Risk Management Tools and Techniques - Assignment Example

A REFLECTIVE REPORT ON RISK MANAGEMENT 1) What I learned throughout the Semester From the lectures, I was able to learn a lot on risk management which will be substantial in my daily activities and also my career. I understood that projects, as well as programs, involve some risks and for that reason it is important to use the risk management tools and techniques to develop risk plan and strategies. The risk methods and tools enable the project managers to efficiently manage risks. The examples of risk tools and techniques discuss throughout the semester are Monte Carlo, scoring models, decision trees, sensitivity analysis and many others. I learned that for a risk plan to be effective it ought to be accompanied by one of the risk tool or technique which will hold in risk avoidance, mitigation and also acceptance in some rare cases. Projects should be run well by managing risk in different levels which are the portfolio, program, project and also the operational level. A decision tree is a useful tool in managing risk since it shows the contingency of the risk. I learned that there was a need for a healthy culture of risk management to be availed for organizations. The stakeholders involved in projects for an organization ought to understand well the need for risk allocation and utility. They should have risk appetite so as to undertake risk aversion appropriately. Additionally, other stakeholders such as employees in an organization should appreciate and understand risk in an organization for proper risk management procedures in the organization. I learned that it was important for organizations to set up a healthy risk culture so as to take the risk seriously for proper management. From the topic of the psychology of risk with the help of bow tie tool I learned that setting an appropriate risk culture was a challenge for most of the organizations. It was also important for stakeholders to understand the psychology beneath risk to come up with useful guidelines for a proper framework for managing risk properly. Additionally, organizations should know the various approaches for dealing with risks so as to address the issue of risk management in the organization. I also learned that the positive and negative sides of risks. Risks are typically negative, but it may make an organization see opportunities which may be beneficial to the organization in the growth of the firm. I concluded proper risk management does not entail fearing to fail in the project but instead removing the barriers which hinder the success of the organization. Since project management is success focused on producing products and services, it is important to manage risk appropriately. Organization should identify opportunities as well as the risks to attain the targets set in the project. From this, I concluded that managing risk in a project is the alternative for being managed by risk. Each project manager ought to be aware of the practices and approaches of risks for effective risk management procedures. Understanding contingency reserves and PERT is imperative for an organization. Project managers should identify and manage risks to an organization to prevent difficulties in the future. The risk management tools and techniques provide supportive guidance for organizations to come up with proper policies, procedures, strategies and plans for efficient managing of risk. In the course, I learned that it was important for project managers and also risk managers to consider the particular context for facilitating identification of risks and also promoting risk management procedures. Stakeholders are the key participant in the daily activities of an organization including the projects and change of program. In the course, I learned that stakeholders should be aware of the risks of a project. The role and the level of influence of interested parties are essential in determining the potential effects on risk. Additionally, I also learned that risk exists about an activity of a firm. A good example is where rain is an adverse risk for a picnic, but it is a positive risk during the dry spell. This shows the different implication of risks. The course taught me that individuals responsible for risk management such as project managers and risk manager should know the objective of the organization so as to select the appropriate risk management tool and technique. The decision tree is essential in risk management procedures since it provides processes, policies and efficient plans for guiding an organization in the managing risk. Other tools such as Delphi and PERT provide guidelines based on the experience of risk management in managing risk. I learned that the risk tools enabled us to choose best practices which make the individuals involved in risk management to learn from mistakes, experiments for proper risk management. We also studied risk reporting in the course. I learned that it was important to accurately represent and transmit data to the involved stakeholders in successfully managing risks. We learned some scoring models which could be used to test the structures for managing the frequency, content and also the participants while communicating risk. I also understood the risk roles and responsibilities in case risk management happens in the project life cycle. Terminologies were used to explain some risk management best practices. I understood that each in a project was accountable in the process of risk management. Additionally, every individual had different functions in the organization in the procedures of risk management in the project cycle. I concluded organizational governance was crucial in ensuring the responsibilities of all the stakeholders in the organization during the risk management in the project cycle. We also learned the various supplementary models which provided support by giving guidelines and training for the individuals involved in managing risks. I learned that the supplementary models could incorporate standard risk management approaches and guidelines for reviewing and reporting the risks emerging in the process cycle of a project. In the topic on introduction to probability system identification, I learned that is important to ascertain the possibility of the risk occurring. I ascertained that risk identification is a crucial step in the alleviation of risks. With the help of probability system, an organization can identify early warning indicators which may alert the project and risk managers who are responsible for risk management. They recognize the risk is imminent thus developing approaches to handling the risk coming. In the course, I also learned that with the help of risk management interviews and questionnaires organizations could regularly review thus identify the possible risks from stakeholders such as employees. This ensures that risk managers remain aware of the likelihood of new risks and thus can develop effective policies to prevent the occurrence of the risks. I also learned that risk managers ought to estimate the ranges of the risks properly so as to be allocated with appropriate budget which will ensure that a suitable approach selected can carry out the activities of managing risks. I also learned that a supportive culture was important in managing risk in a project. A supportive culture will ensure each with management responsibility can freely raise issues concerning risk management. A supportive culture is crucial in that it evaluates and allocates risk competence to the individuals who are capable. Finally, I learned that an effective risk management policy will involve constant re-evaluation and improvement. During the project cycle, I learned that it is important for individuals to be chosen to ensure that the risk management policies and procedures are up to date. 2) How has it helped you shape your understanding of risk? This unit has improved mean to understand risk and ways of risk management. It has also made me realize the potential targets and strategies for risk management. I have been able to comprehend it is necessary for organizations to focus on strategies to intervene problems which hinder the success of a project. From my perspective, I think it is important to consider the risks which are responsible for a particular issue in the project cycle. My understanding of risk is that risk is the aspect of either environment or personal experience which makes it more likely that individuals will experience more problems in their desire to achieve specific goals. A good example is the case of smoking. Smoking can be regarded as the risk factor for getting the heart attack. I have been able to understand that there are protective factors of risks. From my own understanding, I can define protective factors as the aspects of an environment or personal experience that make it less likely for individuals to experience problems in achieving a set goal. For instance, it can be said physical exercise is a protective factor against the possibility of heart attack. I have finally realized that risk and protective factors are very crucial in addressing the day to day issues happening in most of the organizations. From, the numerous models I know able to take back a step from a problem, and critically evaluate the behaviors and the conditions which led to the problem and then coming up with suitable strategies to change the causative situation of the risk. I have also understood how I can identify risks to develop appropriate strategies for risk management. I have understood how I can allocate risk in my budget when planning in my projects. I now know the appropriate time for identification of risk which needs to be addressed by an organization. Additionally, I have learned ways of collecting data such as risk interviewing and risk questionnaires which can help me to identify risk which may occur in my organization. 3) Situations which could have had a better outcome if you had applied knowledge of risk management There are numerous situations which this reflective report has chosen which could have had a better outcome if one had used the knowledge of risk management. One of the situations is indulging in drug abuse. For instance, when one has friends who use drugs, he or she is likely to start using drugs. In this situation if he or she applies risk management the individual will understand that the presence of the drug abusing friends is a risk factor which may lead him to a problem of drug abuse. Thus, he or she should identify the risk and stop his or her relation with those friends for a better outcome of avoiding drugs. The other situation which will require the use of risk management is when making decisions. Most decisions will need data about many aspects affecting the organization such as risk. However, it is important for managers to identify the risks when making decisions regarding allocations of the budget for a given operation or schedule. Decision makers ought to analyses the risk pertained to a particular decision. For instance, a food restaurant can evaluate the risks which will be as a result of purchasing a new machine for roasting or the risk involved in continuing using the current roasting machine which is old and not roasting well. The other example of the situation is the situation of health. Risk management will be essential for an individual to avoid risky behaviors such as heavy smoking, high cholesterol diets and failure to exercise as a way of avoiding heart attacks. With the knowledge of risk management, an individual can identify risks which may result in disorders such as heart attacks and thus come up with effective strategies such as regular exercises, proper diet for a better outcome. The last example of a situation which will require risk management is controlling flooding in cities. With the help of risk management, the city council can evaluate the risk posed by heavy rainfalls to the city. To mitigate the possibility of flooding in the city, they will come up with protective factors. They will have to maintain the waterways and ensure they are not blocked before the actual rainfall. They will also clear the objects which chock the drainage system to allow free flow of water and prevent the possibility of flooding. (2000 words) Source ENGG 3853 – Risk Management Tools & Techniques unit by Lecturer Aminah Wehbe Read More