The Judge's Problem

Basically, there is no project without its own risk during the period of execution and the expected returns on investment from it. Therefore, the following actions are necessary towards effective management of project risk.

i) The managers should identify the allied risks to the project.

ii) Determine the level of risk that could be retained by the organization.

iii) Determine the methods to minimize or reduce the impact of the identified risks on the organization.

iv) Use appropriate methods that could physically reduce the risk exposure of the organization.

v) Determine the risk that should be transferred with either through insurance or contractual agreement.

vi) Factor in the possible risks of project executive to the cost.

vii) Assess the implication of project risk on its financing.

viii) Assess the implication of project risk on expected returns.

SELF ASSESSMENT EXERCISE 3

What are the determinants for effective management of project risk?

4.0 CONCLUSION

You have understood from the discussion in this last unit of this study material that it is imperative for organizations to institute concrete measures with which to control the risk exposures inherent in operations. Furthermore, such measures should include the relevant strategies for ensuring the effective management of quality of products and services from the stable of business organizations.

5.0 SUMMARY

In this last unit of the study material, topics covered include the following:

 Essence of Risk and Quality Management,

  Safeguarding Operations of Organizations ,

  Safeguarding Quality of Products and Services,

  Management of Risk in Project Execution, and

  Determinants of Effective Management of Project Risk.

6.0 TUTOR-MARKED ASSIGNMENT

Mention the measures instituted overtime for managing risk exposures of organizations.

What are the determinants of effective management of project risk? Solution to Self Assessment Exercise

SAE 1.

The measures instituted overtime for managing risk exposures of organizations are as follows:

 fire extinguishers,

  locks,

  protective boots,

  crash helmets,

  protective cloths,

  safety glasses or goggles,

  fire service, etc.

SAE 2.

The important considerations in management of risk in relation to complex nature of project execution and the risk involved include:

 Risk management automatically becomes more critical for global projects.

  Issues bordering on environment will clearly defined and people well trained in the process.

  Such environmental issues when clearly understood will give problem a non-threatening avenue to raise risk issues.

  It is also very important for the project manager to establish good relationship with the team members to increase the level of comfort and encourage open communications.

  Having a simple risk management process in project execution is better than not having any process at all.

  Risk management is a part of the value-added chain in the process of project execution.

  Risk management is a major value-added function of organizations‟ project management process.

  A single form should be developed with the intent of predicting the likelihood of failure of a program based on its current status.

  Some counter measures should be instituted to mitigate project risk based on information obtained project team.

SAE 3.

The determinants for effective management of project risk include:

i) The managers should identify the allied risks to the project.

ii) Determine the level of risk that could be retained by the organization.

iii) Determine the methods to minimize or reduce the impact of the identified risks on the organization.

iv) Use appropriate methods that could physically reduce the risk exposure of the organization.

v) Determine the risk that should be transferred with either through insurance or contractual agreement.

vi) Factor in the possible risks of project executive to the cost.

vii) Assess the implication of project risk on its financing.

viii) Assess the implication of project risk on expected returns.

7.0 REFERENCES/FURTHER READINGS

Crockford, Neil (1986). An Introduction to Risk Management (2 ed.). Cambridge, UK:

Woodhead-Faulkner.

Dorfman, Mark S. (2007). Introduction to Risk Management and Insurance (9 ed.).

Englewood Cliffs, N.J: Prentice Hall.

Hubbard, D. (2009). The Failure of Risk Management: Why It's Broken and How to Fix It, New Jersey: John Wiley & Sons.

Kerzner, H. (2000). Applied Project Management; Best Practices On Implementation, New York: John Wiley & Sons, Inc.

Levine, H. A. (2002). Practical Project Management, New York: John Wiley & Sons.

Malonis, Jane A. (Ed) (2000). Encyclopedia of Business, 2^nd Edition. Detroit: Gale Group.

Pritchet, S.T. et al (1996). Risk Management and Insurance, 7^th Ed., New York: West Publishing Company.

Trieschmann, J.S., Gustavson, S.G. and Hoyt, R.E (2001). Risk Management and Insurance, 11^th Ed, Illinois: Spout – Western College Publishing.

Wilcox J.F. (1996). “Risk Management in the Oil Industry”, Journal Of The chartered Insurance Institute of Nigeria, Vol. 2, No. 2, June.

Williams, C.A., Smith, M.L. and Young, P.C. (1995). Risk Management and Insurance, 7^th Ed, New York: McGraw-Hill, Inc.

 Further Reading

Kaye, D. (2004). Risk Management, London: Chartered Insurance Institute.