EPM5740 Project Risk Management

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EPM5740 Project Risk Management
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Executive Summary
High structural unemployment or underemployment is ranked fifth in top ten risks of the world.
Since it is not caused by normal functioning of the business cycle addressing this risk requires
economical structural changes which are somewhat challenging to employ due to issues of
globalization and urbanization. Apart from this, structural employment is challenging to rectify
because of recurrent mismatch where even when more jobs are added to the economy, they tend
not to be the exact jobs lost. Various mitigation plans have been proposed to in regard to the risk
of high structural unemployment. Some of the recommended mitigation plans comprise
encouraging geographical mobility, training and education and government subsidies to firms
providing worker training and education

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Table of Contents
Introduction 1
Aim/Justification/Purpose 2
Establishing Context-Internal and External 3
Risk assessment, identification and Analysis 4
Risk Register 5
Risk Treatment and Schedule Plan 6
Risk Action
Plan................................................................................................7
Conclusion......................................................................................................8
References......................................................................................................9
Appendix......................................................................................................10

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1. Introduction
Structural unemployment is considered as a mismatch between available jobs and skill levels of
employees. It occurs when uncontrollable factors and underlying shift on the economy makes it
difficult for a group of skilled individuals to find jobs. Unlike other types of unemployment,
structural unemployment is often hard to correct and for that reason it can keep overall
unemployment rate high for over a long period (Bartlett, 2013 p.83). Various causes of
structural unemployment have been identified including emergency of new technologies and
increased trade agreements such as the North American Free Trade Agreement (Eckert &
Kohler, 2014 p.64). When the NAFTA was enacted trade restrictions were lifted. Many factories
relocated leaving former employees jobless
Rising structural unemployment not only drives social pressures and unrest but also increased
levels of inequality in the society. Studies indicates that technological change and economic
advancement would be the major cause of high unemployment rates in the future. Since
unemployment will be experienced globally, spread of connectivity will stir protests and cases of
unrest and violence (Gupta, Gozgor, Kaya, Demir, 2019 p.30). As a result of this social unrest
will spill from individual economies to the global economy. Structural unemployment is affected
by the multidirectional cause-and-effect relationship. This implies that while unemployment and
inequality contributed to social unrest and instability. Social instability also negatively impacts
of employment and equality as well as wealth creation (Orlandi, 2012 p.17). For this reason,
addressing associated risks of structural unemployment is challenging. This paper is a risk
analysis of structural unemployment in three dimensions; interplay between geopolitics and
economics, emerging technologies and rapid unplanned urbanization in developing countries.

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2. Aim/Justification/Purpose
Structural unemployment is a major threat not only to individual economies but also the global
economy in general. Upon the wake of the covid-19 pandemic structural unemployment and
unemployment is general has posed to be a significant risk that needs to be critically analyzed to
determine its implications on global economy (Risks, 2015 p.29). High structural employment
and is ranked fifth in top ten risks or the world with an above average likelihood of happening
and above average in terms of its impact. High structural employment can have far-reaching
consequences and for that reason it is essential that it is assessed.
3. Establishing Context-Internal and External
The world is changing at a very unpredictable pace because of transformational shifts that are
taking occurring is all spheres including environmental, economic, societal, geopolitical and
technological systems (Arango & Flórez, 2018 p.35). These changes and transformations come
along with such transformational shifts results into unlimited opportunities as well as systemic
risks which do not respect national boundaries for instance, structural employment.
4. Risk assessment, identification and Analysis
a) In the context of emerging technologies
There is no doubt that technological advancements are one of the main cause of high structural
unemployment. Since the advent of the computer age, concerns have been brought forward and
fears have increased that there would be less work left for people to do (Ford, 2015 p.67).
Moreover, with the pace of technological advancements industries will adapt technological

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aspects in production and thus increasing the volatility of employment. Examples of structural
unemployment caused by technological advancements is in the newspaper industry where web-
based advertising and promotion has drawn away advertisers from newspaper ads (Haincourt &
Mogliani, 2012 p.41). Besides, online news media has seen customers get away from physical
newspapers thus rendering newspapers employees jobless.
Structural unemployment in the context of emerging technologies has far reaching implications
that range from societal, economic, environmental, geopolitical and technological. In a societal
point of view structural unemployment leads to social pressure as well as inequality (Gil-Garcia,
Helbig, Ojo, 2014 p.33). Since this risk does not know national boundaries it may result into so
much tension and social unrest when people come together to express their concerns. Other
societal costs include increased crime and robbery (Campa, 2014 p.56). Economically, structural
employment poses a great risk because of its detrimental effects on individual economies as well
as the globe’s. For individual countries, structural unemployment is the cause of reduced Gross
Domestic Product which is a significant determinant of the strength of an economy.
b) In the context of Rapid unplanned urbanization in developing countries
A recent research indicates that by 2050 about two thirds of the world’s population an
approximate of 6.3 billion people will live in urban centers with 80% of this population living in
less developed regions as indicated in the fig 1. below.