Risk Management Plan

Introduction

Risk management is crucial for any project, especially when it is developed at the beginning of the project to help organize and help plan for any eventualities. According to Björnsdóttir et al. (2022), concerns have been recently raised over the extent to which contemporary behavior and technology have an efect on risk management. Considering the projected Binders Inc remodeling, which would see the transformation of the new business into a more space-mindful business, all points towards profit optimization. The proposal’s technicalities outline why in-depth risk analysis and management are necessary. For instance, there are financial risks; the profit margin for the organization is not guaranteed; hence, risk management should be in place to cushion such risks. Furthermore, the hazards that the employees and staff would face when working under such conditions would involve the company paying insurance premiums to help in risk management and prosperity of Binder’s Inc.

Throughout the four phases of demolition, construction and electrical, IT upgrade, and Remerchandising, the project is bound to face multiple risks. The risks would be further categorized into different categories such as financial risks, hazard risks, compliance risks, and operational risks. In line with this thought, the risk management plan should include the four phases and categorize them according to the groups identified. The different strategies would further define the plan, and the financial plan and the roles would all be outlined. The plan would factor in the different risk treatment solutions based on the extensive research facilitated by part of the project.

Risk Management Component

Evaluation and Grouping

It is important to help classify and assess risks to minimize uncertainties in a project (Bhatore et al., 2020). The management plan was broken down into individual stages before the eventual grouping. The components were assessed through the lens of the four possible risks in the remodeling business. The four categories; are a hazard, financial, compliance, and operational risks. Intrinsically, an evaluation plan would be conducted to identify the risks in the preferred categories before putting the risks into the said categories. The four categories would the cut across the four phases for the ease of identifying and elaborating the contingency plans for the individual risks identified.

Further, the plan did factor in external and internal risks, but these risks all fall under the four categories. For instance, the increased competition the remodel would face from the regions they chose to locate their new ventures were grouped under the operational risks. Comparatively, the unsurmountable losses or profits the firms may gain from the remodeling were categorized among the financial risks. Consequently, the remodeling process contained the following risks, which were identified and grouped.

The evaluation was done by extensive research of the company data and assessment of how the remodeling process would be conducted. Additionally, the process involved stakeholders and project managers who helped highlight the critical areas to focus on when conducting the analysis. The different departmental resources were harnessed to help analyze the risks that would develop from each remodel operational and management process. Further, the analysis analyzed the qualitative and quantitative risks incurred by the remodelling process. The qualitative process included factors such as evaluating the probability of the risk happening and calculating the risk impact on the organization. The discussion was, however, emphasized during the risk treatment process to understand the nature of the risk developed entirely.

Financial Risks

Hazard Risks

Operational Risks

Compliance risks

The Risk Management Strategy

The risk management strategy was an integral part of the management plan. It elaborated on how the management would proceed regarding the different risks identified. It factored in different ideas, such as the risk treatment approach and the recommendations on how the entire firm would proceed. Intrinsically the plan had a treatment plan for every risk in the category, which would help cushion the firm against the adverse effects. According to Edjossan-Sossou et al (2020), risk strategies should be integrated to yield proper results. Methods such as the insurance plans were weighed, and the right premiums were paid to help transfer the risks from the firm. Besides, the roles were clearly defined for each management committee member to avoid mix-ups during the evaluation process, considering that the entire project would last six months; hence the plans were scheduled for completion before the six months.

Methodology for Risk Assessment

The firm used qualitative risk assessment to ensure that it understands the extent to which the risk might affect the entire remodelling process. to this extent, the risk management focused on a risk matrix, which helped identify the risks. The tool helped categorize the consequences of the risk and how it affects individuals. Furthermore, the extent to which the risk would happen was classified on whether it was very likely or highly unlikely. Notably, the risk matrix was relatively compatible with the hazard risks that were being evaluated and would aid in the firm’s preparation. However, the method also applied to other risks, such as financial risks, but the consequences were not judged on the fatalities. In this approach, the project manager had to come up with other descriptions to fit the bill for the description of the financial hazards.

Nonetheless, the firm incorporated technology to fully comprehend the risk Binder’s Inc. would face during the corporate remodel. Technology is an important aspect of risk management especially in hazard prone areas(Sajjad et al, 2020). The iAuditor software was favored for hazard management, and the firm selected the technology as one risk treatment method. The software had a trusted procedure for any risk hazard assessment, which would give satisfactory results to the users. The software would identify the risk through a form available in the software after a routine check of the operating environment. The user would then evaluate the risks through the software. The software facilitates image uploading to improve the accuracy of the risk reports. Progressively the software encourages the assignment of control measures to every hazard risk mentioned in the previous step of identification. Subsequently, the last two steps of the process would involve recording and reviewing the identified risk hazards. The software gives a chance to capture these recordings and encourages constant updating of the recorded risks to help the firm be ready for any changes.

Moreover, the firm also incorporated the Failure Modes and Effect Analysis tool (FMEA) to plan for the risks that would develop during the remodel. This factored in for financial risks, compliance and operational risk. The tool worked on four principles, identification of each potential failure and the cause. Afterwards, the effect of the failure on the overall system and the higher process was also evaluated. Subsequently, the tool urged for internal and external analysis of existing control methods. Documentation of any associated details was the last stage in using the tool.

Roles and Responsibilities

The risk management process was delegated to a committee formed within the organization. Through the stewardship of the project manager, who acted as the leader of the committee, the team had the role of identifying the risks and forming a plan on how to handle each risk. Therefore, the committee’s major role was the identification process which featured involved stakeholders and other members of binders inc. The committee would conduct the research aided by the identification tools and forms which were easily availed online, and further research was conducted through the literature available online and the firm’s data which was enough to establish the risk from the Binders Inc operation. Hence the responsibilities were shared between the committee formed and the staff that the organization availed to support the project team.

Essentially the committee had a responsibility was risk identification. The manager was to head the identification practice and ensure that they met the defined criteria of identification and grouping. The identification process was first completed before presenting the risks to the program management team. After the identification step, the project manager had to contact the firm’s expertise to construct a risk treatment solution and give the overall expenditure for the process. Notably, the firm already had an employed expert who would advise the firm on the insurance premiums concerning other projects and operations; hence, his services were also utilized by the program.

Another role that befell the committee was education. Personnel awareness and their job security is important in enterprise formation in a corporate business (Kraev & Tikhonov, 2019). The committee had the risk of educating the staff and other stakeholders on the risks of the program on behalf of the program management team. The education entailed breaking down the cost of risk treatment to the stakeholders and customers. However, the management was tasked with convincing the stakeholders for funding release and alternative calculating methods in cases where the risk treatment method exceeded the program’s budget. The final role assigned to the committee was documenting and recordkeeping the roles identified. The committee was obliged to update the records as the project unfolded to ensure that all the relevant data was captured and stored for proper information analysis. On the other hand, the program was responsible for sticking to the risk analysis team’s recommendations and steering the project in the right direction in the wake of the committee’s findings.

Ultimately the role of each participant was captured in a RACI chart. Evidently increasing risks would be managed by proper planning and training the relevant staff( Caballero & Niguidula, 2018). In the cases of compliance risks, the risk expert had to procure the services of the Binders Inc. lawyer, who was to help the project see its initial goal. An overview of the RACI chart gave easy access to what everyone’s role was expected to be and helped quite a lot in time-saving and conflict resolution.

Funding

The funding of the entire risk assessment procedure was $50000. Since most of the team contracted were firm employees, the payment of allowances was not to be covered by the project. Besides, the company had insurance contracts for any upcoming projects, and incidentally, the most favored risk treatment method was the payment of insurance premiums; hence, the insurance company facilitated the payment. Consequently, $10000 was assigned to the initial risk identification and documentation phase. This was to cover the purchase of the technology and procurement of any external services. Consequently, the remaining $40000 was utilized to pay the insurance premiums and equipment servicing. The firm initial risk management programs had adequately covered new programs, and the budget was just supplementary to check on the new methods adopted.

Timing

Unlike the project, which would take over six months, the risk management phase covers the first third of the project. Since most of the information regarding risks likely to be incurred in the program was contained in the proposal, it was possible to come up with a risk management plan before the completion of the project. Incidentally, the risk management plan was to consume six weeks. The first four weeks’ measures were to be implemented before completion whilst other treatment measures were to be implemented upon the completion of the project. The first four weeks involved measures such as risk identification and calculation. After identification, the plan also included the risk funding calculations and approval by the firm’s board. The only processes to take place after the completion of the where the installation of the treatment measures such as risk hazards treatment equipment such as fire extinguishers.

Risk Categories

The main four categories were dominant in categorizing the Binders Inc was likely to face in achieving its new remodel. The orthodox procedure of internal and external risks was ignored in favor of categorizing the risks depending on the departments affected, particularly the financial, compliance, operational, and hazard risks. It was easier to implement the treatment measures for these particular risks if presented in such a manner, for they were easy to comprehend from such a perspective. Besides, it was easy to fill in new risks under the aforementioned categories as they are clearly defined. Ultimately the overlapping risks were easy to deal with, for there was interdepartmental cooperation when handling the risks. Since the firm believes in interdepartmental problem-solving cooperation, it was another opportunity to implement the firm goals in yet another project.

Stakeholder Risk Appetite

The firms’ stakeholders have shown a higher risk appetite from the activities that they have engaged in on different platforms. The firm has an innovative mindset that is supported by the entire board. from the onset of the project the board was clear that it would support the project to the extremes of eventual good which was to be experienced at the end of the project apart from withstanding the rough period that was to be experienced immediately after the project completion. In the calculation of the profits curve, the profits significantly diminished during and a year after the project completion. However, a year after the completion of the projects the curve increased tremendously to eclipse the profit limits that are presently being experienced at the firm currently. Therefore, it was safe to say that the stakeholders risk appetite was quite high and it effectively matched their willingness to embrace the risk management techniques. In empowering the project, the stakeholders funded to every aspect of the project including the risk management budget.

Risk Probability and Impact.

The risk probability and impact would be calculated basing on the Risk impact matrix. By categorizing the risk and the consequences in the table just like the plan handled the hazard risk it would be easier to focus on the consequences as well as the probability. The high-risk probability would be red in color from the impact matrix as the low-risk matrix have the yellow color. Furthermore, the impact matrix would be applied on all the four categories of risk but the description of the consequences slightly changed contextually. For instance, an illustration of how the financial risks are captured below. Intrinsically the probability matrix was easy to use by most of the staff and the accuracy of the results covered a wide range of expectations among them.

Financial Risks Impact Matrix

Reporting Formats

The reporting format for the risks differed greatly according to the audience. The initial proposals and internal committee were communicated through memos as the official channels. These included the findings from the roles assigned to different parties within the committee and other official communication between the firm’s management and the risk management committee. Besides meetings were held in between to update the project management on the progress made by the risks management committee and correct if there is any slow progress or there were scenarios when they were going wrong. However, the external communication with stakeholders and general public was done through progress report which were accurate and verified by both management bodies in the organization. These were purposefully released to the public to inform them on the projects progress and what part they were expected to play in risk treatment among other arising issues.

Risk Tracking

Risk tracking was done through several methods implemented during the initial stages of management. Incorporation of the tracking measures with the projects earned value was deemed important in the tracking process (Browning, 2019). Through technology it was easier to manage the risk expectations and make the necessary adjustments to maneuver through the entire procedure of risk management. The use of IAuditor technology which was used as a tool in risk discovery and management through out the entire process of risk management. Intrinsically one was able to track the particular risk according to the category and update the possible changes in operations and possible approaches.

Conclusion

The risk management process is an essential practice in any organization which should be monitored closely owing to the fluctuating nature of markets and policies in the modern world. At binders Inc the management has always been clear regarding the adoption of innovation hence the forthright approval of the corporate remodeling project which was meant to improve profits within reduced space. Consequently, the project was a maneuver which attracted its fair share of risks hence it necessitated the formation of a risk management procedure. The risk management procedure was to be monitored by technology, which was effective in tracking the unfolding of the project to the final phases. Intrinsically factors such as the risk stakeholder risk appetite and risk management funding were captured in the report.

References

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Browning, T. R. (2019). Planning, tracking, and reducing a complex project’s value at risk.  Project Management Journal, 50(1), 71-85.

Caballero, A. R., & Niguidula, J. D. (2018, March). Disaster Risk Management and Emergency Preparedness: A Case-Driven Training Simulation Using Immersive Virtual Reality. In Proceedings of the 4th International Conference on Human-Computer Interaction and User Experience in Indonesia, CHIuXiD’18 (pp. 31-37).

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Kraev, V. M., & Tikhonov, A. I. (2019). Risk management in human resource management. TEM Journal, 8(4), 1185.

Sajjad, M., Chan, J. C., & Kanwal, S. (2020). Integrating spatial statistics tools for coastal risk management: A case-study of typhoon risk in mainland China. Ocean & Coastal Management, 184, 105018.