The construction had expected that the economic growth of the company would drastically improve in the next few years before the actual construction of the roads began. It implied that the overall cost of construction would decrease to the advantage of the firm. However, this assumption would not be ascertained with accuracy and the economy of the nation performed poorly in the next few years. Therefore, it meant that the project would no longer be viable and had to be abandoned despite the planning that was carried before.
This was evident that avoidance of risk should not have been encouraged in the first place by the contractors of the road construction company. The natural and Climatical conditionsThis involves the natural calamities that are related to the weather conditions and the climate of the country.
It includes natural occurrences such as floods due to heavy rains, thunderstorms, and droughts. The contractors had initially assessed that levels of floods would be manageable and went ahead and start their work.
Inadvertently, the construction area was marred with heavy downfall leading the over flooding. The resources that they had already used, the equipment and cost of hiring the local employees translated into liability for the firm. Despite the preparation the company had done, the risk was not fully eliminated. Pilferage and theftThe company had initially planned that all their equipments would be safe and no extra measures were taken in case of any eventualities.
However, some of the equipments of the company were stolen owing to the spontaneous chaos that was witnessed in the area. As a result, the company experienced significant losses which proved that all risks cannot be eliminated no matter how well the initial planning was developed Sjoberg, In conclusion based on the above findings from my research, it is evident that there was a progress of the road construction by the Freelance Roads Network.
The initial implementation and progress of the project was steady and effective. However, the project faced risks and challenges that were not initially in the plan and these had changed the whole picture and the general direction that the project took.
The company incurred significant losses despite the initial analysis they had carried out on the viability of the project. Companies and other business organizations cannot fully eliminate the problems that arise from risks and challenges that were unforeseen. Hence, it is necessary for business organizations and other companies to accept the occurrence and the uncertainty of risks and take precautionary measures such as risk acceptance.
This will translate the adoption of better methods and will improve the process of dealing with the losses that come with the occurrence of risks to the projects of the firm. The risk management process can make the unmanageable manageable, and can allow the project manager to operate on what seems to be a disadvantage and turn it into an advantage. It is not possible to solve a risk if you do not know it. There are many ways to identify risk. One way is through brainstorming , a methodology which allows a group to examine a problem.
Another method is that of individual interviews. It consists of finding people with relevant experience, so that it is possible to gather information that will help the project manager identify the risk and find a possible solution.
Imagining the current project and thinking about the many factors that can go wrong is another technique. What can you do if a key team member is sick? What can you do if the material does not arrive within the defined deadline? An aid in this phase is also to read the reports of similar past projects, verifying the presence of any problems encountered during the path, and see how these have been solved.
The next step is to determine the likelihood that each of these risks will occur. This information should also be included in the risk register. When evaluating the risks of a project, it is possible to proactively address the situation. For example, potential discussions can be avoided, regulatory problems can be solved, new legislation must be known, etc. Analyzing the risks is certainly difficult. There is never a limit to the information that can be collected in this sense.
Moreover, risks must be analyzed based on qualitative and quantitative analyzes. This means, that you determine the risk factor based on how it will potentially affect the project through a variety of metrics. Not all risks have the same level of severity. It is therefore necessary to assess each risk in order to know which resources will be gathered to resolve it, when and if it occurs. Some risks will be more acceptable, others may even risk to completely stop the project, making the situation quite serious.
Having a long list of risks can be daunting, but the project manager can manage them simply by classifying the risks as high, medium or low. With this perspective, the project manager can then start planning how and when these risks will be addressed. Then, there are those risks that have little or no impact on the program and the overall project budget. Some of these low priority risks could be important, but not enough to be urgently addressed.
Indeed, they could be somehow ignored and also time could delete them and improve the situation. All the hard work of identifying and assessing risks is useless unless the project manager assigns someone to oversee the risk. Who is the person responsible for that risk that, if this were to happen, would take charge of its resolution? This decision, in general, is up to the project manager who knows the level of experience and training of each team member and is therefore able to assess the most suitable person to face a particular risk.
It is certainly important to identify the risks, but if these are not managed by a person in charge, the work will have been completely useless and the project will not be adequately protected. For each identified risk, based on priority, a mitigation plan or strategy is created. The project manager should deal with the risk owner in order to decide together which strategy to implement to resolve the risk.
Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. Risk Avoidance vs. Risk Reduction. Risk Avoidance.
Pros and Cons of Each. Risk Reduction: An Overview Risk avoidance and risk reduction are two strategies to manage risk. Key Takeaways Risk avoidance is an approach that eliminates any exposure to risk that poses a potential loss. Risk reduction deals with mitigating potential losses by reducing the likelihood and severity of a possible loss. For example, a risk-avoidant investor who is considering investing in oil stocks may decide to avoid taking a stake in the company because of oil's political and credit risk.
Meanwhile, an investor with a risk reduction approach to the same oil stocks would diversify their portfolio by keeping their oil stocks, while buying stocks in other industries that could help offset any losses from the oil equities. Risk Avoidance Safely guarantees that returns will not be lost or jeopardized Closes the door on opportunities for future gains, especially potentially higher returns on investment Simple way to focus on steady streams of income.
Risk Reduction Seeks a "best of both worlds" approach to mitigating risk, while exposing yourself to potentially high returns Can be riskier financially, if risks come to fruition Requires a more complex approach to investing, including full understanding of your liabilities.
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