Project
Group 5
Strategic Global Sourcing
Best Practices.
Sollish & Semanik (2010)
Chapter 11: Risk
Chapter Summary
Mariia Biletska, Pinja Kartimo,
Alberto Pinto, Juho Tikkanen
Risk definitions
Simple
Risk is the chance of something
happening that will have an adverse
impact on our objectives
Complex
Risk is a measure of the inability to
achieve program objectives within
Comparison
defined cost, schedule, and
performance constraints
Understanding Risks
Supplier Selection
Contractual Uncertainty
Costs and Resource Allocation
Ongoing Performance
Business Decision-Making
Risk Management Processes
Risk Management
Risk management aims at identifying,
controlling, and assessing risks, which may
occur due to decision making as well as
operational factors. The main objective is to
evaluate, reduce, or eliminate unfavourable
outcomes.
Common Risk Categories
Financial
Human Behaviour
Project Organization
Sociopolitical
Scope or Schedule
Legal
Environmental
Internal Risks
Risks that you can control or estimate
External Risks
Risks that you cannot control as a manager, these risks can
be governmental actions, weather delays etc
Ways to identify risks
Expert Knowledge
Historical Information
Brainstorming and Delphi Method
Simulations
Checklists
Risk Assessment
Assessment Process
Identification of Risks
Complexity
Simplification
Risk Identification Technique
Common Practice
Force-Field Analysis
Evaluating Risks
Methodology
Undesired Events
Risk Examination
Qualitative Assessment
Probability Classification
Prioritization
Risk control methods
Identifying triggers
Monitoring the risk
Risk control methods
Avoidance
Contingency plans
Acceptance
Risk Evaluation
Transfer
Risk control methods
Mitigation
Lessening the risk through the usage of alternative methods that you
or the partner have more experience in
(Risk exposure before reduction) – (Risk exposure after reduction)
Cost of risk reduction
Q&A Session
Question 1
What type of risks could occur for a construction company?
Detective Control
Q&A Session
Answer 1
Financial risks: Due to unexpected costs, supplier's bankruptcy, etc.
Scope or Schedule: Threatening the project's timeline causing cost
implications. Could be caused by natural disaster, poor project definition or
noncompliance issues. E.g. a delivery of a crane is late due to a storm
causing delay at the construction site.
Project organization risks: Occurs when the necessary people or equipment
are not in the right place at the right time.
Human behaviour risks: May threaten the project or activity due to illness,
injury, or departure of personnel.
Q&A Session
Question 2
How does the Delphi method differ from brainstorming
when identifying risks?
Detective Control
Q&A Session
Answer 2
The Delphi method leverages collective judgment from specialists
when objective data is lacking,
while brainstorming involves generating a comprehensive list of
potential risk events and sources through group discussions.
Q&A Session
Question 3
Explain what is "Risk leverage" in the context of mitigation,
and how does it relate to the trade-off involved in
lessening risks through alternative methods?
Detective Control
Q&A Session
Answer 3
Risk leverage is calculated as the difference in risk exposure before
and after reduction, divided by the cost of risk reduction. It represents
the efficiency of risk reduction efforts.
The trade-off involves considering if the cost of reducing a particular
risk is justified by the decrease in risk exposure, acknowledging that
mitigating one risk may introduce others.
Project
Group 5
Thank You
For Your Attention