Risk Management Flashcards
Risk
Risk that one or more events or actions will jeopardize, slow, or prevent the achievement of
project objectives.
Risk =
Impact ( of an event ) x probability of occurence ( of the event )
Dealing with risks
- risk avoidance
→ lack of opportunity - utilization risk shifting
→ insurance fee - risk acceptance (self carrying)
→ risk awareness
risk reduction
→ risk strategy
Principles of risk-conscious action
- We only accept controllable risks.
- We do not deviate from established processes.
- We are committed to the highest safety standards.
- We only work within the scope of our competence.
- We only accept orders of appropriate size.
- We ensure personnel competence and capacity.
- We work only with efficient and reliable partners.
- We only work under contract.
- We do not allow ourselves to be blackmailed.
- We report risk-relevant events without delay.
Risk potential
- General management risks
- Operational risks
- External risks
- Force majeure
- Other risks
General management risks
- Strategic risks
- Corporate planning
- Legal risks
- Organization
- …
Operational risks
- Investment risk
- Financing risk
- Operating risk
- Marketing risk
- …
External risks
- Market risk
- Environment
- Country risk
- Economic risk
- …
Customer risks
- Credit risk
- Contract risk
- Customer satisfaction
- Customer success
- Customer change
Risk in construction projects
- Negative: Risk of deviation
- Positive: Opportunity through deviation
- Coordinated activity to guide and control an organization with regard to risks
-> Goal: Higher reliability in achieving the project goals - Analysis in terms of uncertainties that may lead to negative impacts on the project objectives
-> Goal: Creation of transparency as basis for decision making
External and internal factors throughout the construction phase
Methods in risk assessment process
Choice depends on expected risk environment
- Systematized empirical data
- Retrospective Analyses
- Creativity techniques
- Statistical analysis
Systematized empirical data
- Explicit knowledge
- Known and expected risk horizon
- Checklist for risks
- Damage catalog
-> Categorized damages
Retrospective Analyses
- Damage analysis of projects and risks
- Indicator analysis
-> Change indicators e.g. dealing with changed market prices - Scenario analysis
-> Description of alternative states and derivation of options for action “Learning from the future”
Creativity techniques
- Implicit knowledge
- Inclusion of expert competence
- Brainstorming
-> Identification and Analysis in the team - Delphi method
-> Multi-stage survey method
Statistical analysis
- Standard deviation
-> Interpretation of costing, pricing, etc. - Monte Carlo Simulation
-> Aggregation of individual risks to estimate total risk
-> Scenario planning with distribution function backed scope of risks
Risk Management
- Avoiding
Accepted dangers: - Decreasing
- technical
- organizational
- personal - Transferring
- Danger transfer
- insurance
- contractual clauses - Accepting
Example Risk Management: Economical
Avoiding: no offer in case of low creditworthiness
employer
Transferring: Insurance
against theft
Accepting: Calculation
Transparency as a basis for decision making
- Cost of risks:
Valuation as combination of consequence and probability
of occurrence - Risk management measures:
Assessment of the costs of measures and their impact on risk
-Decision:
Risk measure and imputed approaches
Risk aggregation according to Werner Gleißner
- Cause aggregation :
Risiks with the same cause are bundled and their effect aggregated - Effect aggregation :
For risks with the same impact , the occuring causes ae aggregated - Process flow of risk aggregation takes place at the risk assessment level
Element of costing/pricing
Risk Controlling
- Monitoring the risks
- Monitoring the measures
Monitoring the risks
- Change of risks in the different phases of a project
- Project decisions lead to the emergence of new risk situations, their new individual risks must be identified, analyzed and
managed
-Risks that have not been assessed and classified as serious can suddenly become a threat to success
Monitoring the measures
- Periodic monitoring of the effectiveness of treatment measures
- Adaptation of coping measures in case of changes in risk potentials
- Example: Does adjusting construction sequencing and procedures mitigate schedule risks as identified?
