The paper "How Managing Project Risk Relates to Managing Organisational Risk" is a wonderful example of a Management Case Study. A risk is a situation that exposes a person or a place to a probable threat or danger. The situation can be either foreseeable or unforeseeable. Risk management involves the deliberate and proactive process of identifying, analyzing, and responding to situations that expose the corporate entity to losses. Effectiveness in risk management starts with identification and evaluation risks. The two steps involve spotting the risks and extent of damage those risks are likely to cause in an organization.
After proper evaluation, the organization is able to devise mitigating measures that would respond effectively in the event of a risk. Where these risks are avoidable, the management examines them and puts measures in place to ensure they do not affect the operations of the firm. However, most uncertainties are unavoidable and call for proper risk management strategies to ensure the entity operates uninterrupted when they arise. The main task of the management, in this case, is to ensure the organization has the required capacity to deal with risks effectively. Today’ s environment presents various types of risks, which have a significant effect on organizational operations and sustainability especially if the management fails to address issues competently and effectively.
These types include financial, human, operational, technical, physical, and reputational. All these risks are potential threats to the profitability of the company. They appear in different forms to different firms and at different times. There are risks that are more likely to affect a certain firm than the other, depending on the nature of operations among other factors.
For example, the firm with hi-tech systems and computerized operations are likely to experience technological and operational risks than firms whose work is 90 percent manual. Technological risk includes accidental loss of data or system collapse without adequate backup. Theft or destruction of computers and system hacking contribute to operational risk since these events affect the efficient operation of company affairs. Risk management is the core activity that determines the successful completion of specific projects as well as that of the entire organization. Managing risks at the project level requires a competent team of risk personnel.
Risk experts are able to identify situations that are more likely to affect the company operations hence allocating adequate resources to counter the negative impact. Failure to manage risks at the project level has far-reaching effects on risk management at the organizational level. In other words, poor risk management in projects translates to the underachievement of the project goals and overall objective of the entire entity. At this point, it is clear that the level of risk management at the project level has a direct effect on risk management at the organization.
Therefore, the emphasis the management puts in managing project risks should match the one put in managing those affecting the entire firm. Managing project risks is a critical aspect that determines efficient operations and successful completion of tasks. The manager needs to apply risk management techniques in the same way he would while managing the entire organization. Many large organizations have projects as an integral part of their business, which usually has a particular risk level. Projects fail to realise the intended goal due to lack of proactive measures of managing risks.
To manage project risks, activities involving the identification of impending risks, assessment, and analysis of these risks, and monitoring them should be embraced throughout the project lifespan. Every project faces a unique risk depending on the specific nature of activities conducted and the environment from which they operate. In this case, risk management approaches differ due to the uniqueness of risks. The process that involves identifying, assessing, analyzing, and monitoring risks is therefore critical in ensuring projects adopt suitable and relevant strategies for managing risks.
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