Risk Workshop And Risk Register

Assignment 2: Risk Management Plan

Risk management is a crucial factor when setting up a business. There is a high probability that the company will succeed if incorporated into the company’s policies and strategy. However, if not considered it is evident that the company will find it hard to keep afloat. This document is the Risk Management Plan of Environment Quality Information (EQI) firm based in Siwa, Egypt. The plan defines the risk management plan that will be implemented. It is the responsibility of the Project Manager to update the plan to ensure it deals with any present risk factors by reviewing and maintaining the risk management plan of the EQI firm throughout the entire project duration.

Scope and Objectives of the Risk Management Process

The Project Scope

EQI firm, a privately owned tourist company, is situated in the remote Egyptian oasis of Siwa in the expansive Western desert. The place is located 550 km from Cairo, the capital city of Egypt, and therefore a good get away place for both local people and international tourists. The oasis provides the only source of life in the rather lifeless desert. It is a source of fresh and saline water in the desert, In addition to this, the project boasts of being in a place full of tourist attraction features since it is positioned among the famous sand dunes, palm grooves, and the ancient Shali Ruins. All these tourist attraction features gives the company the assurance that the project will attract and maintain many visitors. The fact that the place is located in an underdeveloped and unexploited tourism destination implies less competition, which translates to more visits by tourists. Financially, this implies more revenue for the firm.

The Project Objectives

Some of the company’s objectives are:

· To provide quality and affordable tourism services to both locals and international tourists. The former will be offered even cheaper incentives to encourage them to visit the site often since it is they who harbour the initial potential for the business.

· To manage and conserve the environment where the firm is located. In alignment with the environment conservation efforts around the world, the company aims at utilizing the tourist attraction sites to draw in more tourists, and use part of the proceeds to conserve the environment.

· To involve the local residents in tourism activities. The local residents shall form the company’s main workforce. They will give the company’s expatriates some guidance since they know the area better, in turn they will be employed by the firm to improve their living standards.

· To attract many investors. The firm will invest in the creation of a good reputation for itself. With the factors mentioned above, the firm expects to attract many investors. This will definitely make the project financially stable and successful in the long run.

· To assess and look into how to manage the risks involved in the business. Despite the strengths outlined above, the project managers are aware of the uncertainties and risks inherent in the project, thus they are more prepared to counteract them.

· To provide employment to other professionals. Besides targeting the local community, the project aims at tapping into the expertise and knowledge of experienced and highly trained hospitality workers from within the locality.

· To break-even within the first 2 years of operation. Once the project starts running, it is expected that the firm shall recover its initial capital overlay within 24 months.

Of all these objectives, environment conservation is of the most priority. The project itself is based on the environment and with a wasted environment; the project is infeasible. The local community is also of much significance since without their support, there will be probabilities of conflicts, which may affect the project negatively. However, all the other factors are important too as they are core to the operational success of the project.

The Project Size

The strategic importance of the firm is critical to the business, as the firm has to be located near the tourist attraction features. The project team anticipates including investors from all over the world. Post-project liabilities are of high consideration since the project is rooted on environmental usage. Innovation in this project is already existent, since the technology that will be used is already in place, but requires minor adjustments. All the stakeholders will calculate the project value, but due to its complexity, the project will most probably be valued above $2M. The tourism sector, where the project falls, is highly regulated as it involves international investors, international tourists and most importantly, the environment. Key project objectives depend on external factors, thus the political support is of great importance since the company’s clients shall come from all over the world and the attraction features belong to the country of operation (Hillson & Simon, 2012. However, it is worth noting that the requirements in the project have not been finalised until after consultation with the stakeholders. According to the project-sizing tool, all these factors sum up to a score above 75(128). This project, therefore, is large and complex.

CRITERION CRITERION VALUE=2 CRITERION VALUE=4 CRITERION VALUE=8 CRITERION VALUE=16 CRITERION SCORE
Strategic importance The significant contribution to business objectives 4
Commercial complexity No unusual commercial arrangements or conditions 2
External constraints Key project objectives depend on external factors 8
Requirement Stability The requirement not finalised and subject to negotiations 16
Technical complexity Enhancement of existing product/service 4
Market sector regulatory characteristics Standard regulatory framework 4
Project value Larger project value over $3M) 16
Project Duration 1-3 years 8
Project Resources Larger project team including external contractors 8
Post-project liability
Significant exposure 8
Overall Project Score 78

Figure 1. The overall expected project size and score.

The Risk Tools and Techniques

The EQI project aims to effectively manage all the risks that may arise in the most appropriate and proactive manner. The goal is to maintain an acceptable risk exposure level, which is the maximum acceptable risks for the investors of the project, and at the same time achieve the project objectives (Hillson & Simon, 2012). For accountability, the risk process will involve all project stakeholders. Through this way, the stakeholders will gain a sense of ownership and take part in making critical decisions that affect the survival and operations of the business.

Detailed information about the risk process shall be communicated to the project stakeholders from time to time to keep them updated and at the same time enable them to give their contributions to any adjustments to the proposal. Through risk management, the project stakeholders will be able to focus their attention on the areas with the most risk and device solutions on how to deal with them (Jugdev, 2012). An analysis of the opportunities based on how well the company shall capitalise on them and the threats on how best it can inhibit them from affecting the project will be done. This way, the most significant positives, and the worst negatives shall be analysed, and a range of how the business will perform be set.

Risks are inherent in the project from the start and throughout the operation of the project. Thus, the risk management plan will take into account, not only the inception of the project but throughout its lifetime. Risks are essential in every undertaking, and they seem to magnify when the project is situated in a new environment (Govori, 2012). The plan will, therefore, be reviewed and updated regularly by the risk factors that will be existent (it is expected the risk factors shall change from time to time). Thus, the risk management plan will major on internal risks, but the company will also consider external threats such as the supplier, and program risks, which all shall affect the business.

Risks expected in the project include technical, management, commercial and external. To counter the first type of uncertainties, the company shall consider including safety and security of tourists and employees in its policies, maintenance of the firm and its neighboring environment, the technology that will be required and its compatibility to the area, and the assumptions and estimates that shall be drawn, considering the project operations (Jugdev, 2012). For the management risks to be disputed, the organisation shall consider including project and operations management, communication, advertisement and access to information, quality and reputation of the firm. On the other hand, commercial risks shall be mitigated by including internal procurements, terms, and conditions of the offered contracts, partnerships and retaining the company’s clients (Heldman, 2005). Some of the external threats to be considered include administrative, regulation and legislation requirements, the environment and weather patterns of the area, competition in the market, and social factors. External risks, just like inherent risks, should not be overlooked. If not well taken care of, the business will collapse.

Risk Review and Reporting

The EQI project requires continuous monitoring through the formulation and implementation of a proper risk strategy and action plan. Such a review of risks should be a regular topic in the project management meetings to facilitate continuous flow of work. This process should involve the control and monitoring of any potential threats. The tools and techniques for performing these assessments include risk reassessment, audits, technical performance measurement, reserve analysis, and status meetings, among others (Heldman, 2005). Thus, a watch list of the prioritised risks should be developed and contemporary measures formulated as a response to the mitigation. This process is of a great significance as it ensures that appropriate procedures of managing risks are in place, and they are clearly understood and strictly followed. Furthermore, the process shall serve as a risk register, which shall be regularly regenerated to support new actions.

After a proper review, project risk reports shall be drafted, which are of enormous significance when it comes to communicating with project stakeholders. They will be the driving force in ensuring adequate risk management actions are put in place, and project outcomes are achieved according to expectations (Heldman, 2005). Furthermore, the reports shall help the project managers and clients to understand the existing opportunities and risks, besides keeping them informed. The results, apart from maintaining communication among the stakeholders, is a balance between risk management actions and core issues.

Risk Impact and Probability

Probability-impact assessment shall play a crucial role in the project risk analysis. It shall involve investigation of the probability that an event may occur and the impact the occurrence shall have on the project. A medium, high and low scale shall be used in the analysis, depending on the complexity of the work. A comparison of the impact and probability scores shall be done, which shall offer an overall conclusion of the value of the risks of the project. However, an event with a low probability/impact ratio shall not be taken to imply the reverse ratio since impact scales are linear and probability ones are logarithmic in nature.

The following table is the probability and impact scale for the EQI project in Siwa;

scale probability Impact on project objectives
Time Cost Quality
VHI 71-99% >3 years >$5M Very significant impact
HI 51-70% 2-3years $3-$5M Significant impact
MED 31-50% 1-2 years $1-$3M Impact on certain functional areas
LO 11-30% 3-12 Months $1M Mino impact on functional areas
VLO 1-10% <3 Months <$1M No unusual impact on overall functionality
NIL <1% No change No change No change

Figure 2. Table of expected risk impact and probability

Risk Threshold.

The risk threshold is the measure of the degree of uncertainty that a particular event will occur and its level of impact. It shall be one of the essential tools in risk management analysis, which the project stakeholders shall be interested in. To quanitify the potential threats, interviews shall be done on the stakeholders to determine the real risks, according to their perception (Govori, 2012). Based on this, the project managers shall calculate the risk threshold from the risk tolerance. Thus, failing to understand the stakeholder’s risk perception, tolerance and threshold shall jeopardise the entire risk management plan.

RBS Level 0 RBS Level 1 RBS Level 2 Example
Project Risk Management Risk Competent management – active management in the restoration of the cultural and traditional identity

– promotion of tourism

-Balancing of women and male affairs in the project

Commercial Risks Product prices – high price for of local expertise and materials beyond the affordability of the local population

– modern construction methods which are more economical and faster to the native residents

External Risks -Social

– Scarcity of Resources

– rising urbanisation leading to increased usage of the modern machines

-Indoor bathrooms and the digging of several wells stresses the supply of water

Figure 3. Table of expected risk threshold.

Risk management plan is a significant tool for the success of the project. It is essential in understanding and handling the threats that may be encountered during the duration of the project. The analysis of these risks during the early stages of the project and the development of mitigation plans as the project develops plays a crucial role in its success. Therefore, if the outline plan for the EQI project at Siwa is followed to the latter, then it is easier to ensure its effective implementation by the management, after consulting and reaching a common consensus with all the concerned stakeholders.

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