Two perspectives on Risk Management

28 Nov

For my final blog I decided to follow on from lucid21’s previous blog post and focus on some videos related to risk management.

Analysts Take: IT Risk Management

http://www.youtube.com/watch?v=oq6hfxzl6G0

This short video is particularly interesting and describes two Gartner Analysts take on IT Risk Management. Lucid21 successfully defined the meaning of the term risk. In this clip Richard Hunter states that “at this point in time if an enterprise has between 50 to 60 enterprise level risks, something like 5 to 10 of them will be IT risks”.  He goes on to say that those IT related risks feature prominently in a wide number of business decisions. These can range from how customers are served to how the company enters new markets. (Ricard Hunter, 2009).

The best thing an organisation can do today to address risk management is to get a good formalized risk assessment process in place.Lucid21 identified a number of ways of doing this. Many companies do not take risks into account and this makes it extremely difficult for them to make the right investment decisions and evaluate their investments effectively (Paul Proctor, 2009).  While identifying risks is essential, it is also important that companies accept that some degree of risk will be associated with an investment. Without taking some form of risk IT investments would not create any value for an organisation. (Paul Proctor, 2009).

Does risk matter? Disengagement from risk management in information systems projects

http://www.youtube.com/watch?v=sPGnFQ9vWbE

In this video Elmar Kutsch (2012) describes a risk as being endemic, present and has the potential to derail the success of any IS project. Risk needs to be proactively managed. A wide range of frameworks and tools are available to project managers in order to actively manage risks in advance of the risk materialising. However project managers are often disengaged from this rational and sensible process of managing risks (Elmar Kutsch, 2012).

The risk management process that is being advocated by major professional organisations is a rational, beneficial and sensible approach that project managers should interpret. Lucid21 touched on a number of these in his previous blog posts also. Unfortunately the speaker in this video has found that at any stage of the risk management process, the process itself tends to fall apart. People become disengaged and ultimately no action is taken.(Elmar Kutsch, 2012).

Managers see risks as a fictional entity, something that hasn’t happened yet and might not happen. As a result while most risks are known to the project managers, they are not responded to.  Project managers then end up waiting until this fictional piece of information turns into reality.(Elmar Kutsch, 2012).

What impact does disengagement have on the quality of projects and their evaluation?

Disengagement has an adverse impact on the quality of an IS project.  If a risk management process is not followed through it makes the company more vulnerable to a risk taking place. What Kutsch has found is that while managers disengage from this process they are actually very efficient at managing the resulting risks quickly and appropriately.(Elmar Kutsch, 2012).

How could this be addressed?

Kutsch presents an alternative paradigm for risk management.  He claims that in order to deal with disengagement, one first needs to understand the reasons why project managers disengage from the process in the first place. Instead of focusing on predicting what might happen and preventing that from occurring, Kutsch suggests that companies put in place the necessary processes to deal with the impact of any potential risk. This ensures that if risks do occur they are manageable from the onset.(Elmar Kutsch, 2012).

Risk management and evaluation of IS projects go hand in hand, as all elements of a project ultimately need to be evaluated. These video’s show the complexities involved in managing, preventing and evaluating risk.

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