioritized, time can be wasted in dealing with risk of losses that are not likely to occur. Spending too much time assessing and managing unlikely risks can divert resources that could be used more profitably. Unlikely events do occur but if the risk is unlikely enough to occur it may be better to simply retain the risk and deal with the result if the loss does in fact occur.
Prioritizing too highly the risk management processes could keep an organization from ever completing a project or even getting started. This is especially true if other work is suspended until the risk management process is considered complete.
People and risk are as integral to farming as are weather, prices and technology. Human resources must have careful attention if managers are to have a full understanding of their sources of risks and their alternatives for handling risk .Managers’ paradigms, understanding of human resource management and human resource skills determine the success they will have with people. Like the rest of risk management, blaming others for management shortcomings neither solves problems nor provides escape from the problems. The good news is that managers can make human resource management one of their strengths. The result will be better risk management, more effective management and greater satisfaction from working with people.
Source by shiny p. kumar