Major infrastructure and construction projects involve enormous levels of complexity.
Large projects may involve multiple contractors, consultants, stakeholders, interfaces, regulatory requirements, procurement packages, complex schedules and significant financial commitments.
Risk management therefore cannot be treated as a static risk register.
Risk Management Is a Decision-Making System
A mature risk management process should help management understand:
- What can happen?
- How likely is it?
- What could it cost?
- What could it do to the schedule?
- What are we doing about it?
- Who owns the response?
Moving Beyond the Risk Register
A risk register is important, but it is only one component of effective risk management.
Modern project risk management can incorporate:
- Risk identification
- Qualitative risk assessment
- Quantitative risk analysis
- Schedule risk analysis
- Cost risk analysis
- Monte Carlo simulation
- Risk response planning
- Risk ownership
- Risk monitoring
- Management reporting
- Emerging-risk analysis
Connecting Risk With Cost and Schedule
One of the most important developments in project risk management is the integration of risk with project controls.
Risk information becomes much more valuable when it can help management understand potential impacts on:
- Cost
- Schedule
- Scope
- Quality
- Safety
- Contracts
- Performance
The Executive Perspective
Senior management generally does not need another 500-line risk register.
They need to understand:
Which risks could materially affect the project, what is being done about them, and where is management intervention required?
That is where professional risk management creates real value.
