Risk Management as a Key Component of Project Management - Case Study Example

Introduction Project risk management is all about the processes or procedures that are used by stakeholders in managing the risks in a venture. These risks are mostly in relation to the objectives of the project. In project risk management there is identification of the risks that are likely to occur, hindering or negatively impacting the achievement of project’s objectives. In project risk management one has to evaluate the magnitude of risks involved in the entire project. The responses of strategies used are clearly determined. Risk management is all about managing the threats that may occur in any project. This is whereby strategies are carried out in order to minimize the risks or avoid them all together. Managers always have to carry out risk management in the organization in order to avoid loss. This paper is all about carry out risk management in relation to a surprise birthday party for my wife. (Andersen, 1998) Terminology/ definitions A risk can be described as something that has the possibility of happening. In most cases the occurrence of such issues normally hampers the project adversely. This clearly implies that there is always the possibility of the risk happening. Another definition of a risk is the overall combination of uncertainty and constraints. Why do risk management Risk management is very important when carrying out any project. One importance is line with the fact that one can identify the possible constraints that can hamper the project from succeeding. This is like an eye opener and makes it easier to handle the situation. Risk management has to be carried out because it enables one to deal with the possible risks accordingly. (Crockford, 1986) They can either be avoided or controlled depending on their nature. It is very essential to carry out risk management in any project as one can easily mitigate them. Plans can also be made for any emergencies that may occur. Furthermore they can easily be measured to establish their overall degree of occurrence. (Roehrig, 2006) About project This project is about making a surprise birthday party for my wife. This is a very interesting project as I intend it to be the most exciting experience for her. Having analyzed her lifestyle, I realized that she has a passion for water bodies. The party is intended to take place in the sea. This will specifically be in a ship. The birthday party will take place at night in the beauty of the stars and the moon. This is intended to be a very good quality birthday party. The cost of the party is extremely high. There will be a very big cake that has fifteen stairs and the top piece coated with small pieces of gold. The entire room will have very beautiful natural flowers from Africa. The room will have scented candles that of purple and crimson colours. Her birthday present will be a very beautiful evening dress made of silk that costs ₤500,000. Other accompaniments will be gold accessories like chains, earrings and silver shoes. This party is intended to be attended by only close family members who will be flown to the venue at five p.m on the material day. (Alexander, 2004) AON (activity on node) Take flight Air port taxi Party venue Start Personal car Taxi Second flight First flight Critical path The critical path is usually a path that includes activities that have a total float of zero. This is where all activities are analysed in relation to a total float that is zero. This is usually the longest path. That is from the onset to the end of the project. Analysis of the above AON shows that the critical path is as follows Start-taxi-first flight-second flight-party venue The length of each activity is as follows; the first channel should take approximately four hours. The second should take three and the third channel two hours. LST (Latest Start time) - the latest start time in relation to the AON is at four in the evening. EST (Elites Start time) - The earliest start time for the AON is at five thirty in the morning. Standards Research shows that there are various British standards in relation to risk management. These have been put in place by various organisations that carry out risk management. This is in line with BSI. Analysis shows that there are ISO standards in relation to risk management. They also include ISO standards part two. All these put measures that have to be adhered to in relation to project management. Risk associated with project As earlier on explained, the project has some risks that are associated with it. First of all, there is the risk of an accident since we are to be flown by my brother. He has just graduated as a pilot and is excited with this whole experience. He offered to be the pilot. He does not have the experience yet in this field of aircraft flying. (Roehrig, 2006) The other possible risk is that the party is being organised by an organisation that I found online. It is a very new company in the market that only has two months experience. There is the risk of things not turning out as I expect. The possible effects could even be death in relation to the accident risk. Other effects could be total disappointment to my wife. This is due to the possibility of having poor quality services and products. Risk profile before treatment (matrix) Source; Ryan, G (2007): Project management software; retrieved from www.findarticles.com accessed on 15-04-08 The risk profile before treatment can be illustrated through its overall quantification. Usually, the high number shows that there is a high probability of the risk occurrence. In most cases, risks can be rated as of medium rate in case their overall impacts are low though they have a high probability of occurring. Risk tolerance level There are usually some risks that can actually be tolerated to a certain percentage. All this has to be carried out in risk management. The graph that is shown above illustrates some of the possible risks that can occur in relation to the surprise birthday party. In this case the tolerance levels of the risk of having an accident are lower than the levels of tolerance related to the risk of having poor quality products. According to the above shown graph, all the risks below sixty will be treated through reduction. Those that are above sixty will have to be avoided altogether. There is a high risk tolerance because of the nature of the risks and their possible effects. (Crockford, 1986) Risk treatments Risk treatment is a process where measures are selected and implemented to amend the risk. This is all about the strategies that are put in place in relation to the risks in the project. It is about taking actions in relation to the identified risks. Risk treatment is usually related to the nature of the risk itself. There are some risks that can be avoided while others can be reduced. Planning is also carried out in line with the time span that the action has to be taken. The following treatments will be carried out on the risks identified. Reduction: this is whereby an action is taken to help reduce the impact of the risk. In this case of the surprise birthday party, the risk of an accident occurring can be reduced by having another experienced pilot to travel with us. The risk of having a flop on the plans can also be reduced by having more research on the company given the responsibility to plan and implement everything. This is in relation to their reputable standards. The other option is to get to occasion planners and get a reputable company that can handle the entire surprise birthday party issues. Avoidance: in this case, the risk of having an accident due to using an aeroplane can be avoided by simply not using it. This is whereby other alternatives of travelling can be incorporated. This is also referred to as risk mitigation. Insure: there is the transference of part of the risk to aid in its reduction. This means that someone can be given the responsibility of handling the risk. For instance a good consultant organisation can be given the overall task of ensuring that a reputable company has takes the challenge of organising the entire party. Accept: in this stage the stakeholders accept that nothing can be done due to the costs involved. (Andersen, 1998) Examples from others projects Risk management has also been carried out in other projects. This is whereby the possible risks are identified and assessed accordingly. This information enabled the risk management stakeholders to carry out possible solutions. Many projects were able to avoid some risks that could adversely affect the project. There were also multiple risks that were highly reduced. Other parties that have been carried out in the past had some risks of some guests arriving very late. Furthermore, there was the risk their luggage being confused and given to different passengers. All these risks were adequately catered for. Sources of information and opportunities The sources of information concerning the examples of projects that have incorporated risk management include books and journals. Records in government offices also show information related to different projects in the nation. There are very many opportunities that are related to risk management that need to be explored. These are in relation to international standards of risk management. (Roehrig, 2006) Resources issues In accomplishing the project illustrated above, various resources are required. A qualified pilot will be essential. Experts in birthday party planning will also be required. Other people include florists, designers and consultants. Other resources that will be required include finances among others. Risk register There are various possible risks that are associated with the surprise birthday party. They include the possibility of a possible fatal accident, poor quality products and poor service provision. There is also the risk of drowning with the ship due to adverse weather changes in the sea. Likelihood table/ consequences Event consequence Guests unable to attend party(delayed flights) Cancellation of party Loss of luggage Unable to present gifts at the party Guests unable to attend (breakdown of personal car) Cancellation of party Commitments by guests Postponement of party Conclusion Risk management is all about ventures carried out to assess possible occurrences that may hamper a project adversely. The project is about a surprise birthday party to my wife. There are possible risks that have a possibility of occurring in relation to the surprise birthday party. They include the possibility of a fatal accident as a result of an aircraft crash. (Crockford, 1986) The other risks include poor quality products and services. Some of the risks can be avoided while others can actually be reduced. For instance, another experienced pilot can be used instead of the inexperienced relative. A reputable company can be contracted to take up the venture of planning for the entire birthday party. ISO standards are also evident in Britain in relation to project management. Read More