Effective Management of Risks in an Organisation

This report discusses the importance of a risk management plan in identifying and assessing potential risks involved in a project. It focuses on the Lewis project and provides a risk register and risk matrix to assess the risks. The report also discusses risk management strategies and activities to mitigate the risks.

Running head: EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
Effective management of risks in an organisation
Name of the Student
Name of the University
Author Note

1EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
Executive Summary
It is necessary for every project management team to devise a risk management plan that
would critically identify the potential risks involved in the project. The purpose of this report
is to devise a risk management plan with the concerned risks in the Lewis Project. The risk
management plan for the Lewis project gives an idea of the potential risk that may be
involved in the execution of the project. The identification and assessment of the risks have
been done with the help of a risk register and the risk matrix. Later the reporting of the risks
have mentioned with the help of the response strategies and the risk management activities.

2EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
Table of Contents
Introduction................................................................................................................................3
Risk identification and impact assessment.................................................................................3
Risk Management and Reporting...............................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

3EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
Introduction
Successful execution of any project takes place with the effective collaboration of the
project management team involving the project manager, the project engineers, the project
control manager and the project secretaries. It is necessary for every project management
team to devise a risk management plan that would critically identify the potential risks
involved in the project (Lam, 2014). The risk management plan would also focus on
assessing the potential risks thereby providing solutions for the mitigation of the risks. The
Lewis project is one of such projects that were facing a lot of challenges. It was a
construction project for a new coal liquefaction pilot plant. The risk identification and the
assessment of the impacts along with its reporting is the crux of this report.
Risk identification and impact assessment
It is really very necessary for the identification of the potential risks in the completion
of the project (Iqbal et al., 2015). This is the initial step of the risk management procedure
that is focussed on delivering the idea of the potential risks involved in the Lewis Project
undertaken by the Robert L. Frank Construction Company.
Category of the Risks Impact of the Risks
Delay risk Delivery of
Vendor’s
material not on
time
For the execution of the Lewis project, it is very important
for the delivery of the Vendors’ materials within the
stipulated timeframe. If there is not a stipulated timeframe,
the delivery of the materials will not take place in time and
the project will suffer an undesirable delay (Hossen, Kang
& Kim, 2015). This will not only affect the fluency of the

4EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
project but will also affect the various types of stakeholders
associated with the project. In turn, this will have a negative
impact on the reputation of the project.
Financial
risk
Companies
with purchase
orders going
bankrupt
It is important for every project to formulate a definite
budget plan. This budget plan generally takes place during
the designing phase of the project. The companies with
purchase orders went bankrupt (Van Deventer, Imai &
Mesler, 2013). This shows that the proper planning of the
budget plan was not formulated during the planning of the
budget and shows signs that there was a limited budget
involved in the project for which the companies with
purchase orders went bankrupt. This will affect the overall
flow of the project areas due to the lack of investments.
Purchasing
management
risk
Inefficiency in
providing
assistance to
To sustain in the successful delivery of a particular project
to the client it is really very much essential to have a proper
purchasing management team whose job would be to look

5EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
purchasing of
items
after the wellbeing of the project in respect to the
purchasing department. In the case of the Lewis project, it
is seen that in order to placate Lewis, the purchasing
management replaced the project purchasing agent with a
new agent named Ron Katz but still there were problems in
the purchasing area. This will largely impact the
stakeholders associated with the project as well as the
harmony of the project will be distorted due to the fact that
the agent was replaced in the middle of the on-going project
(Edwards & Bowen, 2013).
Table 1: Risk identification and impacts
(Source: Author)

6EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
Sl.
No
.
Risk
Category
Owner of
risk
Reason /
cause
Impact
scale
(0-5)
Proba
bility
scale
(0-5)
Level
of risk
(I*P)
Risk
strategy
response
Risk
Management
action
Affected
stakeholder
Communicatio
n strategies
1 Delay risk Upper
management
Poor time
management
regarding
the delivery
3 3 9 Avoid More
involvement
in the project
by strictly
abiding by
the stipulated
timeframe
The internal
and the
external
stakeholders,
project
manager,
vendors
Regular
meetings and
conferences
with all the
associated
members and
the
stakeholders
2 Financial
risk
Inefficient
budget
Bankruptcy
of the
companies
with
3 2 6 Avoid A budget
plan should
be made
during the
Project
sponsor,
project
manager,
Follow up
processes
through calls
and online

7EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
purchase
orders
designing
phase, more
investors
should be
engaged
stakeholders conferences
along with
campaigns
3 Purchasing
management
risk
Whimsical
purchasing
management
Improper
planning
about the
2 2 4 Mitigate Proper
analysis of
the things to
The internal
and the
external
Timely check-
up of the
purchasing

8EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
purchase
orders and
sudden
replacement
of agent
be purchased
beforehand,
being more
attentive
towards the
work
stakeholders,
project
manager,
purchasing
management
team
members
processes with
the help of
emails, calls
and
conferences
Table 2: Risk register
(Source: Author)

9EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
Probability
Impact
Probable 3 6 9
Possible 2 4 6
Remote 1 2 3
Minor Moderate Major
Table 1: 3x3 Risk probability and impact matrix
(Source: Author)
Risk Management and Reporting
The risks have been arranged and are to be incorporated into the above mentioned 3x3
prioritization matrix. After which a specific set of strategies will be followed with the aim of
solving these problems by the risk strategy responses. These risk strategy responses are
classified into accepting, avoiding and mitigating. Initiatives and efforts will be undertaken
such as meeting with the members, visiting the project sites and supervising the reports with
the purpose of checking whether the processes are being carried upon or not (Bourne, 2016).
The low risk of a matrix indicates that the risks are of less concern and can be accepted by the
management authority. Similarly, the medium risks of the matrix indicates that the risks fall
in the moderate level of concern and are needed to be mitigated. Ultimately, the high risks of
the matrix indicates that the risks fall in the extreme level of concern and are needed to be
avoided at any cost.
In the case of the Lewis project it has been found that among the three risks, the first
two risks that is the delay risk and the financial risk fall in the critical zone of concern and are

10EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
required to be avoided at any cost. The third risk on the other hand that is the Purchasing
management risk fall in the moderate category of the risks and is required to be mitigated
under the supervision of the project manager (Honey, 2017). The stakeholders associated
with the project will be apprised with the help of providing the services to the community that
has been affected in the process while keeping a check on the budget and timeframe of the
project. These stakeholders will also be beneficial towards bringing fortune towards the
company.
Conclusion
Every project once initiated is governed by the association of the potential risks. It is
really necessary to carefully identify these concerned risks and assess them accordingly as
risks involved cannot be eliminated but can surely be accepted, avoided or mitigated
following the risk management plan. The risk management plan for the Lewis project gives
an idea of the potential risk that may be involved in the execution of the project. The
identification and assessment of the risks have been done with the help of a risk register and
the risk matrix. Later the reporting of the risks has mentioned with the help of the response
strategies and the risk management activities.

11EFFECTIVE MANAGEMENT OF RISKS IN AN ORGANISATION
References
Bourne, L. (2016). Stakeholder relationship management: a maturity model for
organisational implementation. Routledge.
Edwards, P., & Bowen, P. (2013). Risk management in project organisations. Routledge.
Honey, G. (2017). A short guide to reputation risk. Routledge.
Hossen, M. M., Kang, S., & Kim, J. (2015). Construction schedule delay risk assessment by
using combined AHP-RII methodology for an international NPP project. Nuclear
Engineering and Technology, 47(3), 362-379.
Iqbal, S., Choudhry, R. M., Holschemacher, K., Ali, A., & Tamošaitienė, J. (2015). Risk
management in construction projects. Technological and Economic Development of
Economy, 21(1), 65-78.
Lam, J. (2014). Enterprise risk management: from incentives to controls. John Wiley & Sons.
Van Deventer, D. R., Imai, K., & Mesler, M. (2013). Advanced financial risk management:
tools and techniques for integrated credit risk and interest rate risk management.
John Wiley & Sons.
Walker, A. (2015). Project management in construction. John Wiley & Sons.