Risky Business


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!



2 thoughts on “Risky Business

  1. Gating month — a month when we think our risk will be retired or OBE (overcome by events)

    Thanks for sharing these concepts with us. This reminded me of The Risk Event Graph in Chapter 7 of our text. I thought of this graph when I read about your experience with Risk from your Finance perspective. You stated that overtime, risk decreases as you deliver more product, e.g. more hardware. That means the project is beyond the Planning and Executing phases and is in the Delivering phase where Risk drops and Costs to fix the risk event rises. The Risk Event Graph shows this inverse relationship. Within the Project’s Life Cycle, costs to fix a risk event rises as the Chance of a risk happening decreases. Could this be because the more we are invested in a program, the less likely a risk event will occur because we mitigated expected hiccups? Or does the cost to fix a risk event increase as the Project matures because the risk event will be more unexpected, and therefore more costly to fix?

    It is reassuring to know you are charged with the responsibility to monitor risk levels and re-visit risk identification and assessments during a project. At least your company respects risk and realizes risks change and guard against disruptions even when it’s late in the project’s life cycle.

  2. Hi Kathleen, thank you for your post. I work for a private company and there doesn’t seem to be much emphasis on risk. If upper management really wants to start a new process or implement a project, the owners (family owned business) will give the okay. I assume that they discuss the risk factors before implementing the processes and delegate them to executive management. We don’t have a risk management department even though we are billion dollar company. It’s one of those things that is assumed and since they are so profitable, they are willing to accept the risk. Eventually, it will probably be something that cannot be avoided any longer. We are creating markets in international countries and different parts of the US. It will be interesting to see what approach they take in implementing a strong risk management plan for the company.

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