PROJECT RISK MANAGEMENT APPROACH
Purpose of Risk Management Plan
Purpose of a risk management plan is to identify potential risks before they happen. Being able to identify such risks before they occur will help the organization to plan on how to counter such risks with a perfect solution. The aspect of the early preparation of such risk occurring will help in planning and minimizing effects of the risks. Also, different ways of handling the risk will be developed in advance and a technical team will be ready to implement such plans to avoid time wastage and potential damage during the process of implementing the strategic measures to counter the potential effects of the risk.
Explain how risk management will be approached for the project.
Risk Management Approach.
Risk management involves the following steps, first, the risk needs to be identified, then the risk is assessed and the final process is minimizing the effects of the risks to an acceptable level. The risk management process will determine the process used to handle the risk encountered in Pepsi. In my case, I will use the five known risk process which is as follows.
1. Identifying the risk. The step involves doing a research about likely risks which may affect the organization day-to-day business activities such as fire and many others and writing them down.
2. Analyzing the risk. Then the risk identified needs to be analyzed to understand it better so as to draw a perfect conclusion about it.
3. Ranking the risk. The risk identified will then be weighed then as per the weight of effects likely to be caused by the risk then it will be ranked or rated in a scale of ten.
4. Treating the risk. This step involves actual planning of dealing with the risk identified if it occurs. These step also involves identifying the risk with the highest rate of damages and working on it until it reaches an acceptable level.
5. Monitoring and reviewing the risk. This step involves constantly checking the risk identified if it will happen or not. These step involves actively monitoring the possibility of the risk occurring so that it can be taken care of faster before widespread influence has been witnessed.
Risk management approach also covers the tools which will be used to handle the risk. The organization needs to have the right tools to be able to combat and solve risks successful. A good example is a fire, Pepsi needs to equip its branches with adequate firefighting equipment in case the risk of fire happens. Tools help in making the work easier or some of these risks won't be solved without the use of the right tool. So the management of Pepsi needs to have enough tools at their disposal for their technical team to use.
PROJECT RISK MANAGEMENT PROCESS
Risk management process is a step to step process just like any other process with an aim of identifying risk and solving its effects or minimizing the cost of damages the risk might cause if it happens. Risks are uncertain in nature their might happen or fail to happen and sometimes it might cause a small effect and also it might cause a huge effect. So the organization should be ready to tackle such issues that is why a risk management plan is very crucial for organizations such as Pepsi.
Project Risk Identification
The methods used to identify the possibility of the risk occurring are as follows.
Brainstorming I will implement this idea by exchanging ideas with the risk management team of Pepsi with an aim of coming up with potential ideas of risks which might happen to the organization. Another viable method to use is a direct observation of how the employees. There is a lot of information which can be gathered by just viewing the operations of the business operations.
Observation method will give the risk management team enough information needed to develop a perfect plan to counter risks because small errors which might cause the risks can be identified. The employees might be careless when handling their cigarette smoking habits which might cause a problem these can be observed and the risk causing factor eliminated in advance.
An interview is a method which will help the team to get important information from the employees of Pepsi. The person doing the interview should focus on getting information which relates to certain risks which might be encountered by the organization. The nature of the interview should be kept private to protect the employees who provide important information.
An incident analysis will assist the team in understanding risks which have already happened in the past. The risk register is a very important source of information for this method. This method helps the team to understand issues which might affect the organization and have already happened. The team should be able to analyze if the same risks might happen to the organization again and take pre-caution steps in preventing the risk from happening.
Types of risks which might happen to Pepsi organization are varied in nature, the organization should be wary of them and plan how to handle the varied types of risks which are as follows.
Reputational risk. There is a type of risks which target the name of an organization. These type of risk might bring bad press which might result in a potential loss of customers. These risk might cause an organization to reduce its operations in some areas which will result in loss of the market share and their profit margins.
Operation risk is another type of risk which should be avoided or solve when it is first noticed. These risks affect the operations or workings of an organization. Such a risk can render an organization obsolete because their operations are compromised and they might not be able to provide goods or services to their customers.
Compliance risk is brought about when an organization fails to fulfill the requirements needed for the organization to run the business. There are many compliances which the government has set which they require all business to comply with the failure to do so might result in shut down, huge fines and even jail terms.
Other risks which might affect a business organization are strategic and financial risks. Strategic risks relate to the strategies which have been developed by the business organization. These risk might arise when the strategies are compromised or they fail to provide the results which are favorable. Financial risk happens when an organization faces funding related issues which might be bankruptcy or even their accounts have been frozen.
There are many sources of project risks which might affect the organizations. One of them is the staff of the organization. Human beings are prone to errors when they are tired or just when they don't want to do a task. They can cause massive errors which might cause problems to the organization due to malice or just pure negligence. Vendors who are also human beings can provide shipments which are not satisfied which might cause accidents and possible risks to the organization. Another source of risks is the law of the land, these laws can be the cause of compliance related risks which any organization can suffer from these can be solved by hiring qualified legal advisors. Other sources of risks are technology which the staff is not able to operate well it can cause risks. The one source of risks which can not be controlled by man is weather, which can cause huge damages luckily there are insurance companies which can help sort these out.
Project Risk Assessment.
I will develop risk measuring scales which can explain my findings better since the whole undertaking was done by me and my team using a scale we understand well will help in bringing out a perfect outcome.
Risks will be prioritized based on the effects it can cause according to the measurement scale. The risks which can cause a huge damage will be ranked higher as compared to a risk which will cause a small damage which will be ranked lower and given smaller priorities.
Project Risk Assessment (Quantitative)
Risk will be prioritized using EMV based on the cost of damages they can cause. The risk which can cause a huge cost in damage using EMV will be prioritized more than the risk which can cause a small damage based on the EMV which will be given lower priorities.
Project Risk Response
Identifying and responding to new risks is very vital in the risk management planning. Methods in identifying risks are through observation, interviews, surveys, past incidents analysis and many more. The response to every newly identified risk should be according to the ten strategies in the PMBOK.
Risk Monitoring and Control
Methods used to monitor the risk of occurrence in Pepsi are voluntary, obligatory and continual. These three methods of monitoring the occurrence of risks cover all aspect and make it simple to handle the effects of a potential risk. Voluntary is a monitoring method which is not obligatory and an organization have a choice to monitor a risk or not using the voluntary method. Obligatory monitoring method is a method which is required by the law of the land and the organization has no choice but to monitor risks. The third monitoring method is continual. This method is important while monitoring major risks because the risk is monitored continuously over a long period of time.
The method I will use in reviewing and updating the contingency reserves is expected value method. Contingency reserves involve the amount of anticipated amount of money which will cover the damages which might be caused due to the occurrence of a risk. The expected value method (EVM) uses the formula EV = x1p1 + x2p2 + .... xnpn.
N refers to the number of observations and p represent the probability of risk to happen and its outcome.
Risk Register
REFERENCES
Hampton, J. J. (2015). Fundamentals of enterprise risk management: How top companies assess risk, manage exposure, and seize opportunity. New York NY: American Management Association.
Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Sixth edition. Newtown Square, PA: Author.
Purpose of Risk Management Plan
Purpose of a risk management plan is to identify potential risks before they happen. Being able to identify such risks before they occur will help the organization to plan on how to counter such risks with a perfect solution. The aspect of the early preparation of such risk occurring will help in planning and minimizing effects of the risks. Also, different ways of handling the risk will be developed in advance and a technical team will be ready to implement such plans to avoid time wastage and potential damage during the process of implementing the strategic measures to counter the potential effects of the risk.
Explain how risk management will be approached for the project.
Risk Management Approach.
Risk management involves the following steps, first, the risk needs to be identified, then the risk is assessed and the final process is minimizing the effects of the risks to an acceptable level. The risk management process will determine the process used to handle the risk encountered in Pepsi. In my case, I will use the five known risk process which is as follows.
1. Identifying the risk. The step involves doing a research about likely risks which may affect the organization day-to-day business activities such as fire and many others and writing them down.
2. Analyzing the risk. Then the risk identified needs to be analyzed to understand it better so as to draw a perfect conclusion about it.
3. Ranking the risk. The risk identified will then be weighed then as per the weight of effects likely to be caused by the risk then it will be ranked or rated in a scale of ten.
4. Treating the risk. This step involves actual planning of dealing with the risk identified if it occurs. These step also involves identifying the risk with the highest rate of damages and working on it until it reaches an acceptable level.
5. Monitoring and reviewing the risk. This step involves constantly checking the risk identified if it will happen or not. These step involves actively monitoring the possibility of the risk occurring so that it can be taken care of faster before widespread influence has been witnessed.
Risk management approach also covers the tools which will be used to handle the risk. The organization needs to have the right tools to be able to combat and solve risks successful. A good example is a fire, Pepsi needs to equip its branches with adequate firefighting equipment in case the risk of fire happens. Tools help in making the work easier or some of these risks won't be solved without the use of the right tool. So the management of Pepsi needs to have enough tools at their disposal for their technical team to use.
PROJECT RISK MANAGEMENT PROCESS
Risk management process is a step to step process just like any other process with an aim of identifying risk and solving its effects or minimizing the cost of damages the risk might cause if it happens. Risks are uncertain in nature their might happen or fail to happen and sometimes it might cause a small effect and also it might cause a huge effect. So the organization should be ready to tackle such issues that is why a risk management plan is very crucial for organizations such as Pepsi.
Project Risk Identification
The methods used to identify the possibility of the risk occurring are as follows.
Brainstorming I will implement this idea by exchanging ideas with the risk management team of Pepsi with an aim of coming up with potential ideas of risks which might happen to the organization. Another viable method to use is a direct observation of how the employees. There is a lot of information which can be gathered by just viewing the operations of the business operations.
Observation method will give the risk management team enough information needed to develop a perfect plan to counter risks because small errors which might cause the risks can be identified. The employees might be careless when handling their cigarette smoking habits which might cause a problem these can be observed and the risk causing factor eliminated in advance.
An interview is a method which will help the team to get important information from the employees of Pepsi. The person doing the interview should focus on getting information which relates to certain risks which might be encountered by the organization. The nature of the interview should be kept private to protect the employees who provide important information.
An incident analysis will assist the team in understanding risks which have already happened in the past. The risk register is a very important source of information for this method. This method helps the team to understand issues which might affect the organization and have already happened. The team should be able to analyze if the same risks might happen to the organization again and take pre-caution steps in preventing the risk from happening.
Types of risks which might happen to Pepsi organization are varied in nature, the organization should be wary of them and plan how to handle the varied types of risks which are as follows.
Reputational risk. There is a type of risks which target the name of an organization. These type of risk might bring bad press which might result in a potential loss of customers. These risk might cause an organization to reduce its operations in some areas which will result in loss of the market share and their profit margins.
Operation risk is another type of risk which should be avoided or solve when it is first noticed. These risks affect the operations or workings of an organization. Such a risk can render an organization obsolete because their operations are compromised and they might not be able to provide goods or services to their customers.
Compliance risk is brought about when an organization fails to fulfill the requirements needed for the organization to run the business. There are many compliances which the government has set which they require all business to comply with the failure to do so might result in shut down, huge fines and even jail terms.
Other risks which might affect a business organization are strategic and financial risks. Strategic risks relate to the strategies which have been developed by the business organization. These risk might arise when the strategies are compromised or they fail to provide the results which are favorable. Financial risk happens when an organization faces funding related issues which might be bankruptcy or even their accounts have been frozen.
There are many sources of project risks which might affect the organizations. One of them is the staff of the organization. Human beings are prone to errors when they are tired or just when they don't want to do a task. They can cause massive errors which might cause problems to the organization due to malice or just pure negligence. Vendors who are also human beings can provide shipments which are not satisfied which might cause accidents and possible risks to the organization. Another source of risks is the law of the land, these laws can be the cause of compliance related risks which any organization can suffer from these can be solved by hiring qualified legal advisors. Other sources of risks are technology which the staff is not able to operate well it can cause risks. The one source of risks which can not be controlled by man is weather, which can cause huge damages luckily there are insurance companies which can help sort these out.
Project Risk Assessment.
I will develop risk measuring scales which can explain my findings better since the whole undertaking was done by me and my team using a scale we understand well will help in bringing out a perfect outcome.
Risks will be prioritized based on the effects it can cause according to the measurement scale. The risks which can cause a huge damage will be ranked higher as compared to a risk which will cause a small damage which will be ranked lower and given smaller priorities.
Project Risk Assessment (Quantitative)
Risk will be prioritized using EMV based on the cost of damages they can cause. The risk which can cause a huge cost in damage using EMV will be prioritized more than the risk which can cause a small damage based on the EMV which will be given lower priorities.
Project Risk Response
Identifying and responding to new risks is very vital in the risk management planning. Methods in identifying risks are through observation, interviews, surveys, past incidents analysis and many more. The response to every newly identified risk should be according to the ten strategies in the PMBOK.
Risk Monitoring and Control
Methods used to monitor the risk of occurrence in Pepsi are voluntary, obligatory and continual. These three methods of monitoring the occurrence of risks cover all aspect and make it simple to handle the effects of a potential risk. Voluntary is a monitoring method which is not obligatory and an organization have a choice to monitor a risk or not using the voluntary method. Obligatory monitoring method is a method which is required by the law of the land and the organization has no choice but to monitor risks. The third monitoring method is continual. This method is important while monitoring major risks because the risk is monitored continuously over a long period of time.
The method I will use in reviewing and updating the contingency reserves is expected value method. Contingency reserves involve the amount of anticipated amount of money which will cover the damages which might be caused due to the occurrence of a risk. The expected value method (EVM) uses the formula EV = x1p1 + x2p2 + .... xnpn.
N refers to the number of observations and p represent the probability of risk to happen and its outcome.
Risk Register
REFERENCES
Hampton, J. J. (2015). Fundamentals of enterprise risk management: How top companies assess risk, manage exposure, and seize opportunity. New York NY: American Management Association.
Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Sixth edition. Newtown Square, PA: Author.
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