The Evaluation of the Risk Management and Compliance Process at Tetra Tech - Term Paper Example

? Operating risk management Discuss the evaluation of the Risk Management and Compliance Process at Tetra Tech. Tetra Tech is in the business of remediating identified risks, threats and vulnerability issues of organizations that have undergone its own risk assessment processes. That is to say that Tetra Tech’s client has already identified that the issue need to be remediated because of its potential danger, damage and hazard to the public or to its own employees or stakeholders. With this variable known, it is not only mandatory for Tetra Tech to exercise prudence in conducting a more detailed risk assessment to ensure the safe implementation of remediation or corrective measure it is expected that they exercise a level of professionalism, maturity and expertise. This caution would not only save their client, but it would also save the personnel or employees they will use in the project. Tetra Tech’s Task Initiation Procedure (TIP) requires that before a project is undertaken all risk associated with the project are known, understood and the management of these risk are defined and detailed (Fletcher and Newell). The Task Initiation Procedure based on the RFP (request for proposal) is conducted even before a bid for the project is put together. Short of coming up with an actual project plan or implementation plan of the project from start-up to its completion the TIP will detail the resources needed as well as the materiel that will be needed by the project. Another aspect of Tetra Tech’s unique risk management strategy is also to stop and suspend the project when it encounters an unknown variable that was not included in the project plan prepared at the onset of the project a re-assessment and re-evaluation of the risk base on the new variable is conducted. This unique aspect of Tetra Tech’s operation sometimes led to a renegotiation of the project. However, this practice has avoided near misses and potential disasters for the client, stakeholders and even the project resource that Tetra Tech is using. An essential component of an effective risk management is being prepared for all known risks, and being prepared to handle unknown risks. The employees of Tetra Tech have appreciated the fact that the TIP is not a rigid mandatory requirement but a strict guideline that allows project manager to tailor fit their requirement to the uniqueness of their individual project. The innovation contributed by each employee to the TIP make the employees feel that they own the risk management and compliance process of Tetra Tech. Sarbanes Oxley Act of 2002 with regards to risk assessment and risk management in the context of good corporate governance (Lahti, Peterson and Lanza) used the COSO (committee of Sponsoring Organization of the Treadway Commission) model that identifies an Eight Framework Component in managing risks (Moeller). Tetra Tech has an Internal Environment that is geared towards risk management specifically its operating impetus to “plan to address the risk before execution”. Not only is this enshrined in their operation it is how they do business. For Tetra Tech, the successful risk free implementation of the project that is according to plan is the objective. The TIP in itself is the Event Identification and Risk assessment. The implementation plan is the risk response and the Control and Monitoring activities are the three layers of audit it conducts (Peer review, executive review and compliance audit). Information and Communication is enshrined in the feedback mechanism that would include lessons learned that strengthened the knowledge base of Tetra Tech. Tetra Tech even exceeds the requirement of established Risk Assessment and Management frameworks. Elaborate on risk assessment in the task initiation procedure and oversight Process The risk analysis of Tetra Tech starts at the TIP process using the RFP as basis. Tetra Tech’s appetite will be the basis for joining a bidding process or not. However, the TIP ensures that what is considered as high risk is converted into low risk translating to Tetra Tech’s mantra “there is absolutely no risk we can’t deal with” that leads to Tetra Tech to bid in every contract. The TIP has developed into a full blown and lengthy assessment of all known risks in its knowledge base. However, when the employee started owning the TIP it became a rationalized but comprehensive risk assessment tool by category. The continuous improvement aspect of Tetra Tech’s operation that would include lessons learned processes and collaboration made the TIP the best framework within the industry. Tetra Tech’s pricing and bids being dependent on the TIP conducted six months prior to the official bidding process is not absolute or infallible since risk by its very nature cannot be predicted at all times. To cover this eventuality Tetra Tech’s caveat in its contract agreement with its clients includes a renegotiation process that would cover the risk management of newly discovered risk. How has tetra tech Overcome the Challenges faced by Project Oriented Firms One key issue in organizations that manage project as a business is the variability of the unknown and how it affects the bottom line or the profitability of the project. For Tetra Tech this issue is negated by a provision in the contract that provide for a renegotiation of the contract when material risks are exposed not accounted for during the planning session. Since the bid proposal includes a detailed statement of work based on known variables as indicated in the RFP the acceptability of the renegotiation is an accepted condition of clients. The downside of this strategy is that the bids are normally are higher than most competitors. However, as experience would detail it most competitors end up outsourcing the project to Tetra Tech with the competitor absorbing the cost. For most clients Tetra Tech’s strategy would end up being cheaper and more expedient in the long run. The key and most unique ingredient of Tetra Tech is its knowledge base, its internal processes and the quality control processes defined by the peer review, executive review and the compliance audit. The knowledge base comes from its lessons learned process that builds the collective knowledge of the entire company. The internal process as defined by TIP is a unique procedure that would account for an exact accounting of the cost associated with the project. The review process not only would ensure compliance it would also ensure the congruent implementation of the quality of the project being implemented. Bibliography Fletcher, Donna and Susan Newell. Tetra Tech EC and Risk Management. Ontario, 17 May 2007. PDF. Lahti, Christian, Roderick Peterson and Steve Lanza. Sarbanes-Oxley Compliance Using COBIT and Open Source Tools. Rockland MA: Syngress Publishing, 2005. Moeller, Robert. COSO Enterprise Risk Management: Understanding the New Integrated ERM Framework. New York: Wiley Publishing, 2007. Read More