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CloseQuarter Risk Management Methodology © Close Quarter Limited 2005 www.closequarter.co.uk.

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Presentation on theme: "CloseQuarter Risk Management Methodology © Close Quarter Limited 2005 www.closequarter.co.uk."— Presentation transcript:

1 CloseQuarter Risk Management Methodology © Close Quarter Limited 2005 www.closequarter.co.uk

2 Risk management method (v1.1) 5 April 2005 - Page 2 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Why bother with Risk management? Project plans are often developed in the expectation that everything will go to that plan, however projects rarely go straightforwardly to plan, for example: -Resources may not be available as needed -Stakeholders may resist or oppose the project -Other, higher priority tasks may arise -Requirements may change -The business case may need to be changed -Deliveries of part or all of the solution may be late Risk management aims to: -Identify and assess key risks, and put in place agreed actions – and specific owners of these to mitigate or eliminate the risks -Track the risks regularly and ensure they are properly managed -Ensure the sponsor and all other key stakeholders have complete visibility of the risks, so enabling them to make any necessary judgements on intervention. Thereby ensuring no surprises -Be simple and easy to apply – otherwise it just wont get done Introduction & objectives No worthwhile project is risk free If a project is worth doing, then its risks are worth managing

3 Risk management method (v1.1) 5 April 2005 - Page 3 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Risk management: helping your sponsor and boss sleep better at night Its easy when you are fully involved in the delivery of a major programme to overlook the needs of your sponsor, key stakeholders (and your manager) to feel confident that the project (or programme) is under control Ideally you should be able to communicate your level of control in a simple transparent manner, which does not consume too much time and effort from the individuals charged with oversight of the safe delivery of the programme Bureaucracy and over reporting can kill projects. You want to avoid the Dilberts boss syndrome where reporting and project administration becomes more important than the project itself The risk management method described below sets out to provide a simple and powerful method of control We want to help you ensure that your project sponsor can be confident that your project is under control and you are focusing on what really matters Introduction & objectives

4 Risk management method (v1.1) 5 April 2005 - Page 4 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Identify additional unstated assumptions, which are critical for the success of the project. Are you dependent on another function or external party for your success? Risk Management Process Summary The main objective of the risk management method is to ensure that all key risks identified are actively managed Consult subject matter experts to determine whether there are further risks from their experience that you should consider additionally 2 3 Create suitable action plans Create actions to eliminate or mitigate each risk. It may not be possible to eliminate the risk in the short term, in these circumstances determine what actions might reduce the likelihood of the risk, mitigate or delay its impact or develop a contingency plan 4 Track Risks 6 Who? What? When? Identify key issues and risks 1 Rate Risk i.Group risks into similar categories ii.Create a new category if a particular risk doesnt fit with your existing categories iii.Rate the risk associated with each category iv.Then determine the overall level of risk for your workstream 5 Overview

5 Risk management method (v1.1) 5 April 2005 - Page 5 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Example – developing a risk management plan: Arranging a wedding and reception on a Caribbean island Step 1: Initial Key Risk Assessment Risk Assessment ? Availability of flights to Caribbean Island ? Marriage license not considered valid outside of the Caribbean ? Wedding rings lost in transit ? Caterers not available during visit ? In-laws unable to fly from USA for medical reasons ? Costs/budget unknown ? Parents and family not able to come due to existing commitments Illustrative

6 Risk management method (v1.1) 5 April 2005 - Page 6 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Partner prefers wedding ceremony in Caribbean rather than a traditional wedding in home town Hotel has sufficient capacity and availability for preferred weekend Friends and family are happy to travel to Caribbean for ceremony My partner wants to get married rather than stay single! It is helpful to get a third party to interview you to uncover the unstated assumptions underpinning the success of the project/ workstream that you are managing Step 2: Unstated Assumptions To avoid hitting the project icebergs all risks should be made visible, particular the unstated assumptions we take for granted Illustrative Risk Assessment

7 Risk management method (v1.1) 5 April 2005 - Page 7 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Guests need to have had inoculations to travel safely to the Caribbean Take out insurance cover to protect against the tour operator going bust Have you arranged a suitable venue for the stag party? – can you get the guests to the wedding in time after this event? Have you arranged a suitable venue for the hen party? You dont know what you dont know! So ideally consult an expert who has experience in tackling your particular subject area! Step 3: Subject Matter Expertise Illustrative ? ? ? ? ? ? ? ? Risk Assessment

8 Risk management method (v1.1) 5 April 2005 - Page 8 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk "ID (#)"CategoryRisk/Issue 1LogisticsAvailability of flights to Caribbean Island 2LegalMarriage license not considered valid outside of the Caribbean 3CeremonyWedding rings lost in transit 4ReceptionCaterers not available during visit 5LogisticsIn-laws unable to fly from USA for medical reasons 6FinancialCosts/budget unknown 7LogisticsParents and family not able to come due to existing commitments 8CeremonyPartner prefers wedding ceremony in Caribbean rather than a traditional wedding in home town 9LogisticsHotel has sufficient capacity and availability for preferred weekend 10LogisticsFriends and family are happy to travel to Caribbean for ceremony 11EmotionalMy partner wants to get married rather than stay single! 12LogisticsGuests need to have had inoculations to travel safely to the Caribbean 13FinancialTake out insurance cover to protect against the tour operator going bust 14EmotionalHave you arranged a suitable venue for the stag party? – can you get the guests to the wedding in time after this event? 15EmotionalHave you arranged a suitable venue for the hen party? We can then assemble all of the risks to understand our complete risk exposure at this point Illustrative Risk Assessment

9 Risk management method (v1.1) 5 April 2005 - Page 9 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk "ID (#)"CategoryRisk/Issue 3CeremonyWedding rings lost in transit 8CeremonyPartner prefers wedding ceremony in Caribbean rather than a traditional wedding in home town 11EmotionalMy partner wants to get married rather than stay single! 14EmotionalHave you arranged a suitable venue for the stag party? – can you get the guests to the wedding in time after this event? 15EmotionalHave you arranged a suitable venue for the hen party? 6FinancialCosts/budget unknown 13FinancialTake out insurance cover to protect against the tour operator going bust 2LegalMarriage license not considered valid outside of the Caribbean 1LogisticsAvailability of flights to Caribbean Island 5LogisticsIn-laws unable to fly from USA for medical reasons 7LogisticsParents and family not able to come due to existing commitments 9LogisticsHotel has sufficient capacity and availability for preferred weekend 10LogisticsFriends and family are happy to travel to Caribbean for ceremony 12LogisticsGuests need to have had inoculations to travel safely to the Caribbean 4ReceptionCaterers not available during visit We then group the risks into their logical categories to help us understand the overall risk exposure at this point Illustrative Risk Assessment

10 Risk management method (v1.1) 5 April 2005 - Page 10 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk At the end of the week/month it is useful to transfer (cut and paste) closed risks into the Closed Risks worksheet for future reference The next step is to determine actions which will either eliminate or mitigate each risk – in each case be specific on Who, What, When? Action Planning Illustrative Risk Log - Open Risk Log - Closed Step 4: Create suitable action plans The initial priority is to identify actions for those areas of greatest perceived risk ID(#) (Started or Complete) CategoryRisk/IssueAction(s) Date required Date completed WhoStatus 1LogisticsAvailability of flights to the Caribbean Island Check flight availability with travel agency 1-Oct-0230-SepJamesCompleted 5LogisticsIn-laws unable to fly from USA for medical reasons See if possible to travel to Gulf of Mexico and take a cruise 8-Oct-02Ann 7LogisticsParents and family not able to come due to existing commitments Contact family to determine existing commitments for 2003 01-Oct-02JamesStarted 9LogisticsHotel has sufficient capacity and availability for preferred weekend Ring hotel and check availability in August 2003 08-Oct-0201-Oct-02AnnCompleted 10LogisticsFriends and family are happy to travel to Caribbean for ceremony Check best man and bridesmaids are available for date in August 2003 01-Oct-02 James 12LogisticsGuests need to have had innoculations to travel safely to the Caribbean Include in wedding invitation checklist01-Nov-02 Ann

11 Risk management method (v1.1) 5 April 2005 - Page 11 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk A 4 point scale is preferred to avoid middle score bulging – i.e. everything is set to AMBER! It is suggested that risks are then summarised on a weekly/monthly basis and assigned a risk assessment for each category and an overall assessment for the whole workstream using a four point scale RAG StatusRisk Assessment GREEN (Minimal/ low risk) All under control with no significant risks to manage. There may be some minor risks/issues but these have clear action plans in place. If there are no significant risks to manage, then set the risk assessment at GREEN! A1 Medium risk. Some risks apparent but with clear action steps in place with high confidence of their successful implementation. A2 High risk. Major risks have been identified, however action plans that eliminate these risks are not yet fully developed. RED CRITICAL. Potential show stopper risks, some action plans in place but even when these are implemented, significant risk exposure will remain. Illustrative Step 5: Rate Risk Risk assessment

12 Risk management method (v1.1) 5 April 2005 - Page 12 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Overall Risk Assessment WorkstreamOverall Comment A2Wedding Event The most significant issue is to confirm that we do want to spend the rest of our lives together and we are meeting tonight to confirm "ID (#)"CategoryRisk/IssueAction(s)Date Required A2 LogisticsAvailability of flights to Caribbean IslandCheck flight availability with travel agency1-Oct-03 LogisticsIn-laws unable to fly from USA for medical reasonsSee if possible to travel to Gulf of Mexico and take a cruise8-Oct-03 LogisticsParents and family not able to come due to existing commitmentsContact family to determine existing commitments for 200401-Oct-03 LogisticsHotel has sufficient capacity and availability for preferred weekendRing hotel and check availability in August 200308-Oct-03 LogisticsFriends and family are happy to travel to Caribbean for ceremonyInclude advice on innoculations required with wedding invitations 01-Nov-03 LogisticsGuests need to have had inoculations to travel safely to the CaribbeanSend out invitations and determine likely number of guests and who is able to attend the ceremony 01`-Nov-03 A2 CeremonyPartner prefers wedding ceremony in Caribbean rather than a traditional wedding in home town Conversation with partner to agree that the Caribbean is the perfect location for our wedding 01-Oct-03 CeremonyWedding rings lost in transitTake out insurance to cover possible loss in transit20-Nov-03 GREEN FinancialCosts/budget unknownPrepare budget based on number of guests, likely venue etc.08-Oct-03 FinancialTake out insurance cover to protect against the tour operator going bustIdentify list of insurers – contact one with appropriate cover and purchase 20-Oct-03 A2 LegalMarriage license not considered valid outside of the CaribbeanContact Marriage Licensing in UK to determine steps for getting legally married in the Caribbean 08-Oct-03 A2 ReceptionCaterers not available during visitResearch on internet to determine suitable caterers in location and availability 08-Oct-03 RED EmotionalMy partner wants to get married rather than stay single!Have a serious chat with partner and establish whether they really do want to spend the rest of their life with me 01-Oct-03 EmotionalHave you arranged a suitable venue for the stag party? – can you get the guests to the wedding in time after this event? Contact travel agent to determine a list of suitable venues in the Caribbean 01-Nov-03 EmotionalHave you arranged a suitable venue for the hen party?Contact travel agent to determine a list of suitable venues in the Caribbean 01-Nov-02 The Risk Summary Report can be used as a tool to inform key stakeholders and management on a regular basis of the project risk status Step 5: Rate Risk Individual Risk Assessment for each Category Risk Summary Overall Workstream Risk Assessment Overall Comment regarding the Overall Risk Assessment Risk assessment

13 Risk management method (v1.1) 5 April 2005 - Page 13 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk A simple traffic light scheme suffices to identify high-rated risks for close attention. Some suggested guidance on how you might assess risks Impact if risk occurs AInconvenient but deadline, scope and resources probably unaffected BDisruption to deadline, scope or resources CMajor disruption, deadline and/or scope compromised but project will probably still complete DMajor disruption - deadline and/or resources, and/or scope, severely compromised; high risk of project failure Likelihood of risk occurring ALow risk of happening (0-10%) BMedium probability (11-30%) CMedium-high probability (31-70%) DVery high probability (>70%) Rating of risk overall Warning: A traffic light is just an indicator – it is not a substitute for thinking or judgement Risk assessment

14 Risk management method (v1.1) 5 April 2005 - Page 14 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk The Project Manager can then report the Overall Risk for the Project by assessing the risk in each workstream Risk Assessment WorkstreamOverall Comment Overall Risk Assessment Comment Date: dd month year Risk assessment

15 Risk management method (v1.1) 5 April 2005 - Page 15 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Getting a powerful risk assessment in place can be done quickly If you do not have a risk plan in place already, you can generate a first draft in a workshop event taking 1 to 2 hours for most projects. For large complex programmes, you may wish to start with a high-level overview assessment which can then be followed up by more in depth follow-up events and interviews for particular areas We would suggest you run a workshop with key stakeholders and those key individuals involved in delivering significant parts of the project Suggested workshop approach -Brainstorm a list of potential risks, putting each onto a Post-it note on the wall -When the flow dries up, prompt with probing questions until all are agreed the list is sufficiently complete or the allotted time runs out – any risks identified later can (must) always be added to the list -Group the risks by their affinity to each other – aim for 4-10 groups -When this has been completed, name the groups (see next slide for typical categories for a change project involving technology) Getting started A risk workshop can ensure the key individuals involved in the project have a powerful shared understanding of the potential risks to be managed

16 Risk management method (v1.1) 5 April 2005 - Page 16 ©2005 CloseQuarter Ltd. (www.closequarter.co.uk Tel: 020 7748 2225)www.closequarter.co.uk Typical risk categories for a change project involving technology Every project or programme is different, however there are frequently common categories that can be found across projects For example some Typical risk categories for a change project involving technology include: -Value Realisation – Projects exist to deliver value to the organisation. One needs to ensure delivery of the value and benefits originally promised to justify the project in the first place are on track -Stakeholder Management - Lack of buy in, failure to clear obstacles or actual opposition threatens project success. Stakeholders can be individuals, departments, functions or indeed external partners -Resource, Management & Planning - Problems with approach, scope, time, resource (human and otherwise) or decision making that impact project delivery -Technical - Problems with technical aspects of the solution or with the conduct of the project Getting started


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