Tuesday, October 13, 2009

Risk management in a business change environment

1:16 AM Posted by: Slamun Atlanta 0 comments

There are many good reference texts on risk management; here are quotes from a few good examples:
■ ‘Risks are present in every business activity we undertake’ (OGC, 2007b).
■ ‘Executives ignoring the threats from their competitors run the risk of their organization lagging behind and losing market share, whilst the organizations who embrace risk, often gain advantage and capitalize on opportunities’ (IoD, 2006).
■ The objective of risk management is ‘To add maximum sustainable value to all the activities in the organization. It marshals the understanding of the potential upside and downside of all those factors which can affect the organization. It increases the probability of success, and reduces the probability of failure and the uncertainty of achieving the organization’s overall objectives’ (IRM, AIRMIC and ALARM, 2002).
So, is it better to take on risk or avoid it? The benefits of managing risk should be obvious, but while there is much written on how to manage business or strategic risk and programme or project risk there is little text available on how to manage risks within a business change environment. To put this into context, consider Outperform’s business change wheel in Figure 1.3.1. If you start at the top of the figure, and set the organization off in the right direction, you will be setting the strategy. At the next level, you will: identify the changes necessary to meet the business strategy; and track and monitor the benefits accrued by the successful delivery of programmes and projects that were developed to meet the key performance indicators set by the strategy. This chapter is focused on how to manage risks at this level, called ‘right projects’.

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