FAQs
The following FAQs are addressed below:
- Is risk management just a process that programs and projects follow?
- Does quantified risk analysis just provides an insight into the required provision?
- What is the relationship between the corporate and project risk?
- What is the relationship between risk and value management?
- What is the new role of the risk manager?
Is risk management just a process that programs and projects follow?
No. Risk management is a consultative approach where the risk manager adds value by implementing and driving the process together with providing recommendations to maximise the changes of achieving project objectives.
Does quantified risk analysis just provides an insight into the required provision?
No. Risk quantification should be undertaken as an inclusive process in determining the forecast final cost of a program or project. The inclusion of a tornado diagram to direct the team efforts should be seen as a mandatory component of all quantified risk analysis.
What is the relationship between the corporate and project risk?
A certain amount of risk taking is essential for an organisation to achieve its objectives. More risk aware organisation appreciate that an active risk management process provides them with a competitive advantage.
Taking and managing corporate risks is essential for the organisational survival and growth making a company more flexible and responsive to market changes. Effective risk management and internal control can be utilised to manage changes to all levels of the company.
Decisions on risk should be applied were critical decisions have to be made. Strategic decisions are primarily concerned with long-term objectives while medium and goals are achieved through programs and projects to allow for business change. However, medium- and short-term decisions are based on the long-term decision taken at corporate level to achieve company’s objectives.
What is the relationship between risk and value management?
Value management is about clearly articulating what represents value in terms of the project benefits and then linking these to the most cost-effective design solutions. Risk management is about identifying causes of uncertainty or maximise opportunities, and then putting in place activities to minimise the adverse impact on the project. Both activities complement each other.
Value management can reduce risk. Risk management can provide opportunities to increase value. It can also avoid the destruction of value.
Value management provides an effective process to maximise value in line with the owners’ and end users’ requirements, and fulfils the first of these requirements. Risk management fulfils the second requirement as part of effective project management, by providing a process for managing risk. Both processes should be applied on every significant construction project.
What is the new role of the risk manager?
The risk manager adds value in other ways such as identifying trends, judging the effectiveness of mitigation actions and advising of required decisions.
The risk management role developed into an essential part of the project team and it is supported by robust processes. The risk manager sits alongside the commercial lead and project manager in order to provide added value to the clients advising on mitigation strategies, giving recommendations, bringing experience and challenges and working strictly with the client to provide a bespoke and specific approach.