WHY RISK MANAGEMENT?
Risk Management allows to identify the dangers and opportunities related to a project. Consequently, it allows you to reduce the negative impacts. But also, to exploit the opportunities throughout the life cycle of your projects. Projects are becoming more and more complex. Whatever the phase, it is then recommended to proceed to a risk identification and to set up a risk management plan. Risk management is nowadays used in practice during the different phases of a project. However, its use requires a good methodology in order to achieve significant benefits for the clients or companies concerned.
THE PREREQUISITES FOR RISK MANAGEMENT
Project risk management requires anticipation, vigilance and a real adaptation to the realities of the field. It is in this context that a risk management plan is necessary. Thus, the mastery of risk analysis tools is an asset in order to carry out risk analyses.
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WHY RISK AND UNCERTAINTY MANAGEMENT IN PLANNING?
The management of risks and uncertainties contributes to the success of offers before signature and projects after launch.
STRATEGY FOR DEALING WITH RISKS AND OPPORTUNITIES
Assessing risks significantly reduces the probability of failure (cost overruns, delays…). It also favors the success of projects within the contractual deadlines. It is therefore essential to anticipate by identifying the areas of the project where risks are concentrated. The objective is then to implement measures to mitigate them. Risk simulation tools allow to estimate the relevance of a preventive measure by comparing its cost to the benefit it could bring.
Steps to manage project risks and uncertainties:
1. Organization and planning of risk management in a project
Establish a risk management plan or process that will bring all stakeholders up to speed. It is then necessary to define the objectives of your projects. But also to describe the modalities and methods of risk management (frequency of risk review, roles and responsibilities, modalities of response elaboration, reporting…)
2. Identify the risks and uncertainties of your projects
Identify and document, in a risk register, their characteristics using a risk grid. It is recommended to work with a risk management tool such as Primavera Risk Analysis, Safran, or Deltek Acumen Risk. We recommend that you define the risk hierarchy on the basis of a matrix according to the view
below: It is essential to assess the uncertainties by task of your projects, so that you can combine the uncertainties of the critical tasks with the risk register.
3. Implement the qualitative risk analysis
Using the information obtained during the risk identification process, establish a hierarchy of risks according to their probability of occurrence and the severity of their impact.
4. Implement Quantitative Risk Analysis
This step is called pre-mitigation – numerically assessing and analyzing risks, using the Primavera Risk Analysis tool for example, to quantify the impacts and effects on the project’s time and financial objectives.
5. Establish a risk response plan
This step is called post mitigation – putting in place action plans that incorporate effective solutions to mitigate risks and exploit opportunities.
6. Track and monitor risks
Update the list of risks and reassess them. Adapt the risk response plan as risks change.
RISK RECORD TEMPLATE (EXTRACT from Primavera Risk Analysis)
A risk management plan must be rigorously followed for complex industrial projects. After the analysis and identification of risks, it allows the establishment of a risk response plan, adaptable over time. This logic of continuous improvement will aim at a continuous mitigation of risks.
We suggest you download a risk register template directly from Primavera that you can fill in and send to us to conduct a contract management workshop.
Our consultants will provide you with their expertise in the use of this software which is perfectly adapted to risk management. They will also provide you with operational assistance when making commitment decisions.
Combining the two skills is essential to ensure the security of your industrial projects. A well conducted risk management will allow you to be one step ahead when managing complex projects.
Our follow-up of the PMBOK method ensures your projects an anticipation and an optimal risk management.
Our experts benefit from a field experience and a multi-sector experience. They are also qualified to accompany you during any phase of the life cycle of your projects.