Zero Risk is not an Option
All projects and wnterprises are subject to uncertainty, arising from a multitude of sources, including internal and external threats and opportunites relating to technical, management, project and commercial issues. The value of a formal and structured approach to risk management is becoming increasingly recognised as the discipline develops and more organisations begin to reap the benefits of the proactive management of uncertainty. Indeed there is a compelling argument in favour of management of risk being the single most important factor in ensuring successful project and business management. But what is risk management, and how can it contribute to project and business success?
The UK Association for Project Management (APM) “Project Risk Analysis & Management (PRAM) Guide” defines risk as “any uncertain event or set of circumstances that, should it or they occur, would have an effect on achieving the objective.” This introduces the dual nature of risk: uncertainty (defined as the probability that a risk might occur) and effect (the potential impact on objectives if the risk does occur). From this definition, the essential aim of risk management becomes clear – to improve decision – making by reducing uncertainty and minimising its potential effect. It also makes clear the absolute relationship between risk management and project or business success, since risks are measured by their potential effect on achievement of objectives, including not only the usual time/cost/quality triangle, but other objectives such as business benefit, competitive advantage, environmental impact or regulatory compliance. Failure to manage risks effectively will inevitably lead to failure to meet some or all of these objectives. Conversely, a comprehensive approach to dealing with risk must by definition increase the chances of meeting objectives, and so enhance the likelihood of project and business success.
Effective management of risk involves a four-phase process, with comprehensive identification of all sources of risk, objective assessment of their significance, planning of appropriate responses, and management of those responses to achieve the required result. While this process is not complex, it represents a common-sense and structured approach to dealing with uncertainty,and ensures that proper account is taken of every foreseeable risk. The aim is to allow proactive management in advance, rather that waiting for risks to mature into problems which require a crisis response.
A structured approach to risk management produces both hard benefits to the bottom line, and also contributes to softer issues including improved communication and morale. Risk management is not an option, since all projects and decisions are subject to uncertainty, and this requires a response. Proactively addressing risk improves decision-making by minimising uncertainty and maximising the chances of project success, demonstrating that risk management is arguably the single most critical factor in successful project and business management.
The YCG approach to risk management is both professional and pragmatic, offering clients an effective and efficient means of controlling uncertainty. While the YCG approach is fully consistent with current best practice, the aim is to provide each client with support at an appropriate and cost-effective level to meet their specific risk management requirements, rather than imposing a “solution” which proves to be an over-complex bureaucratic overhead.
How can we help?
York Consulting Group offer a full risk management support service, with a variety of different elements depending on the needs and experience of the client organisation. Our range of risk support services includes the following :
Organisational benchmarking.
The degree of external support or input required for effective management of uncertainty depends on the existing level of maturity and capability in an organisation’s risk processes. YCG offer a benchmarking service to assess the client’s current approach to risk management, based on a recently published Risk Maturity Model (RMM). This permits an organisation to compare its risk processes against best practice, in order to identify areas requiring development or improvement.
Process review and development
Where an organisation has an existing approach to risk management, YCG offer an independent and objective external review against current standards, guidelines and industry best practice. This permits development of effective processes, tailored to the specific requirements of the organisation, and integrated into the corporate culture and infrastructure. Our advice is independent, based on our understanding of current best practice, and allows clients to benefit from our track record of successfully implementing effective risk management processes in major organisations. We are also able to take a broad view of the organisation’s processes, assessing the effectiveness of risk management within the context of the overall project and business culture, drawing on our wider project management expertise.
Risk model development and analysis.
YCG risk staff possess the full range of analytical skills required for complex risk modelling, using a variety of leading-edge software tools and methodologies. Where a client requires expert assistance in development of risk models to analyse the uncertainties of a particular situation, we are able to produce models which fully represent the degree of risk exposure and which provide a robust basis for supporting decision-making under conditions of uncertainty. YCG risk models use the best tool for each particular analysis, and clients are provided with both the model and its results, together with guideline enabling client staff to maintain and operate the model for themselves.
Skills and technology transfer.
YCG have particular expertise in assisting organisations to develop an organic in-house risk capability where there is no previous experience of risk management. We offer a complete service, including development of effective methods and techniques, captured in processes and procedures which can be incorporated into the corporate quality system, supported by appropriate tools and training for all staff at a level commensurate with their involvement in the risk process. Each implementation is unique and is tailored to the specific requirements of the client. YCG offer independent advice, not linked to any particular vendor or proprietary solution, providing confidence that the client will acquire a risk management capability that meets their needs precisely and cost-effectively.
Education.
In order to manage risk effectively, all stakeholders require an understanding of the risk process and their role within it. Buy-in at all levels across the organisation is essential. YCG can help to ensure this by a comprehensive programme of risk education, providing a variety of inputs at an appropriate level. This can range form awareness briefings for senior management, to provision of speakers for seminars and in-house courses. YCG staff are also in demand as expert speakers on risk management for conferences and symposia on the subject, contributing to the general understanding and awareness of risk management in the wider business community.