Write an eight to ten (8-10) Risk Workshop and Risk Register Component paper in which you: Identify the required pre-workshop activities.Prepare a risk workshop agenda based on Figure B-8, Sample Agen

Running head: RISK MANAGEMENT PLANS 0

Risk Management Plan

In project management, where there are various critical aspects, the most critical one is risk management. It allows the project team to identify and manage all the possible risks associated with the project for proactively reducing their impact on the project. Effective risk management is quite necessary for project teams to improve the maximum chances of a project's success. This study will be developing a risk management plan for a new project carried out by British Petroleum.

British Petroleum has initiated a significant project making an effort to increase its production capacity by 85,000 barrels daily. The organization has been facing various safety and other hazard issues in its projects. BP must manage the new project effectively to gain the desired project benefits with the project's completion, including cost, time, and resources. For the same reason, BP is identifying and managing the possible risks associated with the project. BP has allocated an amount of $100,000 cost for managing the whole process relating to the risk. The risk manager's responsibility will require him to use the same amount for the risk management process within a timeline of 6 months.

All the predictable risks that may arise during any phase of a project can potentially hurt the objectives of that project, so the risk management process is a wise way aiming to handle all the conventional risks not only effectively but also proactively (Hillson & Simon, 2007). The acceptable risk for BP project is the one with a P-I scoring, reaching maximum threshold 4.

The external and internal risks potentially arising within the project completion phases can adversely impact the scope of a project. Keeping in view, the management of BP has expanded the scope of the risk management plan to cover both the risks, including business, program, corporate, supplier, and safety risks. There are various objectives of the risk management process including;

• Maximizing the success chances by ensuring sufficient and proactive identification and management of all the existing risks

• Ensuring effective communication with all the project stakeholders regarding the risk allowing them to adopt, modify, or implement effective strategies to manage the risks (Aven, 2016).

• Developing and maintaining proper engagement between stakeholders, creating ownership, and a sense of responsibility towards project success.

Hilson & Simon (2007) provide a tool for determining the size of the project by applying the ATOM process. The study uses the same device to determine the project's scope to develop risk processes towards increasing the chances of a project's success.

• Strategic Importance: BP project carries high strategic importance, and it is undoubtedly contributing towards the business objectives. Therefore, their criterion value allocated for the same is 8.

• Commercial Complexity: The commercial complexity of the project is quite minor as BP has been executing such projects in the past; therefore, the criterion value allocated for the segment is 4.

• External dependencies: Since BP is executing the project itself, there are still no external dependencies associated with the project. The criterion value allocated for the same is 2 (Bernardo, 2012).

• Requirement Stability: The project team has received the project’s requirements thoroughly; therefore, the criterion value allocated for the “requirement stability” is 4.

• Technical Complexity: Since there is still no new technology introduced, the project team will be using the existing technological resources for improving its production capacities. The criterion value allocated for the same is 2 (Blake, 2015).

• Market Sector Regulatory Characteristics: The BP project is expected to comply with the Standard Regulatory Framework. Therefore, the criterion value allocated for the segment is 4.

• Project Value: The overall value of the project is significant; therefore, the criterion value allocated for project value is 4.

• Project Duration: The timeline allocated for the completion of the project is limited to one year. The criterion value assigned for the same is 4 (Bernardo, 2012).

• Project Resources: A medium in-house project team allocated for completing the project will ensure iron triangle parameters like time, cost, and money. Therefore, the criterion value assigned for the “project resources” is 4.

• Post-Project Liabilities: The project liabilities exposure after the completion is acceptable; therefore, the criterion value allocated for the same is 4.

As per the ATOM risk methodology, the overall criterion value for the BP project is 42. It means that the size of the project is medium. Therefore, it is imperative to develop and utilize all the risk processes based on the medium size. The BP project team will be using the ATOM process for risk management consisting of various stages like;

• Initiation: Clarification of the project objectives

• Identification: Exposure and documentation of the risks

• Assessment: Qualitative or quantitative risks assessment

• Response Planning: Dealing with each risk with the determination of effective strategies

• Reporting: Communication and discussion on the project’s dynamic position

• Implementation: Application of the risk response strategies

• Review: Regular review of the major and minor risk strategies implementation

• Post-Project Review: From the complete risk process, developing and following a technique known as lessons learned.

Qualitative risk analysis will be prioritizing the potential risks arising in the project using pre-defined rating scales (Aven, 2016). This type of analysis will comprise information like situation information, judgment, knowledge, etc.

• Risk Probability and Impact Assessment: The impact and happening of information involving risk will support in carrying out risks scoring. The same tool will evaluate all the risks with the potential to affect the cost, time, or quality factor.

• Probability and Impact Analysis: The team will be defining the risk tools in advance. The analysis will determine the organization's ability to identify and manage the existing risks with numerical scoring and develop appropriate methodology accordingly (Blake, 2015).

• Risk Categorization: The team will be categorizing the risks based on its scoring and uncertainties to identify root causes to manage the same efficiently.

• Risk urgency assessment: The overall risk assessment will collaborate with the risk urgency in this analysis to determine the overall risk sensitivity for timely action (Aven, 2016).

The qualitative risk tools and techniques have been selected for ensuring the fast and valid identification and management of the risks using subjective means and project team collaboration.

Quantitative risk analysis will be assigned a numerical score to the highest priority risk for carrying out a more detailed probabilistic analysis of the risk for better management (Blake, 2015).

• Three-Point Estimate: This analysis will be using optimistic, most likely, and pessimistic values to determine the best estimate for the project (Bernardo, 2012).

• Decision tree analysis: The development of a tree against each risk will help in choosing the best possible alternative.

• Expected monetary value: The analysis will help prepare the contingency budget and schedule against each possible risk (Blake, 2015).

• Sensitivity Analysis: The analysis will support in determining the risks with its maximum possible impact on the project.

The quantitative risk tools and techniques have been selected to carry out probabilistic numerical estimates of the risks for better management using specialized techniques. The overall process of using above-defined risk tools and techniques throughout the project life is defined below;

• Initiation

  • Risk management document sign-off and sharing with team members

• Identification

  • Brainstorming

  • Project assumption, constraints

  • Standard checklist

  • Ad-hoc risks identification

  • Preliminary Risk register

• Assessment

  • Probability and Impact assessment

  • Risk categorization

  • Top risks list preparation

  • Update of the risk register

• Response Planning

  • Risk urgency development

  • Decision tree analysis/Monetary Analysis/Sensitivity Analysis

  • Identification of risk analysis and roles delegation

  • Risk register updating

• Reporting

  • Risk of ad-hoc reports to concerned stakeholders

  • Risk report to the project sponsor

• Implementation

  • Response strategies implementation

  • Risk actions monitoring

• Review

  • Risk workshops for evaluating the past and identifying any new risks for the project

The project team will evaluate the risk exposure for the BP project at a defined frequency conducting major and minor reviews during the project lifetime. All of the risk reviews will assist in identifying and assessing the progress of identified risks and their management, along with identifying new threats and their response planning (Aven, 2016).

A minor review of the potential risks at the BP project will be carried out in a formal daily meeting. The frequency has been set as it will keep the project team members continuously updated regarding the potential risks and their management to avoid any substantial implications at the later stages of the project. A significant review of the risks will be carried out every month. The frequency has been set as it will benefit the project team in carrying out a detailed risk analysis to ensure that there is no hazard arising at the project carrying the potential to adversely impact the project scope (Hillson & Simon, 2007).

The project team will be generating monthly sharing of risk reports with all the stakeholders, including the BP project sponsor. It will benefit all the stakeholders to gain information regarding the status of the current risks, along with their roles and responsibilities for dealing with future threats. A lesson learned document regarding risk management will be generated after the completion of the BP project (Hillson & Simon, 2007). It will benefit the BP project team to identify the weak and strong areas prevailing in their current risk management process for sustaining the positive regions and improving the negative areas effectively in future projects.

The overall cost allocated for the risk management process for the BP project is $100k, where the timeline for the same is about six months. The contingency rule of 10% has been used for determining the specific values related to the impact on project objectives concerning quality, time, and cost. The probability and impact analysis table, as defined below, will support in carrying out project risks scaling for effective treatment and management.

It is imperative to mention that the provided impacts will be used positively if the risks are creating an opportunity for the project concerning time, cost, and quality. Otherwise, they will be used negatively (Hillson & Simon, 2007).

Although the budget allocated is $100 k with a timeline of 6 months. Therefore, it is possible to make use of contingency values in this regard as a threshold for the risks. However, there could be various risks existing at the BP project; therefore, it is not a good idea to determine the same amount and timeline flexibility to all the risks (Blake, 2015). Thus, the risk manager will be using the above-defined probability and impact matrix to define the risk threshold. The risk with a probability of 11 – 30% with an impact over the project objectives reaching 6 – 11 days, $1.9k - $k with a minor effect over BP project objectives is the threshold section; this is the low scaling of the risks existing at the BP project. If the impact of the risks is constrained up to defined limits, then the BP project team will be accepting the same risks taking no robust action in the same regard, if the solution is more time or budget consuming (Aven, 2016). However, the risk team is bound to take suitable actions for all the risks exceeding the same limit.

Overall, the risk management process is a critical opportunity available to the BP project team for ensuring the successful project conclusion following the limitations of quality, time, and cost. The risk management plans would serve all the BP project team's requirements for executing and completing the project successfully.

References

Aven, T. (2016). Risk assessment and risk management: Review of recent advances on their foundation. European Journal of Operational Research, 253(1), 1–13. http://doi.org/10.1016/j.ejor.2015.12.023

Bernardo, D. V. (2012). Security risk assessment: toward comprehensive practical risk management. International Journal of Information and Computer Security, 5(2), 77. http://doi.org/10.1504/ijics.2012.051775

Blake, S. (2015). 3. Dispute Management, Project Management, and Risk Management. A Practical Approach to Effective Litigation, 46–64. http://doi.org/10.1093/law/9780198715948.003.0003

Hillson, D., & Simon, P. (2007). Practical project risk management: the ATOM methodology by David Hillson and Peter Simon. Vienna, VA: Management Concepts.