Risk Management Flashcards
What does Management of Risk, 1st edition (2016) set out?
- key principles of risk management
- response/mitigation strategies
- risk identification techniques.
What is risk management?
- Risk management as a discipline is becoming far more
prevalent for the success of projects, programmes and
indeed the construction industry. - The success of construction projects arguably can be
gauged on the ability of the professional team to mitigate
threats and maximise opportunities in relation to the overall
objectives of the project.
What is risk avoidance?
Where risks have such serious consequences on the project outcome that they are totally unacceptable. Risk avoidance measures might include a review of the employer’s brief and a reappraisal of the project, perhaps leading to an alternative design solution that eliminates the risk or even project cancellation.
What is risk reduction?
Where the level of risk is unacceptable and actions are taken to reduce either the chance of the risk occurring or the impact of the risk should it occur.
Typical actions to reduce the risk can include: further
site investigation to improve information, using different
materials/suppliers to avoid long lead times or using
different construction methods.
What is risk transfer to the contractor?
Risks that may impact the building programme are transferred to another party able to control it more effectively, usually involving a premium to be paid. If the risk materialises, the impacts are carried by the other party.
What is risk sharing by both employer and contractor?
This is when a risk is not wholly transferred to one party and
some elements of the risk are retained by the employer.
The approach for dealing with risks that are apportioned between the client and the employer will normally be dealt with using provisional quantities, with the pricing risk being delegated by the contractor and the quantification risk being allocated to the employer.
What is risk retention by the employer?
In the event where risks are to be retained by the employer, the appropriate risk allowance identified in the cost plan will be reserved and managed by the employer.
All projects contain an element of risk. These generally fall
into five categories, what are they?
Political and business - something breaks out into the public domain and has an adverse effect on the business as an
ongoing concern; for example, the client’s share price reduces
Benefit - failure of the project to deliver the performance expected, leading to an undermining of the long-term business case.
Consequential - Risks that may occur as a result of other risks; that is, there is a knock-on effect.
Project - risks that could affect the successful delivery of the project. Project risks are commonly considered in terms of time, cost and quality.
Programme - Risks that impact on the programme as a whole, rather than individual projects. These risks concern decisions that transform strategy into action.
Name the risk response/mitigation strategies
Risk avoidance
Risk reduction
Risk transfer
Risk sharing
Risk retention (residual risk exposure)
Interrelationships of risks
