ADVISORY ARTICLE
By Evan Piekara
Washington, DC, USA
Abstract
Risk comes in many forms and not all risks are created equal. Organizational leadership and project managers can increase project performance by identifying risks across relevant stakeholders and eleven common risk categories. Once organizational leaders have identified potential risks, they can qualify risks based on their risk appetite and what they perceive to be the likelihood and impact of the risk. This enables the project team to plan for the risk and develop mitigation approaches to address risk. Risk management is a continuous process and taking an enterprise approach to managing risk enables the organization to communicate, prioritize, and allocate resources to adapt to a changing environment.
Identify Risk to Understand the Operating Environment
Risk comes in many forms and it may only take mis-identifying or mis-calculating once to leave your project in complete disarray. Taking a holistic enterprise approach to identifying and managing risk can not only enable your team to alleviate risks, it will also enable your team to anticipate and scenario plan for prospective challenges. Enterprise Risk Management (ERM) is a holistic and continuous process that, when done effectively, entails identifying, qualifying, and planning for risks across the organization.
Fundamentally, risks come in eleven forms[1]:
- Compliance Risk: This is the organizations’ ability to follow applicable laws, regulations, and ensure accountability.
- Credit Program Risk: This is the organizations’ reliance on a borrower or financial counterparty to meet obligations and fully repay debt or interest on time. For instance, if an organization is funding a project through invoice payments from another project and if those invoices are not paid on time, this could slow or halt the project or cause the organization to borrow in the short-term, which could raise expenses.
- Cyber Information Risk: This is the organizations’ or projects’ potential for vulnerabilities that compromise processed, stored, or transmitted information. For instance, cyber threats have caused many organizations and projects to re-think their security and factor in the risks that come with managing sensitive data. This consideration may require organizations altering their project timeline or adding security expenses to ensure information and controls are protected.
- Financial Risk: This is the projects’ financial impact to the organization such as the potential for loss of funds, increased expenses, or waste.
- Legal Risk: This aligns with compliance risk and is the organizations’ ability to meet contractual agreements or ethical requirements.
More…
To read entire article, click here
How to cite this article: Piekara, E. (2019). Managing Risk to Raise Project Performance, PM World Journal, Vol. VIII, Issue III (April). Available online at https://pmworldlibrary.net/wp-content/uploads/2019/03/pmwj80-Apr2019-Piekara-managing-risks-to-raise-project-performance.pdf
About the Author
Evan Piekara
Washington, DC, USA
Evan Piekara currently works in management consulting as a Senior Manager for BDO Public Sector. Evan supported the launch of BDO’s Public Sector Management Consulting Practice by helping government and nonprofit organizations develop strategic plans, establish and analyze performance metrics, and manage change efforts. In this capacity, Evan has collaborated with a range of executive leaders and managed diverse, cross-functional teams to deliver solutions to complex challenges under tight timelines. Evan currently holds professional certifications in Project Management (PMP), Change Management, Conflict Management, Lean Six Sigma, Total Quality Management, Strategic Organizational Leadership, and Continuous Process Improvement. He recently published Case In Point: Government and Nonprofit, a guide for those entering public sector consulting.
Evan can be contacted at epiekara@bdo.com
[1] https://cfo.gov/wp-content/uploads/2016/07/FINAL-ERM-Playbook.pdf
