Managers and the Management of Risk
You can not manage what you cannot measure, and in reality you can not measure what you cannot manage.
What does all that mean?, Successful project outcomes are almost mainly due to good management
and measuring the progress against the goals.
The management of risk in any project will only be successful if the risks to the project are known in
advance, and these risks are assessed and the results of the assessment are then analysed and measures
put in place to reduce those risks.
Constant re-assessment during the project will show up any short comings, and the measures are changed
to suit any changes in the risk.
The main steps all managers should do are:-
- List all the risks associated with the project.
- Determine who/what may be harmed.
- Note current practices and work methods that currently reduce these risks.
- Carry out effective risk assessments, and record the findings.
- Communicate the risks to those persons affected.
The 5 steps above will relate to practically any type of business, the banking world will perhaps have differing
methods but for the most part the 5 steps can be utilised by all managers an example could be a basic building project.
Demolition– Falling Masonry, collapse of structures- Persons at risk are builders and members of the public.
Excavation work– Persons falling into excavations, water flooding- Persons at risk are builders and members
of the public.
Existing Services– Electrocution, explosion of gas- Persons at risk are builders and members of the public.
Working At Height– Falling from ladders- Persons at risk are builders.
These risks would certainly be known before the project commenced, for this example only a few risks are being used to illustrate the methods used.
To reduce the demolition risks, use a structural engineer to carry out a safe work method for the demolition, and to protect workers and the public, use long reach equipment and use fencing or solid hoarding to barricade the work area along with warning signs.
To reduce the excavation risks, plan the excavations. If adverse weather is forecast ensure adequate pumps are on site and use barriers and fencing to barricade the work area, along with warning signs.
To reduce the risk from existing services, ensure that all known buried services are traced and marked on the ground any services to the structure are to be fully isolated, any gas mains are protected etc.
Use safe work method statements and trained staff.
To reduce the risks from working at height, use scaffold towers or full scaffolding instead of ladders, ensure fall arrest systems are in place and use trained persons.
The example given above shows how the manager will assess the health and safety risks, but the method can be adopted for project finance for example:-
- Risk of project losing money and no profits made.
- Risk of severe financial penalties for not completing the project to the agreed time.
- Risk of high insurance premiums if claims made during the contract.
- A project can lose money if no material procurement system is used.
- A project can lose money if material or labour quantities are incorrect or poorly calculated.
- A project can lose money if poor labour management is used.
The correct way of managing this risk is to have suitably qualified and experienced staff that can estimate the amount of materials and labour needed before submitting the price to the client, as well as not ensuring that the correct number of staff and correct amount of plant and machinery is on site at the commencement of the project.
Risks must be determined and solutions determined prior to any project commencing, the process must be ongoing
to ensure that any changes are assessed and all the results are communicated to all those involved.