Risk Management Importance

Whenever we think about risk, we always associate with the uncertainty and the possibility of something going wrong. Discipline and risk management focuses on the identification and assessment of possible risks and of all identified risks and thus, prepare a plan to meet that, when that happens! There is a lot of misunderstanding about the risk management strategy is being able to get rid of all the risks you can think of maybe. This is not perhaps, even faith with good risk management. Below is a quote from a world-renowned risk management experts largely summarizes the essence of good risk management.

"Good risk management fosters vigilance in times of calm and instills discipline in times of crisis.
"-Dr. Michael Ong

The benefits of risk management process

Benefits implementation of systematic risk management process is long-term and short-term. In fact, every stage of the risk management effort, the right of hazard identification, risk assessment of mitigation strategies, and has its own benefits and are listed as follows.

* Risk identify benefits: identification of risks is quite critical phase of the risk management process. The most obvious benefit is that all risks identified at the start of the project on mitigation strategies. This means, in turn, all identified risks most likely to be likely to be planned without affecting the objectives of the project and the final result. Another benefit to risk is that all the assumptions listed below. Analysis of the assumptions is an important step in removing the potential inaccuracies and contradictions in the beginning of the process itself. Now, the risks need not always be negative. Positive are often stumbled (opportunities that were not part of the original project plan) when you select phase and you can take appropriate action to make the most of this "opportunity". This in turn will have a positive impact on the entire project or business.

* Risk assessment benefits: this stage requires a focus on all identified risks, and assess their impact on the project or business. Evaluation of the planned measures to remove or reduce the risks, is the result of constructive discussion or debate among the various stakeholders. The biggest advantage of this process is that it serves to bring different perspectives to the table and in the process of finalizing its potential solutions, and each person is brought to the same page. This, in turn, brings forth a sense of accountability to all stakeholders (including vendors, contractors, etc.), one of the objectives of risk management. Participate in the risk assessment activity also aims to promote an organizational culture where everyone is "aware" and to appreciate how their performance to be measured and rewarded. In addition, as a result of the cost-benefit analysis, you can review the contractual procedures for pricing, deadlines etc, based on risk factors.

* Risk analysis and evaluation of benefits: a is a subset of the risk assessment process, where each risk is described along with its attributes such as importance and likelihood of occurrence, the recommendation to minimize risk profiles, stakeholders, etc. The risk is all set for a business function or process that the allocation of risk. Changes to policy, emergency numbers etc, are the benefits of a successful process of analysis and assessment.

* Risk of treatment benefit: risk profiles once finalized, graded, and evaluation, the next step for the implementation of the plan. Through internal controls (including policy decisions) and compliance regulations are established reduction strategies at work. Downside risks or threats "do not correspond to shock or surprise risk and opportunity are abandoned because of lack of preparation and planning. Achieved significant benefits to increase operational efficiency and profitability when successful treatment of risks at this stage.

* Risk monitoring and review benefits: risk management is not a one-time activity. The risk of continuous monitoring and review of the risk-management plans underpin a successful business strategy. This activity provides long-term benefits with regard to lessons learned to improve future risk management strategies and the effectiveness of the treatment measures of risk, which will no doubt come in handy for subsequent projects.

Compared with no strategy for risk, interest risk management of the business, in short, as described below.

* Awareness of "high risk": you can avoid the most important threat to business, any failure to identify and plan for risks and communicate across the Board to all stakeholders.

* Save on time and cost: a proactive approach to threats in the enterprise or business through risk management, always leads to considerable savings in costs, and prevent the waste of time and effort in the fight against the fires.

* Discover opportunities: instead of being unprepared for the opportunities identified during the project cycle or business, risk management can help plan and prepare.

* Harvest reusable knowledge: risk management comprehensive attempt with contributions from various stakeholders, experiences, and insights. This collective knowledge, or at least large parts of it, can be reused for future endeavours. One risk management plan can provide templates for successive plans to start from, rather than reinventing the wheel. This is probably the most useful long-term benefits.

Risk management helps in making better decisions in the anticipate threats and opportunities for projects or business. While some of the benefits achieved from the initial stages of the project, often "hidden" benefits surface much later. There is no doubt that good risk management plan is a cornerstone in the success of projects.

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Risks of Change Your Business Management

Change management is a discipline that puts a set of processes and tools to handle the change. Management and leadership organizations today are faced with the rapid pace of change. While accepting this reality and a willingness to change, it is important to be able to predict and manage the risks associated with implementing the change.

What does Change Management Involve
Before we broach the topic of risks, let us understand briefly what the change management process entails. In the corporate setup, change management is initiated to deal with either an evolutionary or a revolutionary change.

* Evolutionary change is a gradual process often managed well due to lack of pressing timelines, for example, a culture shift in an organization.
* Revolutionary change, on the other hand, has to be implemented in a shorter time frame and is usually a one-time effort. This requires people and processes to adapt quickly.

If a company has been through a merger or acquisition exercise, the smaller organizations usually have to quickly scale up to the parent organization's processes. Both types of changes involve overcoming several barriers to change when it comes to their implementation.

If change barriers are not predicted and overcome in a timely manner in preparation for change implementation, it is certainly going to pose some risks and challenges during what is commonly called the "go-live" phase. While each project or program has a different set of attributes resulting in different risk factors, we can derive certain commonalities among them.

We can broadly categorize two types of risks: risks from a cost perspective and other, let's call them "intangible" risks, for want of a better word. You will find several more categories of risks that experts in project management have formulated, however, let us restrict our scope of this article to just these two very broad categories.

Typical Risk Factors

The risk usually cost as follows:

* The delay in achieving the milestones and scheduling goals because of a lack of resources and/or as a result of incorrect timeline estimates

* Budget overruns

* The cost of rework due to lack of communication between the implementation teams or due to some unexpected challenges that appear along the way (and this is especially true for new projects where there was a previous Executive experience, etc.)

* Costs arising from new technology, upgrade technology, or because of a change in regulatory requirements (such as a change in government policy, etc.)

* The costs resulting from the lack of funds and/or human resources (this would include staff attrition, lack of skills on the implementation team, etc).

Other hazards which do not directly lead to the risk of costs would be as follows:

* Resistance to change: the smallest change is known to provide at least a small amount of stress to people. From the perspective of organizational change, resistance to change can be active and passive workers alike. Hostility is a general feeling that needs to dealt with a very sensitive way. For example, layoffs inflate the enormous hostility. It raises feelings that would have a direct impact on the decline, but also the results not only in the power struggle within the implementation teams. While timely, frequent contact and transparent and accurate is the key to this kind of risk, at the end of the day after all the efforts, it is still a real danger.

* Project frozen or abandoned altogether: these are the main risks that proved to be widely prevalent during difficult economic conditions such as recession and currency depreciation. No doubt about it always affects costs as staff morale.

* Project fails to deliver results: imagine if the change has been implemented and has spent millions of dollars, and resistance to change has been handled and dealt with most of the other risk factors. It appears the project has been implemented successfully, but does not seem to be delivering results as expected. Not realized the potential benefits, and everyone is just wondering what was wrong.

Managing Risks during Change Implementation
An effective way to manage the risks mentioned above is to prepare for change implementation in advance and approach it in a systematic fashion. An important activity in risk management is Risk Assessment and Impact Analysis.

Risk Matrix: The diagram below is a representation of this standard exercise.
Risk Matrix

Probability Axis: It is a very simple process where the "Probability axis" denotes the probability of each identified risk. For this, you need to first enlist each risk (refer to the ones listed above) to the smallest detail possible and predict the probability of its occurrence. Now, this would naturally take a lot of experience and expertise but it would be time well spent.

Impact Axis: Next on the vertical "Impact Axis", assign a percentage of impact, in the event that the risk does occur. At the end of this plotting, you would obviously want to focus on the 'red quadrant' on priority. In short, you want to first manage the risks that have a high likelihood of occurring and in the event that they do occur, the change implementation would be affected to a great extent.

Please note that the above risk matrix is not a do-it-once exercise. The matrix should be revisited at regular intervals of change implementation and the risk factors must be reviewed to see if they still exist or need to be moved to a different quadrant. This kind of periodic review will ensure better risk management. Taking timely action on projected risks will ensure greater success of the change implementation process.

Change management process and associated risks and dangers largely differ from one organization to another, and project to project. Can offer a laundry list of risks and risk management solutions for the same reason. It needs to be placed in each scenario. However, to ensure a systematic approach to risk management through identification, assessment and analysis of each challenge during implementation of change management, make it nightmarish experience for all stakeholders. Hope scope article here asserts the fact that successful change management application as a result of a comprehensive process to recognize and mitigate risks throughout the life cycle of change.

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