Risk management

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Project Visions and Visioning
File:Vision.jpg This article is developed within the scope of the Project Visions and Visioning, an effort to enhance Foresight learning through collaborative work.


Definitions

The first question to be asked on this topic is: "What is a Risk?". Briefly and commonly known a "Risk" is:

- The possibility of suffering a harm or lost.

- An element, factor or way that includes unknown dangers.

- An event that could happen and reduces the chance of success.

In a Project management approach, it can be consider that: "A risk is PROBLEM WAITING TO HAPPEN". To better understand and indentify a risk, it is indicated to look for some particular properties of it, like:

- A Risk is an event in the future, not in the present.

- It could happen (is not a fact)

- It is potentially harmful

- It could increase, decrease, disappear or happen

Now passing on to the second aspect of risk in an organizational and economic entity, it is time to ask: "What is Risk Management?". We can define this concept as being: "The process of identifying risks, analyzing the exposure to them and determining how to best handle such exposure in order to decrease the probability of a project failure".

In practice, Risk Management has the following key elements:

  • Objective

- Identify and qualify project risks

  • Directives

- Identify project risks (3 to 5 risks)

- Build risk statements

- Identify project probability and loss, and calculate exposure

- Rank risks

  • In group

- Discuss the identified top n risks

Interpretations

Reading the two articles as support for this topic: “The certainty of uncertainty: risk management revisited” and “Uncertainty, the critical basis of risk management” by Jacques G. Richardson slowly make me realized and believe that a big factor of risk appearance is transparency and lack of information. For example: is the writers’ vision, the public and many economists have held the lack of financial-market transparency as a critical factor in the build-up to the crisis of 2008. Huguette LaBelle sustains that: “The costs of disclosure in well-regulated markets are borne by all those who promote a risk, or transfer it to others. From preventing excessive short-term risk-taking to exposing potential conflicts of interest, transparency is a key to ensuring that confidence is restored” (LaBelle, 2009).

The writer also sustains that: obstacles of different sorts have emerged. I also believe that these are lack of agreement on propulsion details, defects in coordination between widely separated technical centers and factories, contrasting work habits and work discipline among the several nationalities, and the inevitable cultural clashes regarding who is “right” and who is “not right” when solid agreement is otherwise paramount. A very interesting fact presented in the first article was the concept recently introduced by Niall Ferguson in the pages of the journal Foreign Policy, the idea of the axis of upheaval as a guiding theme: the loci of factors that will inevitably guide much of the world and its geopolitical health during the coming decades of probable instability. The noted historian describes these loci as “[e]conomic volatility, plus ethnic disintegration, plus an empire in decline. That combination”, Ferguson stresses, “is about the most lethal in politics. We now have all three. The age of upheaval starts now” (Ferguson, 2008). From the variety of examples illustrated in the paper, it is clear and also I support it, that the will to progress or to reform is essential to the decision processes implicit in the courses of action finally taken. The “will to progress” may range from a pondered exercise in selective options to a brusque choice taken almost on the spur of the moment. Whatever the method, uncertainty is overcome, the risk is defied, and the outcome managed as it develops.

Also a great part of these essays is that the opposite of uncertainty is admittedly assuredness, but such certainty may often be lacking when planning new or reinforced strategy. The careful reckoning of risk is everything in how future conditions will permit the implementation of a strategy once adopted—whether carefully pondered or the desperate poker player’s go-for-broke tactic. The examples cited in the paper were selected because of the weighing involved of certainty vs. uncertainty. In the second mentioned essay it was examined the hazard, danger, sometimes even peril that managers and other deciders must confront. Those who decide live in an environment of persistent uncertainty so that the challenge of risk accompanies almost every decision made. Potential gain must be balanced, therefore against putative loss. An interesting part is regarding the economic goal of innovative firms seeking a tenable world rank is the one most often at the top of the list. This is self-evident but it risks estrangement from a vision both more extended and more in conformity with European genius. The knowledge society beckons us to a shared birth in a new world, where creativity would be developed among all of us. Teaching, which transmits science, is evidently involved from the outset: not by creating a scientific and technical culture, as this term tends today to be repeated too often, but by recognizing the embedding of science and technology within culture itself [. . .] What’s more, such recognition must also embrace making room for others – today’s fraction of the world that our scientific and technical development leaves ever further behind us.

The second essay ends with a glance at the probability – uncertain vs certain – of the nature of space exploration to come. The manned expeditions to the Moon that began in 1969 have given way, quite reasonably, to pondered exploration of the planets and possibly beyond. The Ares I rocket had its first launching on October 2009, holding some promise of further manned exploration because of improved propulsion, composite materials ever lighter in weight, and better information technology. My favorite quotes from these two articles are: “Accepting all risks means accepting risks that are not acceptable” (Jacques Lesourne) and ‘‘The powers of human self-deception are seemingly endless [. . .] [W]e have thus far sought to solve all our problems by the expansion of our economy. This expansion cannot go on forever and ultimately we must face some vexatious issues of social justice [. . .]’’ (Niebuhr, 2008).

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