Risk Management

Risk Event Examples

Can you provide some examples of "risk events" we should consider?

Recurring-type Risk Events

·      Recurring risk events are predictable to some extent

·         You know they will happen, but not the degree!

·      Some examples of this type are:

·         Changes in market conditions

·         Changes in operational requirements

·         Changes in social, political and environmental considerations

·         E.g. public opposition for one reason or another

·         Changes in taxation or currency exchange values

·         Changes in inflation

·         Extreme and unusual weather conditions

Non-Recurring Risk Events

·      Non-recurring risk events tend to be unpredictable

·         I.e. they happen at random

·         You know of them but hope to avoid them!

·      Some examples of this type are:

·         Natural hazards: off-site accidents, fire, flood, earthquake

·         And their side effects

·         Unavailability of resources, transportation, services

·         Project financing cash flow restrictions

·         Commercial failure of service provider

Internal Business Risk Events

·      These risks, within the business organization or their immediate stakeholders, should be more obvious:

·         Management over-optimism

·         Over-aggressive schedule demands

·         Management incompetence

·         Failure of communication

·         Inadequate staffing, or staff overloading

·         Failure of internal support

·         Financing or budget shortfall

·         Insolvency

Project Management Risk Events

·      These risks arise from undisciplined project management:

·         Milestone failure due to unrealistic schedule

·         Failure due to inappropriate delivery system

·         Realization of error in a planning assumption

·         Inability to provide or obtain bonding coverage

·         Damage to professional reputations

Technological Risk Events

·      These risk events arise out of the technology involved in the project:

·         Working in unsafe conditions resulting in accident

·         Unacceptable operational and maintenance or safety

·         Design unsuitable or inappropriate as a solution

·         Design not completed or not feasible

·         Technology suddenly becomes obsolete

·         Performance unattainable

·         Sheer size of project or its complexity causes collapse

·         Technological incompetence revealed

Legal Risks

·      There are always legal risks, such as:

·         Unexplained contractual failure

·         Suit by an insider disrupting this project

·         Suit by an outsider affecting this project

·         Liability claim

·         Licensing challenge or delay

·         Patent rights contested

·         Force majeure:

·         "Irresistible compulsion excusing contract completion"

·         E.g. war, strike, act of god, etc

Classification of Risk Events

If you are developing checklists of possible risk events to be considers for your programs and projects

·         Organize them by the source of the problem

·         This greatly facilitates allocation of responsibility

·         Either before or after the event!