Risk Management Case

Risk Management

Student’s Name

Institution

Introduction

For a project to realize its goals, the proactive management of risks is important throughout the lifecycle of the project. Risk can either be good or bad. However, risk is always associated with the bad especially when it occurs. However, the occurrence of risk is also a learning process and individuals should learn from it. A risk can be identified as a harm that may occur in future due to certain activities that occur in the present. The loss as a result of a risk is usually measured in monetary terms, loss of future business, property or even life.

Table of Contents

1.0.        Executive Summary        

2.0.        The risk management Practice        

2.1.        Risk Identification        

2.2.        Analyze        

2.3.        Prioritize        

2.4.        Plan        

2.5.        Mitigate        

3.0.        The stakeholders of Risk Management        

4.0.        Conclusion        

5.0. References        

Abstract

The paper will discuss the practice of risk management that involves identification of risk, analysis, rating of risks in accordance to likelihood of loss, planning, risk mitigation, and communication. In addition, the paper will discuss some of the risks that are likely to reoccur in the engineering and Technology projects. The stakeholders in risk management will also be discussed in detail to determine their role in the risk management process. The paper will finally give some of the best measures to avoid and manage risk in the Engineering and technology sector.

1. Executive Summary

Risk management involves a series of steps whose objective involves identification of risks, addressing of the risks, and elimination of the technology risk items that are likely to become an threat to technology and engineering. The technology industry is often faced with huge risks that in most cases have led to loss of significant sums of money (Javaid, n.d.).  These risks occur either because they were identified when it was too late or because the wrong problem was addressed. Risk management requires that those charged with responsibility of managing risks in an engineering project or technology project be proactive rather than reactive. Reactive teams in this case are those that undertake to mitigate risks after they have occurred without any proper planning. On the other hand, proactive teams begin risk management even before the work is initiated. They avoid risk as much as possible and have an effective way of responding to risk when they occur.

Engineering risk management aims at addressing well-structured user requirements, technical standards and specifications. There are few differences on how risk management principles are applicable to systems whose performance depends on the interaction of the systems. These types of systems are referred to as systems-of-systems (Dionne, 2013). Systems of systems can be said to related to one another in terms of operation and functionality. Risk management in engineering are considered complex when compared to risk management in business (Javaid, n.d.). However, the risk management process is similar to other sector. The difference is the implementation and management of the process across large-scale and complex systems that are geographically dispersed (Goetsch, 2012). In addition, challenges such as accountability, lack of clear goals and management of responsibility also affect the risk management process in engineering and technology (Dionne, 2013).

1. The risk management Practice

The risk management process can be categorized into two dependent components; risk control and risk assessment. Risk assessment involves identification of risk, analysis of risk and ranking of risk (prioritization). Risk management should be carried out interactively with other departments to ensure its success.  Risk control can be summarized in a diagram as below:

[pic 1]

Figure 1: The Risk Management Cycle

1. Risk Identification

In risk identification, the team in charge of risk management searches for possible risks and makes them explicit before they become significant to technology and the Engineering sectors. There are several methods that can be used to identify technology and engineering risks. One of the methods is generic risks. These are risks that pose a threat to every engineering and technology project. Examples of generic risks include bankruptcy of the technology and engineering firm, loss of key personnel, changes in technology, increase in costs and process among others. It is advisable that the technology and engineering firm to keep a list of all these risks ('Engineering project risk management', 2000). After the risks have been identified, the risk management teams then assess the extent to which these risks affect the engineering and technology and sector. This is done through assessing the extent to risks affect the project based on engineers, managers, programmers, customers and policies.

The other method is product-specific risks which can only be identified with specialist possessing knowledge in technology and engineering. For example, the availability of a sophisticated knowledge or software in case of technology and the risks posed by a machine used in engineering workshops.  Product specific and generic risks can be further divided into product risks and business risks. Factors to consider in these risks include people risks, size risks, technology risks, tools risks, sales and support risks, estimation risks and managerial and organizational risks ('Engineering project risk management', 2000).