Risk Management Methodology. City Project Management. City Project Management

Transcription

1 Risk Management Methodology City Project Management City Project Management

2 Why bother with Risk management Introduction & objectives Project plans are often developed in the expectation that everything will go to that plan, however projects are rarely that straightforward, for example: - Resources may not be available as needed - Stakeholders may resist or oppose the project - Other, higher priority tasks may arise - Requirements may change - The business case may need to be changed - Deliveries of part or all of the solution may be late Risk management aims to: - Identify and assess key risks, and put in place agreed actions and specific owners of these to mitigate or eliminate the risks - Track the risks regularly and ensure they are properly managed - Ensure the sponsor and all other key stakeholders have complete visibility of the risks, so enabling them to make any necessary judgements on intervention. Thereby ensuring no surprises - Be simple and easy to apply otherwise it just wont get done No worthwhile project is risk free If a project is worth doing, then its risks are worth managing Risk management method (v1.1) - Page 2

3 Risk management: helping your sponsor and boss sleep better at night Introduction & objectives It s easy when you are fully involved in the delivery of a major programme to overlook the needs of your sponsor, key stakeholders (and your manager) to feel confident that the project (or programme) is under control Ideally you should be able to communicate your level of control in a simple transparent manner, which does not consume too much time and effort from the individuals charged with oversight of the safe delivery of the programme Bureaucracy and over reporting can kill projects. You want to avoid the Dilbert s boss syndrome where reporting and project administration becomes more important than the project itself The risk management method described below sets out to provide a simple and powerful method of control We want to help you ensure that your project sponsor can be confident that your project is under control and you are focusing on what really matters Risk management method (v1.1) - Page 3

4 The main objective of the risk management method is to ensure that all key risks identified are actively managed Overview 2 Identify additional unstated assumptions, which are critical for the success of the project. Are you dependent on another function or external party for your success 6 1 Track Risks Identify key issues and risks Risk Management Process Summary 3 Consult subject matter experts to determine whether there are further risks from their experience that you should consider additionally Pro ject Number Com pa ny Reference Number Risk Rating Risk Description Owner Nam e Action By Action Status Im pa ct EU Asia NA 5 Rate Risk i. Group risks into similar categories ii. Create a new category if a particular risk doesn t fit with your existing categories iii. Rate the risk associated with each category iv. Then determine the overall level of risk for your workstream 4 Create suitable action plans Create actions to eliminate or mitigate each risk. It may not be possible to eliminate the risk in the short term, in these circumstances determine what actions might reduce the likelihood of the risk, mitigate or delay its impact or develop a contingency plan Who What When Risk management method (v1.1) - Page 4

5 Example developing a risk management plan: Arranging a wedding and reception on a Caribbean island Step 1: Initial Key Risk Assessment Risk Assessment Illustrative Availability of flights to Caribbean Island Marriage license not considered valid outside of the Caribbean Wedding rings lost in transit Caterers not available during visit In-laws unable to fly from USA for medical reasons Costs/budget unknown Parents and family not able to come due to existing commitments Risk management method (v1.1) - Page 5

6 To avoid hitting the project icebergs all risks should be made visible, particular the unstated assumptions we take for granted Step 2: Unstated Assumptions Risk Assessment Illustrative Partner prefers wedding ceremony in Caribbean rather than a traditional wedding in home town Hotel has sufficient capacity and availability for preferred weekend Friends and family are happy to travel to Caribbean for ceremony My partner wants to get married rather than stay single! It is helpful to get a third party to interview you to uncover the unstated assumptions underpinning the success of the project/ workstream that you are managing Risk management method (v1.1) - Page 6

7 You don t know what you don t know! So ideally consult an expert who has experience in tackling your particular subject area! Step 3: Subject Matter Expertise Risk Assessment Illustrative Guests need to have had inoculations to travel safely to the Caribbean Take out insurance cover to protect against the tour operator going bust Have you arranged a suitable venue for the stag party can you get the guests to the wedding in time after this event Have you arranged a suitable venue for the hen party Risk management method (v1.1) - Page 7

8 We can then assemble all of the risks to understand our complete risk exposure at this point Risk Assessment Illustrative "ID (#)" Category Legal Ceremony Reception Financial Ceremony Financial Availability of flights to Caribbean Island Wedding rings lost in transit Caterers not available during visit In-laws unable to fly from USA for medical reasons Costs/budget unknown Risk/Issue Marriage license not considered valid outside of the Caribbean Parents and family not able to come due to existing commitments Partner prefers wedding ceremony in Caribbean rather than a traditional wedding in home town Hotel has sufficient capacity and availability for preferred weekend Friends and family are happy to travel to Caribbean for ceremony My partner wants to get married rather than stay single! Guests need to have had inoculations to travel safely to the Caribbean Take out insurance cover to protect against the tour operator going bust Have you arranged a suitable venue for the stag party can you get the guests to the wedding in time after this event Have you arranged a suitable venue for the hen party Risk management method (v1.1) - Page 8

9 We then group the risks into their logical categories to help us understand the overall risk exposure at this point Risk Assessment Illustrative "ID (#)" Category Ceremony Ceremony Financial Financial Legal Reception Wedding rings lost in transit Partner prefers wedding ceremony in Caribbean rather than a traditional wedding in home town My partner wants to get married rather than stay single! Have you arranged a suitable venue for the stag party can you get the guests to the wedding in time after this event Have you arranged a suitable venue for the hen party Costs/budget unknown Take out insurance cover to protect against the tour operator going bust Marriage license not considered valid outside of the Caribbean Availability of flights to Caribbean Island In-laws unable to fly from USA for medical reasons Parents and family not able to come due to existing commitments Hotel has sufficient capacity and availability for preferred weekend Friends and family are happy to travel to Caribbean for ceremony Guests need to have had inoculations to travel safely to the Caribbean Caterers not available during visit Risk/Issue Risk management method (v1.1) - Page 9

10 The next step is to determine actions which will either eliminate or mitigate each risk in each case be specific on Who, What, When Step 4: Create suitable action plans The initial priority is to identify actions for those areas of greatest perceived risk Risk Log - Closed Risk Log - Open Action Planning Illustrative ID(#) (Started or Complete) Category Risk/Issue Availability of flights to the Caribbean Island In-laws unable to fly from USA for medical reasons Parents and family not able to come due to existing commitments Hotel has sufficient capacity and availability for preferred weekend Friends and family are happy to travel to Caribbean for ceremony Guests need to have had innoculations to travel safely to the Caribbean Action(s) Date required Date completed Check flight availability with travel 1-Oct Sep agency See if possible to travel to Gulf of Mexico 8-Oct-02 and take a cruise Contact family to determine existing 01-Oct-02 commitments for 2003 Ring hotel and check availability in 08-Oct Oct-02 August 2003 Check best man and bridesmaids are 01-Oct-02 available for date in August 2003 Include in wedding invitation checklist 01-Nov-02 Who James Ann James Ann James Ann Status Completed Started Completed At the end of the week/month it is useful to transfer (cut and paste) closed risks into the Closed Risks worksheet for future reference Risk management method (v1.1) - Page 10

11 It is suggested that risks are then summarised on a weekly/monthly basis and assigned a risk assessment for each category and an overall assessment for the whole workstream using a four point scale Risk assessment Step 5: Rate Risk Illustrative RAG Status Risk Assessment GREEN (Minimal/ low risk) All under control with no significant risks to manage. There may be some minor risks/issues but these have clear action plans in place. If there are no significant risks to manage, then set the risk assessment at GREEN! A1 Medium risk. Some risks apparent but with clear action steps in place with high confidence of their successful implementation. A2 High risk. Major risks have been identified, however action plans that eliminate these risks are not yet fully developed. RED CRITICAL. Potential show stopper risks, some action plans in place but even when these are implemented, significant risk exposure will remain. A 4 point scale is preferred to avoid middle score bulging i.e. everything is set to AMBER! Risk management method (v1.1) - Page 11

12 The Risk Summary Report can be used as a tool to inform key stakeholders and management on a regular basis of the project risk status Risk assessment Step 5: Rate Risk Overall Risk Assessment A2 Workstream Wedding Event Overall Workstream Risk Assessment Overall Comment Risk Summary The most significant issue is to confirm that we do want to spend the rest of our lives together and we are meeting tonight to confirm Overall Comment regarding the Overall Risk Assessment "ID (#)" Category Risk/Issue Action(s) Date Required A2 Availability of flights to Caribbean Island In-laws unable to fly from USA for medical reasons Parents and family not able to come due to existing commitments Hotel has sufficient capacity and availability for preferred weekend Friends and family are happy to travel to Caribbean for ceremony Guests need to have had inoculations to travel safely to the Caribbean Check flight availability with travel agency See if possible to travel to Gulf of Mexico and take a cruise Contact family to determine existing commitments for 2004 Ring hotel and check availability in August 2003 Include advice on innoculations required with wedding invitations Send out invitations and determine likely number of guests and who is able to attend the ceremony 1-Oct-03 8-Oct Oct Oct Nov-03 01`-Nov-03 A2 Ceremony Ceremony Partner prefers wedding ceremony in Caribbean rather than a traditional wedding in home town Wedding rings lost in transit Conversation with partner to agree that the Caribbean is the perfect location for our wedding Take out insurance to cover possible loss in transit 01-Oct Nov-03 GREEN A2 A2 Financial Financial Legal Reception Costs/budget unknown Take out insurance cover to protect against the tour operator going bust Marriage license not considered valid outside of the Caribbean Caterers not available during visit Prepare budget based on number of guests, likely venue etc. Identify list of insurers contact one with appropriate cover and purchase Contact Marriage Licensing in UK to determine steps for getting legally married in the Caribbean Research on internet to determine suitable caterers in location and availability 08-Oct Oct Oct Oct-03 RED My partner wants to get married rather than stay single! Have you arranged a suitable venue for the stag party can you get the guests to the wedding in time after this event Have you arranged a suitable venue for the hen party Have a serious chat with partner and establish whether they really do want to spend the rest of their life with me Contact travel agent to determine a list of suitable venues in the Caribbean Contact travel agent to determine a list of suitable venues in the Caribbean 01-Oct Nov Nov-02 Individual Risk Assessment for each Category Risk management method (v1.1) - Page 12

13 A simple traffic light scheme suffices to identify high-rated risks for close attention. Some suggested guidance on how you might assess risks Risk assessment Impact if risk occurs A B C D Inconvenient but deadline, scope and resources probably unaffected Disruption to deadline, scope or resources Major disruption, deadline and/or scope compromised but project will probably still complete Major disruption - deadline and/or resources, and/or scope, severely compromised; high risk of project failure Likelihood of risk occurring A B C D Low risk of happening (0-10%) Medium probability (11-30%) Medium-high probability (31-70%) Very high probability (>70%) Rating of risk overall If Impact = A A A A B B B B C C C C D D D D And Likelihood = A B C D A B C D A B C D A B C D Then Overall Risk = A B C C A B C D B C D D B C D D Warning: A traffic light is just an indicator it is not a substitute for thinking or judgement Risk management method (v1.1) - Page 13

14 The Project Manager can then report the Overall Risk for the Project by assessing the risk in each workstream Date: dd month year Risk assessment Overall Risk Assessment Comment Risk Assessment Workstream Overall Comment Risk management method (v1.1) - Page 14

15 Getting a powerful risk assessment in place can be done quickly Getting started If you do not have a risk plan in place already, you can generate a first draft in a workshop event taking 1 to 2 hours for most projects. For large complex programmes, you may wish to start with a high-level overview assessment which can then be followed up by more in depth follow-up events and interviews for particular areas We would suggest you run a workshop with key stakeholders and those key individuals involved in delivering significant parts of the project Suggested workshop approach - Brainstorm a list of potential risks, putting each onto a Post-it note on the wall - When the flow dries up, prompt with probing questions until all are agreed the list is sufficiently complete or the allotted time runs out any risks identified later can (must) always be added to the list - Group the risks by their affinity to each other aim for 4-10 groups - When this has been completed, name the groups (see next slide for typical categories for a change project involving technology) A risk workshop can ensure the key individuals involved in the project have a powerful shared understanding of the potential risks to be managed Risk management method (v1.1) - Page 15

16 Typical risk categories for a change project involving technology Getting started Every project or programme is different, however there are frequently common categories that can be found across projects For example some Typical risk categories for a change project involving technology include: - Value Realisation Projects exist to deliver value to the organisation. One needs to ensure delivery of the value and benefits originally promised to justify the project in the first place are on track - Stakeholder Management - Lack of buy in, failure to clear obstacles or actual opposition threatens project success. Stakeholders can be individuals, departments, functions or indeed external partners - Resource, Management & Planning - Problems with approach, scope, time, resource (human and otherwise) or decision making that impact project delivery - Technical - Problems with technical aspects of the solution or with the conduct of the project Risk management method (v1.1) - Page 16

17 Do you need help with your Risk Management issues How confident are you that you are managing your key risks effectively If you would like to hear how we could be of service to you,why not ring John Corr on Tel: for an initial discussion of your specific situation, issues and challenges. We can offer you help in: Diagnosing and resolving specific issues rapidly, particularly if they are Technology related Providing you with great people who bring in-depth financial services expertise each with over 20 years business, IT and programme management expertise Delivering business performance improvements to your key processes in terms of cost reduction, revenue generation and service improvement Looking forward to hearing from you. John Risk management method (v1.1) - Page 17