Risk Management and Procurement Management Assignment

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Contents
Introduction............................................................................................................ 4
How risk can be managed effectively.....................................................................4
Elements of risk management methods.................................................................5
Risk mitigation options........................................................................................... 8
Risk reduction......................................................................................................... 9
Risk retention....................................................................................................... 10
Measuring and ranking of risk...............................................................................10
Conclusion............................................................................................................ 13
References............................................................................................................ 14

Introduction
Risk management and procurement management are very important for any project to
become successful. As per the definition of ISO 31000, risk management is the
identification, forecasting evaluation and prioritization of risk. Risk is the effect of
uncertainty or occurrence if undesirable situation which may result to losses and
probabilities can be attached to it. Uncertainly you cannot predict the outcome of the
occurrence and hence cannot be managed. Therefore since the outcomes of risk can be
predicted in advance, its important o put the right measures in place to manage risk in
order to prevent the foreseen undesirable situations from occurring. This report
evaluates and analyzes the risk in a project and discusses how these risks can be
managed. The solution also evaluates and discusses the ranking of the risks that have
been identified to find out which ones have a higher probability of occurrence (Hillso
& Simon, 2012). A project risk management strategy is also constructed to show the
road map that should be followed by a project manager when undertaking a project.
Procurement is an important aspect for all projects. Procurement can be defined as the
process of obtaining or buying goods and services on behalf of an organization. It
involves many stages such as identification of need, assessment of required amounts
and placing orders. This report also discusses the importance of procurement
management in a project. This report examines all the processes and activities
undertaken by an organization when procuring the materials needed in a project. The
process and standards required to procure services in project management is also
analyzed.

How risk can be managed effectively
Risk management is very important for successful implementation of a project. To
manage risks effectively in any given project, the project management team has to
undertake a series of steps and actions. Different organizations have put in place
different strategies to help them manage risk depending on the industry in which they
are operating and the objectives of the organization (Kendrick, 2009). The effective
risk management framework consists of the following components; Internal
environment, risk assessment, risk response, control activities, communication and
information as well as monitoring.
Elements of risk management methods
Risk management is an ongoing process on a project and it does not stop even after
the completion of the project. The following are the steps taken when managing risk
in an organization:
 Identification and characterization of threats
 Assessment of vulnerability of key assets to the specific threats identified
 Determine the expected likelihood and the consequences of the events happening
 Identify the ways in which the risk can be reduced
 Prioritization of ways in which the risks can be measured
According to the ISO 31000 the following are the guidelines that should be followed
in risk management processes;
The first step is establishing the context. This step involves the identification of the
risk in a selected domain of interest. The domain of interest for example could be in a
construction project and the domain of interest is that of risk of the prices of materials