APARATO LOCOMOTOR DEL TRONCO Columna vertebral

This action is concerned with putting in place arrangements for the on-going management of risk during the key phases of the project.

Risk management is a structured approach to identifying, assessing and controlling risks that emerge during the course of the policy, programme or project lifecycle. Its purpose is to support better decision making through understanding the risks inherent in a proposal and their likely impact.

Effective risk management helps the achievement of wider aims, such as:

• effective change management • the efficient use of resources • better project management • minimising waste and fraud • supporting innovation Risk Management Strategy

Strategies for the active and effective management of risk involve:

• identifying possible risk in advance and putting mechanisms in place to minimise the likelihood of them materialising with adverse effects

• having processes in place to monitor risks, and access to reliable, up-to- date information about risks

• the right balance of control to mitigate against the adverse consequences of the risks, if they should materialise

• decision-making processes supported by a framework of risk analysis and evaluation

At the level of individual policies, programmes and projects, risk management strategies should be adopted in a way that is appropriate to their scale.

Risk Mitigation

Recognised methods for the mitigation of risk throughout the life span of the policy, programme or project include:

• Early consultation: Experience suggests that costs tend to increase as more requirements are identified. Early consultation will help to identify what those needs are and how they might be addressed

• Avoidance of irreversible decisions: Where lead options involve irreversibility, a full assessment of the costs should include the possibility of delay, allowing more time for investigating alternative ways to achieve the objectives

• Pilot studies: Acquiring more information about risks affecting a project through pilot studies allows steps to be taken to mitigate either the adverse consequences of bad outcomes, or to increase the benefits of good outcomes

• Design flexibility: Where future demand and relative price are uncertain, it may be worth choosing a flexible design adaptable to future changes, rather than a design suited to only one particular outcome. For example, different types of fuel can be used to fire a dual fired boiler, depending on the future relative price of alternative fuels. Breaking a project into stages, with successive review points at which the project could be stopped or changed can also increase

• Precautionary principle: Precautionary action can be taken to mitigate a perceived risk. The precautionary principle states that because some outcomes are so bad, even though they may be very unlikely, precautionary

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• Procurement/contractual: Risk can be contractually transferred to other parties and maintained through good contractual relationships, both informal and formal – see commercial case

• Making less use of leading edge technology: If complex technology is involved, alternative, simpler methods should be considered, especially if these reduce risk considerably whilst providing many of the same benefits

• Reinstate, or develop different options: Following the risk analysis, the appraiser may want to re-instate options, or to develop alternative ones that are either less inherently risky or deal with the risks more efficiently

• Abandon the proposal: Finally, the proposal may be so risky that whatever mitigation is considered, it has to be abandoned

By reducing risks in these ways, the expected costs of a proposal are lowered or the expected benefits increased. As can be seen, benefit and risk are simply two sides of the same coin and successful management depends on the effective identification, management and mitigation of risk.

Risk Management Framework

Public sector organisations should foster a pragmatic approach to risk management at all levels. This involves:

• establishing a risk management framework, within which risks are identified and managed

• senior management support, ownership and leadership of risk management policies

• clear communication of organisational risk management policies to all staff • fully embedding risk management into business processes and ensuring it is

These actions should help establish an organisational culture that supports well thought out risk-taking and innovation.

The arrangements for the management of risk should be outlined, together with the respective roles and responsibilities and reporting lines of the posts concerned. These should be made clear in relation to the overall project management arrangements.

Risk Register

The plans for the management of associated risks should be encapsulated within the risk register for the project, which lists all the identified risks and the results of their analysis and evaluation. Information on the status of the risk is also included.

The risk register should be continuously updated and reviewed throughout the course of a project and at this stage in its development cover all phases of the project, with particular focus on the related project management and procurement risks for the scheme. The information that a risk register should contain for each risk is set out below:

143 Risk Register

Risk number (unique within the register) Risk type

Author (who raised it)

Date identified Date last updated

Description (of risk)

Likelihood

Interdependencies (between risks) Expected impact

Bearer of risk Countermeasures

Risk status (action status)

Additional guidance on risk is contained within Step 6 of the SCIM Option Appraisal Manual or more general guidance may be obtained from the Office of Government Commerce (OGC) at:

Action 7.5 Plan post project evaluation – strategy, framework and outline