Risk profiles in project management - Revision history

Tkokotas at 19:19, 20 November 2018

2018-11-20T19:19:35Z

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			''Developed by Camilla Bech''


	In construction projects, there are always uncertainty and unexpected situations that may occur. The future cannot be predicted, but preparations can be made for surprises and it can be developed ability to respond to them when they happen. Risk management is a learning process through time, and the risk management is much more inefficient if the duty has not been good from the beginning of the project. During the beginning, there are often high level of uncertainty, so this part of the project life cycle requires greater effectively risk managing. A good risk management approach requires a systematic methodology, knowledge and experience.		In construction projects, there are always uncertainty and unexpected situations that may occur. The future cannot be predicted, but preparations can be made for surprises and it can be developed ability to respond to them when they happen. Risk management is a learning process through time, and the risk management is much more inefficient if the duty has not been good from the beginning of the project. During the beginning, there are often high level of uncertainty, so this part of the project life cycle requires greater effectively risk managing. A good risk management approach requires a systematic methodology, knowledge and experience.

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2017-06-22T08:55:21Z

Purpose

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	To be able to make a risk profile, it is important to identify the risks. In construction projects, risks can be identified within the following categories; management, technical, schedule, cost, environment, safety and health. An example for a risk within the management category can be that a proper mix of people with the right experience and skills are not assigned to the project, or that a effective risk assessment has not been performed or the results from it is not understood and then acted upon. A risk within technical can be that the technology that is to be used in the project has not been demonstrated in required operating environment. For schedule and cost, an example may be that the schedule or the funding profile do not match the acquisition strategy or planning.		To be able to make a risk profile, it is important to identify the risks. In construction projects, risks can be identified within the following categories; management, technical, schedule, cost, environment, safety and health. An example for a risk within the management category can be that a proper mix of people with the right experience and skills are not assigned to the project, or that an effective risk assessment has not been performed or the results from it is not understood and then acted upon. A risk within technical can be that the technology that is to be used in the project has not been demonstrated in required operating environment. For schedule and cost, an example may be that the schedule or the funding profile do not match the acquisition strategy or planning.
	<ref> SLAC (2009). RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION, RISK MANAGEMENT PLAN. https://www-ssrl.slac.stanford.edu/lcls/reviews/rsb_project/2009_rsb_may18-19/supporting_docs/rsb_risk_management_plan.pdf. (22-06-2017) </ref>		<ref> SLAC (2009). RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION, RISK MANAGEMENT PLAN. https://www-ssrl.slac.stanford.edu/lcls/reviews/rsb_project/2009_rsb_may18-19/supporting_docs/rsb_risk_management_plan.pdf. (22-06-2017) </ref>

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2017-06-22T08:54:41Z

Purpose

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	To be able to make a risk profile, it is important to identify the risks. In construction projects, risks can be identified within the following categories; management, technical, schedule, cost, environment, safety and health. An example for a risk within the management category can be that a proper mix of people with the right experience and skills are not assigned to the project, or that a effective risk assessment has not been ~~preformed~~ or the results from it is not understood and then acted upon. A risk within technical can be that the technology that is to be used in the project has not been demonstrated in required operating environment. For schedule and cost, an example may be that the schedule or the funding profile do not match the acquisition strategy or planning.		To be able to make a risk profile, it is important to identify the risks. In construction projects, risks can be identified within the following categories; management, technical, schedule, cost, environment, safety and health. An example for a risk within the management category can be that a proper mix of people with the right experience and skills are not assigned to the project, or that a effective risk assessment has not been performed or the results from it is not understood and then acted upon. A risk within technical can be that the technology that is to be used in the project has not been demonstrated in required operating environment. For schedule and cost, an example may be that the schedule or the funding profile do not match the acquisition strategy or planning.
	<ref> SLAC (2009). RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION, RISK MANAGEMENT PLAN. https://www-ssrl.slac.stanford.edu/lcls/reviews/rsb_project/2009_rsb_may18-19/supporting_docs/rsb_risk_management_plan.pdf. (22-06-2017) </ref>		<ref> SLAC (2009). RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION, RISK MANAGEMENT PLAN. https://www-ssrl.slac.stanford.edu/lcls/reviews/rsb_project/2009_rsb_may18-19/supporting_docs/rsb_risk_management_plan.pdf. (22-06-2017) </ref>

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2017-06-22T08:42:34Z

Annotated bibliography

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	==Annotated bibliography==		==Annotated bibliography==
	:'''1. Investopedia, “Risk Profile". '''		:'''1. Investopedia, “Risk Profile". '''
	::<u>Summary:</u> This link identifies risk profiles and explains how to minimize them.		::<u>Summary:</u> This link identifies risk profiles and explains how to minimize them. It also explains how a project can chose to accept a risk, and when this is a good idea.
	:'''2. Winch, G. M., 2010, Managing Construction projects, second edition'''		:'''2. Winch, G. M., 2010, Managing Construction projects, second edition'''
	::<u>Summary:</u> Gives an explanation of risk profiling, identifies different types of decisions-makers; risk-neutral, risk averse and risk-seeking. Gives a model of risk propensity. Explains the terms known knowns, known unknowns and unknown unknowns.		::<u>Summary:</u> Gives an explanation of risk profiling, identifies different types of decisions-makers; risk-neutral, risk averse and risk-seeking. Gives a model of risk propensity. Explains the terms known knowns, known unknowns and unknown unknowns.

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2017-06-22T08:41:07Z

Annotated bibliography

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	==Annotated bibliography==		==Annotated bibliography==
	:'''1. Investopedia, “Risk Profile". '''		:'''1. Investopedia, “Risk Profile". '''
	::<u>Summary:</u> This link identifies risk profiles		::<u>Summary:</u> This link identifies risk profiles and explains how to minimize them.
	:'''2. Winch, G. M., 2010, Managing Construction projects, second edition'''		:'''2. Winch, G. M., 2010, Managing Construction projects, second edition'''
	::<u>Summary:</u> Gives an explanation of risk profiling, identifies different types of decisions-makers; risk-neutral, risk averse and risk-seeking. Gives a model of risk propensity. Explains the terms known knowns, known unknowns and unknown unknowns.		::<u>Summary:</u> Gives an explanation of risk profiling, identifies different types of decisions-makers; risk-neutral, risk averse and risk-seeking. Gives a model of risk propensity. Explains the terms known knowns, known unknowns and unknown unknowns.

S161546: /* Business-state representation of risks. */

2017-06-22T08:34:04Z

Business-state representation of risks.

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	===Business-state representation of risks.===		===Business-state representation of risks.===

	The risk profile should provide a current-state analysis of identified risks that have a high probability of occurrence and would have a big effect on the business if they were to occur. It should also include the organizations risk management expectations and requirements, their views on risk and security, current vulnerability and threat analysis and expectations from external parties. This part of the profile should have a language understood by both technology-and business-oriented staff. <ref name="Isaca"/>		The risk profile should provide a current-state analysis of identified risks that have a high probability of occurrence and would have a big effect on the business if they were to occur. It should also include the organizations risk management expectations and requirements, their views on risk and security, current vulnerability and threat analysis and expectations from external parties. This part of the profile should have a language understood by both technology- and business-oriented staff. <ref name="Isaca"/>

	[[File:CMM.jpg\|380px\|thumb\|right\|Figure 2: CMM (click to zoom)]]		[[File:CMM.jpg\|380px\|thumb\|right\|Figure 2: CMM (click to zoom)]]


	===Future-state objectives and requirements.===		===Future-state objectives and requirements.===

S161546: /* Annotated bibliography */

2017-06-22T08:31:28Z

Annotated bibliography

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	::<u>Summary:</u> This link identifies risk profiles		::<u>Summary:</u> This link identifies risk profiles
	:'''2. Winch, G. M., 2010, Managing Construction projects, second edition'''		:'''2. Winch, G. M., 2010, Managing Construction projects, second edition'''
	::<u>Summary:</u> Gives an explanation of risk profiling, identifies different types of decisions-makers; risk-neutral, risk averse and risk-seeking. Gives a model of risk propensity.		::<u>Summary:</u> Gives an explanation of risk profiling, identifies different types of decisions-makers; risk-neutral, risk averse and risk-seeking. Gives a model of risk propensity. Explains the terms known knowns, known unknowns and unknown unknowns.
	:'''3. John P. Pironti, Isaca, 2013 “Key Elements of an Information Risk Profile". '''		:'''3. John P. Pironti, Isaca, 2013 “Key Elements of an Information Risk Profile". '''
	::<u>Summary:</u> This link shows the structure of a risk profile, including points that must be investigated to achieve a full risk profile; Guiding principles and strategic directives, Information risk profile development, Business-state representation of risks, Future-state objectives and requirements, Key business processes and capabilities, Key data elements, Identification of data owners and stakeholders, Identification of business value, Data classification schema and Risk levels and categories.		::<u>Summary:</u> This link shows the structure of a risk profile, including points that must be investigated to achieve a full risk profile; Guiding principles and strategic directives, Information risk profile development, Business-state representation of risks, Future-state objectives and requirements, Key business processes and capabilities, Key data elements, Identification of data owners and stakeholders, Identification of business value, Data classification schema and Risk levels and categories.
	:'''4. Slac, 2009 “RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION. RISK MANAGEMENT PLAN". '''		:'''4. Slac, 2009 “RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION. RISK MANAGEMENT PLAN". '''
	::<u>Summary:</u> This link shows the different categories within risk management in a construction project. It gives some examples within the different categories.		::<u>Summary:</u> This link shows the different categories within risk management in a construction project. It gives some examples within the different categories.

S161546: /* Annotated bibliography */

2017-06-22T08:30:19Z

Annotated bibliography

← Older revision		Revision as of 08:30, 22 June 2017
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	::<u>Summary:</u> This link identifies risk profiles		::<u>Summary:</u> This link identifies risk profiles
	:'''2. Winch, G. M., 2010, Managing Construction projects, second edition'''		:'''2. Winch, G. M., 2010, Managing Construction projects, second edition'''
	::<u>Summary:</u> Gives an explanation of risk profiling, identifies different types of decisions-makers; risk-neutral, risk averse and risk-seeking. Gives a model of risk propensity.		::<u>Summary:</u> Gives an explanation of risk profiling, identifies different types of decisions-makers; risk-neutral, risk averse and risk-seeking. Gives a model of risk propensity.
	:'''3. John P. Pironti, Isaca, 2013 “Key Elements of an Information Risk Profile". '''		:'''3. John P. Pironti, Isaca, 2013 “Key Elements of an Information Risk Profile". '''
	::<u>Summary:</u> This link shows the structure of a risk profile.		::<u>Summary:</u> This link shows the structure of a risk profile, including points that must be investigated to achieve a full risk profile; Guiding principles and strategic directives, Information risk profile development, Business-state representation of risks, Future-state objectives and requirements, Key business processes and capabilities, Key data elements, Identification of data owners and stakeholders, Identification of business value, Data classification schema and Risk levels and categories.
	Guiding principles and strategic directives.
	~~2.2~~ Information risk profile development.
	~~2.3~~ Business-state representation of risks.
	~~2.4~~ Future-state objectives and requirements.
	~~2.5~~ Key business processes and capabilities.
	~~2.6~~ Key data elements.
	~~2.7~~ Identification of data owners and stakeholders.
	~~2.8~~ Identification of business value.
	~~2.9~~ Data classification schema.
	~~2.10~~ Risk levels and categories.
	:'''4. Slac, 2009 “RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION. RISK MANAGEMENT PLAN". '''		:'''4. Slac, 2009 “RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION. RISK MANAGEMENT PLAN". '''
	::<u>Summary:</u> This link shows the different categories within risk management in a construction project. It gives some examples within the different categories.		::<u>Summary:</u> This link shows the different categories within risk management in a construction project. It gives some examples within the different categories.

S161546: /* Annotated bibliography */

2017-06-22T08:28:21Z

Annotated bibliography

@@ Line 131: / Line 131: @@
 :'''3. John P. Pironti, Isaca, 2013 “Key Elements of an Information Risk Profile". '''
 ::<u>Summary:</u> This link shows the structure of a risk profile.
 :'''4. Slac, 2009 “RESEARCH SUPPORT BUILDING AND INFRASTRUCTURE MODERNIZATION. RISK MANAGEMENT PLAN". '''
 ::<u>Summary:</u> This link shows the different categories within risk management in a construction project. It gives some examples within the different categories.

S161546: /* Purpose */

2017-06-22T08:22:57Z

Purpose

← Older revision		Revision as of 08:22, 22 June 2017
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	[[File:Risk.jpg\|400px\|thumb\|left\|Figure 1: Risk propensity (click to zoom)]]		[[File:Risk.jpg\|400px\|thumb\|left\|Figure 1: Risk propensity (click to zoom)]]

	A risk profile can be expressed in a graph as shown in figure 1. The x-axis shows a downside risk event, this can for example be a loss due to an accident. The y-axis shows an upside risk event, this can for example be a profit on a contract. Figure 1 represent a model of risk propensity for known knowns. Known knowns is a cognitive condition of risk, where the risk source is identified and the occurrence of a risk event can be assigned a probability given the risk source. A risk profile represented by a graph as in figure 1 can also be given for known unknowns, which is a cognitive condition of risk where the risk source is identified but the probability of the occurrence of the risk event cannot be assigned. ~~For unknowns~~ unknowns, cognitive condition of uncertainty where the risk source is not identified, and therefore the risk event cannot be known, cannot be drawn in a model of risk propensity. This is simply because decision-makers cannot have an appetite for something they do not know about. <ref name="Winch">Winch, G (2010). Managing Construction projects, second edition. (22-06-2017)</ref>		A risk profile can be expressed in a graph as shown in figure 1. The x-axis shows a downside risk event, this can for example be a loss due to an accident. The y-axis shows an upside risk event, this can for example be a profit on a contract. Figure 1 represent a model of risk propensity for known knowns. Known knowns is a cognitive condition of risk, where the risk source is identified and the occurrence of a risk event can be assigned a probability given the risk source. A risk profile represented by a graph as in figure 1 can also be given for known unknowns, which is a cognitive condition of risk where the risk source is identified but the probability of the occurrence of the risk event cannot be assigned. Unknowns unknowns, cognitive condition of uncertainty where the risk source is not identified, and therefore the risk event cannot be known, cannot be drawn in a model of risk propensity. This is simply because decision-makers cannot have an appetite for something they do not know about. <ref name="Winch">Winch, G (2010). Managing Construction projects, second edition. (22-06-2017)</ref>

	Usually, a greater risk for an investment is associated with a greater return. That is why some decision-makers have a larger “appetite” for risks that they are willing to accept, looking for a greater return. This type of behaviour from a decision-maker can be divided into three main groups; risk-neutral, risk averse and risk-seeking. Risk-neutral is represented in figure 1 as the straight line at 45 degrees, here the decision-maker are indifferent between the chances of reward event and risk event occurring; p(y)=p(x). Risk averse is represented as the upper line in figure 1. Here, the decision-maker’s willingness to invest decreases rapidly as the probability of a risk event increases; p(y)>p(x). Risk averse decision-makers do not make the investment, or they are not prepared to pay additional to reduce either the magnitude of losses associated with the downside risk event or the probability of it occurring.		Usually, a greater risk for an investment is associated with a greater return. That is why some decision-makers have a larger “appetite” for risks that they are willing to accept, looking for a greater return. This type of behaviour from a decision-maker can be divided into three main groups; risk-neutral, risk averse and risk-seeking. Risk-neutral is represented in figure 1 as the straight line at 45 degrees, here the decision-maker are indifferent between the chances of reward event and risk event occurring; p(y)=p(x). Risk averse is represented as the upper line in figure 1. Here, the decision-maker’s willingness to invest decreases rapidly as the probability of a risk event increases; p(y)>p(x). Risk averse decision-makers do not make the investment, or they are not prepared to pay additional to reduce either the magnitude of losses associated with the downside risk event or the probability of it occurring.