This week in class we had to turn in our risk assignment for our fundraiser project. As a financial analyst I work closely with risk on a daily basis. Something we touched on in class when we created the risk was just the basics. What sort of risk, probability, value of the risk and contingency plan. In reality, there is so much that goes into risk. That it why I chose to research risk and see what else there is to know about risk. I found a great article that talked about the fluidity of risk. The project management realm deals with an ever changing environment, which means risk is changing on an almost daily basis as well. In my business, the programs I work on are very complex, which makes risk management and analysis complex as well and needs to be continuously re-visited and re-analyzed.
When creating our risk at my company, we don’t know how many out of box failures we may have on a program. We don’t know how many parts might fail. That is why over time, it is pivotal to continue to re-visit our risk. Something I use in my job is called a “gating month”. It is a month when we think our risk will be retired or OBE (overcome by events). That being said, looking at risk on a daily basis is so important to monitoring project health. As a project progresses and evolves, potentially so does the risk.
A personal example from my job as a financial analyst on government programs has to do with gating months. For example, on my current program, we build and deliver hardware to the customer. Because of that, a risk we carry has to do with our second sourced suppliers. If a supplier who makes a part for our hardware build goes out of business or stops making the part, we need to be prepared for the costs that will go into replacing that part. That includes finding another supplier, validating them and then potentially modifying the part to our specs. This isn’t just a risk we carry throughout the entire program. Over time, as we deliver hardware, this risk becomes smaller and smaller. Why carry risk for 500 deliveries when we only have 50 left? That is why, as a financial analyst, I work with the PMO to analyze our delivery schedule in relation to our risk items. I help plan when this risk item should be reduced and when it will be OBE. When that happens the PMO needs to make an important decision. Do we want to retire the risk to our bottom line or do we want to re-visit the program health and plan risk items for other problems that, over time, have now presented itself?
I have learned through personal experience, class and this article that risk is something that needs to be looked at continuously. It needs to be managed daily and analyzed daily for any changes to the project and its environment. It needs to be reduced or increased. It needs just as much attention as the project execution itself. In the article I read I found a great chart that shows the fluidity and cyclical nature of risk management and risk analysis:
Now a few questions on risk management and risk analysis:
1. Do you use risk at your job? What sort of risk management and analysis do you perform?
2. Have you experienced a unique risk circumstance? What happened and what did you learn from the experience?
3. Do you have anymore insight and input into risk management and analysis?
4. Any other questions and comments are welcome!
http://www.pmoplanet.com/cross-discipline-elements/risk-management/