Determinants and Value of Risk Management †MyAssignmenthelp.com

Question: Discuss about the Determinants and Value of Risk Management. Answer: Introduction: According to McNeil, Frey and Embrechts (2015), risk culture is one of the system of values as well as behaviors which is mainly present within an organization for shaping the decisions of management as well as employees. One most important element of risk culture is development of proper understanding by the organization for its business related purpose (Burger and Gochfeld 2015). It is identified that risk culture is one of the glue that generally binds various elements of risk management infrastructure as it generally reflects shared goals, practices as well as reinforcement mechanism for properly embedding risk into an organizations decision-making processes As organizations needs to undertake some of the risks in order to achieve its goals as well as objectives thus, the existing risk culture of an organization either make the project successful or failure (DeAngelo and Stulz 2015). It is found that risk culture mainly affects the capability to take proper strategic decisions within the project in order to deliver the outcome of the project on time. Organization that have proper risk culture will generally found themselves allowing various activities which is totally considered as odds with appropriate stated procedures as well as policies. It is stated by Cole, Gine and Vickery (2017) that inappropriate risk culture not only highlights that the project related activities will be mainly undertaken only by few individuals but it also reflects that the activities of the project will be ignored by other individuals. If the organization does not have proper risk culture and if the stakeholder does not understand the risk then it would negatively affect the progress of the project. Therefore, it is very much necessary for the project stakeholders to understand as well as address the risk culture of the organization properly (Bromiley et al. 2015). In order to minimize the impact of the risk couture on the project it is very much necessary for the project board to set proper responsibilities as well as communication skills in order to enforce the risk culture of the organization that consequently influences, directs as well as align with the objectives as well as strategies of the project. The organization that have proper risk culture generally sets more risk related strategies in order to avoid as well as minimize any type of risk that would impact the project negatively (DeAngelo and Stulz 2014).It is found that positive risk culture assists in allocating resources in order to monitor various ty pes of risks and putting it in proper system in order to escalate information for judging the action place by the people. Therefore, proper risk culture within the organization does not assist in creating any type of negative impact on the results of the project. In order to resolve issues related with risk culture, it is very much necessary for the organizations to identify the risk as well as opportunities of the organization. In order to implement proper positive risk culture within an organization in order to avoid project failures it is necessary to have proper communication (Rampini and Viswanathan 2014) In addition to this, successful risk culture will be adopted within the organization by utilizing proper leadership tacking, appropriate processes as well as toolsets. In addition to this, proper formal procedure must be used in order to consider risks while making important decisions for the project. This step would be quite advantageous for making the project successful. Recommendations in order to integrate project risk management with the organizational culture The recommendations that are necessary for integrating risk management within the culture of the organization mainly include: Understood needs of project risk management before integration within organizational culture: Every organization has understood the requirement of risk management or risk mitigation plan within the project. However, some of the organizations are generally utilizing bureaucratic arrangements that assist in avoiding various types of regulatory penalties but keep the organization vulnerable to various types of project related risks as well as challenges. Therefore, it is very much important for an organization to integrate project risk management with the culture of the organization in order to get appropriate idea about management of inherent risks as well as for procedures that generally eliminates the exposure of various types of unnecessary risks. Proper risk management plan generally help the organization to integrate awareness within the culture of the organization Manage control as well as oversee different types of risks: In order to inherent risk management strategies, the organization it is very much necessary to manage, control as well as oversee various types of risks as well as challenges. It is found that effective integration of risk management strategies within the culture of the organization helps in making real choices on day-to-day basis. As the organizational people make significant risk related decisions then the approach of the company to integrate the risk management strategy within the organization is considered advantageous. Effective risk management integration holistically helps in addressing the elements of the organization including its culture, methodology, process, governance as well as tools for achieving success. Creating risk culture awareness: It is found that presently, organization does not have proper standardized management as well as reporting for various operational or project related risks thus they generally end up with poor transparency as well as various types of uninformed decisions. Many of the organization generally have improper compliance with the various operation related risks. However, in spite of addressing various types of reports, compliance as well as governance tactically, it is quite important to analyze the problems that generally occur due to lack of awareness within the culture. With appropriate realization the company can be able to promote proper sound culture that helps in supporting, promoting as well as motivates various cultures as well as polices. Overcome the challenges: It is identified that for overcoming the issues as well as challenges, it is very much necessary to lay a proper solid foundation that generally needs important top-down direction as well as time commitment. It is found that considerable cross-functional coordination within the various siloed organization is quite difficult to achieve due to the existing internal politics. In addition to this, it is identified that by defining the culture program too narrowly the objectives of risk management can be properly achieved. Measure the impact of the management: After integration of risk management within the organization, it is very much important to measure the impact of the program as well as documentation tracking culture. It is also necessary for the organization to properly measure each and every aspect of risk cultural program. Maintain proper risk environment within the organization: After integration of the risk culture, it is very much important to maintain proper risk environment within the organization. It is found that proper integration of risk culture within the organization assists in making risk enabled decisions as well as processes within the project. After embedding the changes, it is necessary to maintain it properly for achieving some positive results. Creative risk management entail According to Marcelino-Sadaba et al. (2014), risk management is considered as one of the integral component of proper management as well as governance. It is generally an iterative procedure that consists of number of steps that is generally undertaken in sequence for enabling continual improvement in making various types of decisions. It is found that all non-profit organization as well as business generally faces unexpected events and risks which generally cause loss of funds, injury to staff, revenue and further creates negative impact on the organization (Aldunce et al. 2015). Occurrence of any type of negative event generally cost money of the organization. It is very much necessary for the companies to forecast the risks as well as challenges properly in order to mitigate them at their initial stage. In order to manage risks as well as challenges, organizations generally implement risk management strategies that are helpful in resolving or mitigating the challenges that the com pany mainly faces. It is analyzed that in Australia, the utilization of risk management was mainly provided a proper boost by standards of Australian publication in order to mitigate the challenges that the Australian organizations are facing. It is found that development of risk management strategies depends on the maturity of the organization to face risk (Benson, Lorenzoni and Cook 2016). The more mature the organization becomes, it will implement more number of risk management strategies in order to avoid or minimize the chances of negative impact of the risk on the operations of the organization. It is identified that risk is the main cause of uncertainty within any organization. The organizations mainly get involved in identifying the risks for resolving them before it affects the operations of the organization. The ability of risk management helps the organization to act much more confidently on various future decisions in the business (Gatzert and Martin 2015).Their knowledge on risk management generally provides them different options for dealing with the potential problems that generally exist within the organization. It is found that risk management processes is very much important for an organization as without managing the risks, an organization cannot be able to define its future objectives for achieving success. If the objectives of the organization are defined without considering the risks then there is high chance that the organization will lose their direction due to the obstruction that will occur due to the occurrence of risks (Wu, Chen and Olson 2014). The mai n role of the team is to properly identify the risks, creates proper risk management strategies and executes the strategies in order to mitigate the issues as well as challenges (Grote 2015). Larger organization generally faces much more risk as compared to smaller organization therefore it is very much necessary for the larger organizations to implement proper risk management strategies so that the risks as well as challenges can be mitigated quite easily. Risk management plan mainly helps in ensuring that the risks that are associated with the organization will be mitigated properly. The main goal of the risk management is to minimize the impact of negative risks within the organization by enhancing the impact of opportunities (Cvitanic, Possamai and Touzi 2016). It is found that development effective risk management strategy generally assists in identifying the risks that are mainly associated with the business so that it will not create any type of negative impact on the operations of the business. An organization that is mature about the risks of the organization will mainly develop much more effective risk management strategy as compared to other organizations (Sweeting 2017). It is found that a joint effort was mainly utilized in the risk assessment which mainly included PPSLC which is a loan provider and Microsoft. In this joint venture the workers of Microsoft worked with PPSLC tech in order to resolve the security risk that th e organization is facing by utilizing proper risk management strategies. It is found that risk management strategies must be developed in the initial stage so that the risks as well as challenges associated with the organization can be resolved successfully. Effective risk management must be integrated with the various processes of the project so that any type of risk associated with the project can be easily identified at the initial stage. The other benefits of risk management are elaborated below: Better quality of data for decision making: It is found that with the help of risk management the senior leaders can be able to access proper quality of data which are quite helpful in enabling them to make proper decisions within the project (Cagliano, Grimaldi and Rafele 2015). Ability of accessing risk information in real time with the help of project management dashboards generally reflects that decisions are generally based on the latest data as well as information. Proper elevation of communication: Proper risk management generally elevates the conversation. It generally assists in creating proper point of discussion between the project team as well as various key senior stakeholders in order to prompt them to discuss on various difficult topics for dealing with potential causes of conflicts (Falkner and Hiebl 2015). Discussions on risk management generally helps in creating a positive working relationship with the various key personnels as their success is generally tied with the success of the project Setting proper expectation: By knowing that a risk can be properly managed generally helps in setting an expectation for achieving project success. With proper framework in place for delivering the known risks as well as open communication about the challenges of the project with the senior managers is quite helpful (Bellini and Di Bernardino 2017). It generally changes the entire team mindset. It is found that the expectation of success among the team members of the project generally assists in improving morale as well as productivity. Escalations are easier and clear: While dealing with risks, the project team needs to escalate the problem to the senior management in order to get proper action as well as advice from them. Clear process of risk management processes assists in making the escalations clear as well as easier. In addition to this, t is found that a defined procedure helpful in ensuring that risks are generally addressed as well as seen by the right people at right team for properly addressing a potential problem. Determining cost per day to crash each of the project activities Activity Immediate predecessors Normal time (Days) Crash time (Days) Normal cost (Rand) Crash Cost (Rand) Cost/Day for crash (Crash cost/Crash time) A --- 3 2 1400 2000 1000.00 B ---- 5 2 3000 4200 2100.00 C A 2 1 900 1300 1300.00 D A 4 2 1100 2500 1250.00 E A 2 1 400 900 900.00 F B 7 3 2300 3100 1033.33 G C,E 7 2 500 1100 550.00 H D,F 9 4 2200 3200 800.00 I G,H 5 3 2000 2400 800.00 Determine total time and cost involved which project duration can be reduced Activity Immediate predecessors Normal time (Days) Crash time (Days) Normal cost (Rand) Crash Cost (Rand) Time by which project can be reduced Cost by which project duration can be reduced A --- 3 2 1400 2000 1 500 B ---- 5 2 3000 4200 3 1200 C A 2 1 900 1300 1 400 D A 4 2 1100 2500 2 1400 E A 2 1 400 900 1 500 F B 7 3 2300 3100 4 700 G C,E 7 2 500 1100 5 600 H D,F 9 4 2200 3200 5 1000 I G,H 5 3 2000 2400 2 400 Total 43 13,800 23 17,500 The work breakdown structure is mainly defined as a work that is generally required for producing the product or deliverables of the project. It is generally represented as a hierarchical subdivision of a project within various work areas with lowest being the work package (Siami-Irdemoosa, Dindarloo and Sharifzadeh 2015). It is identified that for creating work breakdown structure for project, various approaches are generally utilized. The approaches in the development of work breakdown structureare listed below: Guidelines: The first technique that is generally used in order to create a work breakdown structure is by utilizing guidelines. Guidelines generally assists in providing content, form as well as project frameworks for meeting various project related standards within the organization. It is found that every organization have their own guidelines that are mainly used by them in order to create best possible outcome (Sharon and Dori 2015). It is very much significant to determine the past project documentation properly in order to design the work breakdown structure successfully. Analogy approach: Analogy approach is quite helpful in smaller project as this approach assists in tailoring the project successfully. Analogy approach is generally helpful in breaking down the project based on the experience (Zhang and Fan 2014). It is found that this technique generally utilizes a repository of WBS file that is generally worked for some similar type of project. The project manager can be able to review past projects WBS in order to create the new one as same method is followed in all projects. Top-down approach: Top-down approach that is utilized in order to develop a work breakdown structure helps in stating that in order to create a WBS, it is very much necessary to take the biggest task in the project and then break them down into number of manageable parts (Sandin and Berggren 2015). It generally needs much more logic as well as structure and it is mainly preferred method for creating work breakdown structure. This approach is generally helpful in identifying the solution first and then assists in dissecting it into number of smaller steps that is mainly needed in order to successfully implement the project. Bottom-up approach: This approach is one of the most straightforward methods for creating the WBS. In this approach, a specific task is generally picked and then it is completed successfully (Zecheru and Olaru 2016). This approach is generally considered as one of the ideal method that brainstorming a specific solution for the problem. The approach is mainly utilized by the team members of the project in order to identify as well as for listing activities of the project. Mind-mapping technique: This is considered as one of the most useful technique that is mainly used by most of the project specialist. In this particular approach, the tasks of the project are written in non-linear, branching format in order to create the WBS structure properly (Sequeira and Lopes 2015). It is found that there are number of mind-mapping tools that are available in the market, which can be utilized for creating work breakdown structure for the project. Furthermore, it is found that this approach generally allows drawing as well as writing pictures by using the different ideas in a non-liner format. Detailed outline report It is found that the project mainly focuses on the modification of desktop computers to light weight laptops development in order to ease portability. The project of product development steps as well as sequences is generally illustrated in order to explain the activities or actions that need to be performed during each phase of the project life cycle. It is stated by Snyder (2014) that project life cycle is a four step process that is mainly followed by all the project managers in order to execute the project successfully. The phases of the project life cycle mainly include: Conceptualization phase: Conceptualization phase is mainly considered as the initiation phase of the project. In this phase the project is mainly initiated and this step is mainly undertaken within the project in order to elaborate the needs as well as requirements of resources are services for completing the project successfully by the upper management of the organization (Kerzner and Kerzner 2017). It is identified that in this phase, the activities or processes that are generally undertaken includes development of business case, undertaking feasibility study, establishing project charter, as well as appoints the project team members so that the medication of desktop computers to light weight laptops development can be easily completed. Planning phase: The next phase of the project cycle is the planning phase, where the solution of the project is properly developed by providing necessary steps for meeting the objectives of the project. In this step, a team member generally identifies all the work that is required to be performed within the project in order to execute the project successfully (Mir and Pinnington 2014). The requirements, tasks as well as resources of the project are properly identified in this phase along with appropriate strategy for producing them. Proper project plan is created in the planning phase that mainly outlines various project tasks, activities, dependencies as well as timeframes. The project manager mainly involve in coordinating for creating the project budget by estimating costs that are mainly associated with equipment, labor as well as material costs (Snyder 2014). As per the theory of project management, budget costs are generally utilized for monitoring as well as controlling the ex penditure of the project during the development of the project. In addition to this, the project manager identifies steps that can pose threat to the project. Identification of risk generally assists them to create proper risk management plan so that the risks that occur within the organization can be easily resolved within the initial stage (Kerzner 2017). Planning phase is also considered as one of the proper step to identify all the stakeholders of the project in order to create a communication plan that will elaborate the information that is required for illustrating information that is needed for keeping the stakeholders of the project informed. Execution phase: During the execution phase, the project plan is mainly put into motion and the entire project work is mainly performed. It is considered as one of the important step for marinating control as well as communication that is generally needed during the execution phase of the project (Svejvig and Andersen 2015). The steps that are generally undertaken in this step mainly includes generating idea, analyzing market research and competitors, screening of ideas, concept development and testing, analysis of business strategy and development, product development, testing marketing, as well as commercialization (Joslin and Muller 2015). In this phase, progresses of the project is continuously monitored as well as adjusted as required in order to achieve the objectives of the project. The project manager generally utilizes information that is mainly reported during regular meetings. They generally utilize the information in order to maintain proper control over the project direc tion (De Carvalho, Patah and de Souza Bido 2015). The project stakeholders as well as sponsors must be kept updated with the status of the project as per agreed frequency as well as format of communication. The project management theory states that the status report that is created in execution phase must emphasize various types of anticipated points in context to schedule, cost as well as quality of the project deliverables (Marcelino-Sadaba et al. 2014). One all the deliverables of the project is produced then the accepted solution can be easily achieved. Termination phase: During the final closure of the project, proper emphasis is generally released on the final deliverables of the project. In this phase, the activities that are mainly undertaken include business termination, releasing project resources, communicating the closure of the project to all the stakeholders (Chih and Zwikael 2015). The last remaining step that is generally conducted for examining the project properly in order to make sure that all the activities of the project are properly undertaken and the entire project is successfully completed within the estimated time and budget. It is identified that the activities that are generally undertaken in each phase of the project life cycle for properly developing the light weight laptop is provided below: WBS Task Name 0 Development of light weight laptops 1 Initiation phase 1.1 Developing business case 1.2 Undertaking feasibility study 1.3 Establishing project charter 1.4 Appointing project team members 2 Planning phase 2.1 Creating project plan 2.2 Development of resource plan 2.3 Development of financial plan 2.4 Creating quality plan 2.5 Development of risk management plan 2.6 Development of communication plan 3 Execution phase 3.1 Idea generation 3.2 Market analysis 3.3 Idea screening 3.4 Concept development and testing 3.5 Business strategy analysis and development 3.6 Product development 3.7 Testing marketing 4 Commercialization 4.1 Closure phase 4.2 Business termination 4.3 Releasing project resources 4.4 communicating the closure 4.5 Post project review Bibliography Aldunce, P., Beilin, R., Howden, M. and Handmer, J., 2015. 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