Table of Contents

Question 1
Appraise the benefits of project risk management. Provide a critical discussion of
each benefit appraised to the case study project.

Question 2
According to Gido and Clement (2015:287), another approach to identify risks of a
project is to establish risk categories. Identify and appraise the risk categories.
Thereafter, identify and critically discuss the risks associated with each category of
the case study project.

Question 3
Use the risks identified in question 2 and compile a risk response plan for the case
study project. Record a plan for at least TEN (10) identified risks. A comprehensive
discussion is required for each risk.

Question 4
Use the common project risk response strategies and appraise the risks identified in
question 3. Explain in detail your response for each risk.

Question 1
Introduction
The BP oil spill was a catastrophic environmental disaster that occurred in 2010 when
the Deepwater Horizon oil rig exploded and sank in the Gulf of Mexico. Eleven
platform workers died, and an estimated 4 million barrels of oil spilled into the Gulf,
making it the worst environmental disaster in US history. The project risk assessment
of the BP oil spill focused on three factors: likelihood, damages, and detection.
Serious risks were those that had a high likelihood, could cause considerable
damages, and were difficult to detect. The BP oil spill was a serious risk because BP
and the industry had not kept up with the way they assessed the risk of catastrophic
damages from spills. The safety culture of BP and its contractors had flaws, and they
suffered from a culture of denial that prevented them from preventing such disasters.
The detection of problems was made much more difficult due to overconfidence and
incompetence. The BP oil spill disaster shared a management culture similar to the
one that contributed to the Columbia shuttle disaster in 2003. Preparing a risk
management plan requires project managers to think objectively about what could go
wrong and make tough trade-offs between time, money, resources, and risk.

Project risk management (PRM) is a hot topic in academic and industrial circles on a
national and worldwide scale. PRM is one of the nine key knowledge areas of project
management in the PMBOK (PMI, 2004, p.237), with the goal of "increasing the
probability and impact of positive events while decreasing the probability and impact
of negative events." Other key frameworks and best practices for project management,
such as the Association of Project Management, British Standards Institution, and
Office of Government Commerce, regard it as an essential component of project
management (Kutsch & Hall, 2010). Crawford, Pollack, and England (2006) state that
it is one of the few areas in the project management literature that has continuously
gotten significant attention in the leading project management publications.
As a result, the research topic has grown to be very broad, and many diverse issues
have been clarified. Managerial behavior (Kutsch & Hall, 2010); inclusion of
opportunities (Hillson, 2002); estimate precision (Elmaghraby, 2005); portfolio risk
management (Teller, 2013); and cross-cultural views and multi-disciplinary
methodologies (Goodwin & Strang, 2012) are examples.

According to Hällgren (2012, p. 804), the majority of contemporary research in

project management is focused on "gap-spotting," which has been proven to impede
project development because long-held, and often erroneous, assumptions are rarely
challenged. The authors acknowledge this point, leading to the paper's foundation on
the work of Raz and Michael (2001), who performed a questionnaire among the
Israeli software and high-technology industries (SHTI). In this study, we collected
data from the Norwegian oil and gas industry (OGI) and investigated several tools to
determine which tools are most likely to be related with successful project
management and efficient project risk management.

In a research looking into the use and benefits of PRM tools, Raz and Michael (2001)
identified the most commonly utilized tools: those linked with successful project
management in general and effective PRM in particular. In their study, they defined
tool broadly (Raz & Michael, 2001, p.10), "including not only special purpose tools,
but also methods, practices, and processes that are likely to contribute to the
management of risks in projects." Camp (1989)'s benchmarking approach motivated
their research. Their cross-sectional study found a Person correlation of 0.36 at a level
of significance of 0.0008 between average tool score (ATS) and project management
performance (PMP). This positive relationship was understood to mean that
"respondents who come from environments conducive to better project management
performance are more likely to assign higher scores to project risk management tools"
(Raz & Michael, 2001, p.13).

Project risk management is a process that involves identifying, assessing, and

mitigating risks that may affect the successful completion of a project. There are
several benefits of project risk management, including:

Improved project outcomes

By identifying and addressing potential risks early in the project, project managers
can ensure that the project stays on track and achieves its goals. In the case study
project, risk management can help ensure that the project is completed within the
timeline and budget, and that the final product meets the client's expectations.

Better decision making

Risk management provides project managers with a systematic approach to making

decisions. By considering the potential risks associated with each decision, project
managers can make informed decisions that minimize risk and maximize project
success. In the case study project, risk management can help the project team make
decisions about project scope, schedule, and budget, ensuring that the project stays on
track.

Increased stakeholder confidence

Effective risk management can increase stakeholder confidence in the project's

success. By demonstrating a proactive approach to risk management, project
managers can reassure stakeholders that the project is under control and will be
completed successfully. In the case study project, risk management can help the
project team communicate with stakeholders about potential risks and the steps being
taken to mitigate them.

Improved communication

Risk management encourages open communication among project team members,

stakeholders, and other project participants. By sharing information about potential
risks, project managers can ensure that everyone is on the same page and working
together to achieve project success. In the case study project, risk management can
help the project team communicate about potential risks and the steps being taken to
mitigate them, ensuring that everyone is informed and engaged in the project.

Cost savings

Effective risk management can lead to cost savings by identifying potential risks and
taking proactive steps to mitigate them. By avoiding costly delays, rework, and other
project setbacks, project managers can ensure that the project stays within budget and
delivers value to the client. In the case study project, risk management can help the
project team identify potential cost overruns and take steps to avoid them.

In conclusion, project risk management provides numerous benefits to projects,

including improved outcomes, better decision making, increased stakeholder
confidence, improved communication, and cost savings. In the case study project,
these benefits can help ensure that the project is completed successfully and delivers
value to the client.
Question 2

Introduction

Risk is defined as any uncertainty that can prevent an organization, individual, or

business from accomplishing its goals. It includes all events or conditions that
endanger the normal running of a business or organization. Such events or
circumstances may arise from within the organization or from outside sources. It is
always difficult for a company to manage all risks because it is nearly impossible to
understand where risk may project from. Risk categories are the classifications of
hazards based on various activities carried out by an organization or business. Risk
categorization is a difficult procedure that involves separating hazards of one type
from others in order to provide an easy approach to determine where the most serious
risks are.

The discovery, analysis, mitigation, and planning for potential hazards that may
disrupt routine organizational or company operations is referred to as risk
management. A risk management program is a business model that examines the
relationship between risk and its subsequent impact on an organization. Furthermore,
risk management should be comprehensive enough to predict the probability of risk
occurrence and build out a mitigation plan to prevent the risk from occurring or
minimize the consequences that it may have on an organization or business.
Understanding the many types of risks and their potential consequences (risk
classification) is therefore critical to the complex risk management program because it
allows firms to stay risk tolerant and cushion themselves from potential loss.

Risk management entails categorizing distinct hazards in order to facilitate the

implementation of mitigation plans. distinct approaches are used by different
organizations to score distinct risk categories. These methodologies are based on risk
occurrence inventories, risk impact statistics, impact matrices, and root cause analysis.
An organization may face a number of different types of hazards. Financial, legal,
reputational, security, human, and operational risks are among them.

Internal risks are internal dangers and causes that arise within an organization and can
be handled effectively by the organization. Technological, human resource, and
physical risks are examples of internal risks. These risks are eliminated via a set of
internal controls that businesses use to reduce hazards within the organization and
ensure the smooth functioning of activities.

External risks arise from outside the organization and, unlike internal risks, are not
under the organization's control. Natural hazards, political risks, and legislative risks
are among them.

Economic risks are those that have a negative impact on a country's economic
stability and thus have a negative impact on business/organizational operations.
Inflation, deflation, and more government taxation are examples.

The BP Deepwater Horizon oil spill, which occurred in April 2010, was the worst
environmental disaster in US history, with an estimated 4 million barrels of oil
spilling into the Gulf of Mexico. The spill occurred when the oil rig caught fire and
collapsed, causing the drill pipe to fracture and oil to start gushing through the broken
pipe. BP attempted to close the relief valves, but the flow continued, and the company
minimized the extent of the problem at first.

The risk assessment of the BP oil spill focused on three factors: likelihood, damages,
and detection. A serious risk would be one whose likelihood is high, damages could
be considerable, and it would be difficult to detect the early stages of an incident.
However, the oil industry has not kept up with the way it assesses the risk of
catastrophic damages from spills. The safety culture is flawed, and the industry
suffers from a culture of denial, accepting that their industry is risky and accidents are
inevitable, thereby denying their part in preventing such disasters.

The challenge of detection was raised as BP ignored the signs that something was
wrong through overconfidence and incompetence, making it much more difficult to
detect problems and properly manage and control the project. The Columbia shuttle
disaster in 2003 shared a management culture not unlike the one that contributed to
the BP oil spill disaster. People did not spend enough time thinking about what could
go wrong, and both events highlighted the importance of risk management and the
need to make tough trade-offs between time, money, resources, and risk.
Conclusion

In conclusion, the BP oil spill was a tragic event that highlighted the importance of
proper risk assessment and management. It demonstrated the need for companies to
take a proactive approach to risk management, constantly assessing the likelihood of
risks, the potential damages, and the difficulty of detecting problems. It also
highlighted the need to create a safety culture that encourages people to think about
what could go wrong and take proactive steps to prevent disasters from occurring.
Question 3

Introduction

In business operations, risk response is an essential component of risk management

processes. This also applies to risk management conducted by participants in
investment and construction processes, such as construction and assembly firms. As a
result, organizations may successfully limit the negative repercussions of risk. As a
result, contractors must be aware of numerous approaches and practical ways of
responding to hazards when executing commercial activities. The hazards of
investment projects differ from one another. This is largely attributable to the unique
nature of a certain project and the specific circumstances under which this investment
project is to be carried out. Because of these factors, risks must be treated differently
each time they occur, as no two investment projects are completely identical.

Risk response planning is an essential part of project management as it helps in

mitigating the potential negative impacts that may affect the project's success. In the
case study project, this essay identified several risks, and below is a risk response plan
for at least ten of the identified risks:

Risk: Delays in obtaining necessary permits and approvals.

Mitigation: The project team will work with the relevant authorities to expedite the
approval process. The project manager will also allocate additional resources to help
expedite the approval process. The project schedule will be adjusted to allow for
potential delays, and the project team will work closely with the relevant authorities to
ensure all requirements are met.

Risk: Change in scope due to stakeholder requirements.

Mitigation: The project team will review the requirements with the stakeholders and
evaluate the potential impact of any changes. Any changes to the scope will be
documented and approved by the project sponsor before being implemented. The
project team will also work to manage stakeholder expectations to minimize changes
to the scope.
Risk: Inaccurate cost estimates.

Mitigation: The project team will engage subject matter experts to help develop
accurate cost estimates. The team will also review historical data and benchmark
against similar projects to ensure that the estimates are reasonable. The project
manager will track and report any cost variances to the project sponsor for review and
approval.

Risk: Lack of experienced project team members.

Mitigation: The project team will provide training and mentorship to less experienced
team members to ensure they are equipped with the necessary skills to deliver their
tasks. The project manager will also engage consultants with relevant experience to
augment the team's skills.

Risk: Adverse weather conditions.

Mitigation: The project team will review the weather forecast regularly and adjust the
schedule accordingly. The project manager will also allocate additional resources to
help expedite activities that may be affected by adverse weather conditions.

Risk: Insufficient budget.

Mitigation: The project team will review the project budget regularly to identify
potential cost savings. The team will also work to optimize resource utilization and
identify any cost overruns early to avoid compromising the project's success. The
project sponsor will be kept informed of any budgetary issues and approve any
changes to the budget.

Risk: Equipment failure.

Mitigation: The project team will work with equipment vendors to ensure that all
equipment is properly maintained and serviced. The team will also develop a
contingency plan in case of equipment failure, which may include renting or leasing
alternative equipment to keep the project on track.

Risk: Lack of communication with stakeholders.

Mitigation: The project team will establish clear communication channels with
stakeholders and provide regular updates on the project's progress. The project
manager will also ensure that all stakeholders are informed of any changes or issues
that may arise.

Risk: Inadequate risk management.

Mitigation: The project team will develop a comprehensive risk management plan that
includes identifying, assessing, and monitoring risks throughout the project's
lifecycle. The team will also establish contingency plans to address potential risks and
ensure that all stakeholders are informed of any potential impacts.

Risk: Poor quality deliverables.

Mitigation: The project team will establish quality standards and processes to ensure
that all deliverables meet the required quality criteria. The team will also conduct
regular quality reviews and testing to identify and address any quality issues early.

Conclusion

In conclusion, developing a risk response plan is critical to the success of any project.
It helps in mitigating potential risks that may affect the project's success. The above
risk response plan provides a comprehensive approach to addressing ten of the
identified risks in the case study project. The project team should continuously review
and update the risk response plan as necessary to ensure that it remains relevant
throughout the project's lifecycle.
Question 4

Introduction

Risk response strategies are implemented to mitigate, transfer, avoid, or accept the
risks identified in a project. Here are the risk response strategies that are commonly
used in project management:

Avoid: In this strategy, the project team takes actions to eliminate the risk altogether.
This is done by either changing the project plan or removing certain aspects of the
project.

Mitigate: This strategy involves taking actions to reduce the likelihood or impact of
the risk.

Transfer: In this strategy, the risk is transferred to another party, such as an insurance
company or a subcontractor.

Accept: This strategy involves accepting the risk and developing contingency plans to
manage the consequences if it occurs.

Technical risk: The risk of technology failing during the project can be mitigated by
implementing thorough testing and quality assurance procedures to ensure that the
technology is reliable. Additionally, contingency plans can be developed in case of
technology failure, including having backup systems in place.

Schedule risk: The risk of project delays due to scheduling issues can be mitigated by
developing a detailed project schedule with clear timelines and milestones,
monitoring progress closely, and adjusting the schedule as necessary. Additionally,
contingency plans can be developed in case of schedule delays, including allocating
additional resources or revising the project scope.

Cost risk: The risk of project cost overruns can be mitigated by developing a detailed
budget and monitoring project expenses closely. Additionally, contingency plans can
be developed in case of cost overruns, including revising the project scope or
obtaining additional funding.
Stakeholder risk: The risk of stakeholders not being satisfied with the project
outcomes can be mitigated by engaging with stakeholders throughout the project,
gathering feedback and addressing concerns promptly. Additionally, contingency
plans can be developed in case of stakeholder dissatisfaction, including revising the
project scope or offering additional incentives.

Resource risk: The risk of not having enough resources to complete the project can be
mitigated by developing a detailed resource plan that identifies the necessary
resources and allocating them accordingly. Additionally, contingency plans can be
developed in case of resource shortages, including revising the project schedule or
outsourcing certain tasks.

Legal risk: The risk of legal issues arising during the project can be mitigated by
conducting thorough legal research and ensuring compliance with relevant laws and
regulations. Additionally, contingency plans can be developed in case of legal issues,
including obtaining legal advice or revising the project plan.

Communication risk: The risk of miscommunication or misunderstandings between

project team members can be mitigated by implementing clear communication
protocols and ensuring that all team members are aware of their roles and
responsibilities. Additionally, contingency plans can be developed in case of
communication breakdowns, including revising the project plan or scheduling
additional team meetings.

Quality risk: The risk of project outcomes not meeting quality standards can be
mitigated by implementing thorough quality assurance procedures, such as conducting
regular audits and inspections. Additionally, contingency plans can be developed in
case of quality issues, including revising the project plan or implementing additional
quality controls.

Scope risk: The risk of project scope creep can be mitigated by developing a detailed
project scope statement and monitoring project progress closely to ensure that the
project stays on track. Additionally, contingency plans can be developed in case of
scope changes, including revising the project schedule or budget.
Environmental risk: The risk of environmental issues arising during the project can be
mitigated by conducting thorough environmental impact assessments and ensuring
compliance with relevant regulations. Additionally, contingency plans can be
developed in case of environmental issues, including revising the project plan or
obtaining additional resources.

Conclusion

In conclusion, by identifying and implementing risk response strategies, project

managers can minimize the impact of risks on and increase the likelihood of project
success. It is important for project teams to continuously monitor risks throughout the
project lifecycle and adjust their risk response strategies as necessary. Effective risk
management is a critical component of successful project management and can help
organizations achieve their project goals while minimizing potential negative
consequences.
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