What is risk?

Risk is defined as the effect of uncertainty on objectives (ISO31000:2009)

The importance of risk management

Proper risk management from early on in a project can increase the chances of project success. By planning for unexpected events, project teams are better equipped to respond to them if they arise.  

VBKOM solutions

VBKOM is proud to offer a fully comprehensive and integrated service to our clients. 

We subscribe to the ISO 31000 principles and guidelines, and follow a structured and repeatable process.

Our tailored approach is designed to fit the solution to the exact need and risk appetite of the client, organisation or a specific project, ranging from organisations with well-established and mature risk management processes and structures, to client organisations with no risk management structures.

Our offerings include:

• Strategic assessment and risk policy alignment;
• Risk management process and planning;
• Qualitative risk identification and evaluation;
• Quantitative risk simulation and sensitivity analysis;
• Technical risk assessment;
• Risk structuring and reporting;
• Risk database implementation (operation monitoring & integration).

Risk identification

With risk identification, VBKOM typically uses a structured brainstorming format with a group of experts on the project team. 

A project-specific risk breakdown structure, which represents a list of possible risk sources, is used as a check list to ensure no areas are overlooked. The risk breakdown structure and the knowledge and experience of the project team is reviewed to identify all potential risks.

Qualitative risk assessment

During a qualitative risk assessment VBKOM facilitates a work session with a project team to investigate the root cause of each risk before we determine how to best manage the risks. 

The result of qualitative risk assessment is ‘n Risk Register with risk , cause and consequence descriptions and ratings for the probability and impact of each risk consequence based on the client’s own risk rating criteria.

Risk response planning

During risk response planning VBKOM facilitates group discussions to identify ideas for actions to manage the risk or prevent it from occurring.  In other words, we look for ways to reduce the likelihood of the risk occurring or the impact of the risk if it did occur.

The outcome of risk response planning is an action plan with timelines and responsibilities allocated to the actions.
 

Quantitative risk assessment

A quantitative risk assessment evaluates schedule, estimate and discreet uncertainty and translates it into a monetary value for the project through Monte Carlo simulation modelling.

The Monte Carlo simulation models uncertainties in 5000 iterations using risk distributions and correlations where applicable. 
The elements of the risk model include:

• Project/discrete risks: uncertainties associated with discreet risk events that will have an impact on the project schedule and/or costs.
• Estimate: include uncertainty associated with cost items in the work breakdown structure and likely changes in quantities and/or rates of the estimate risk model.
• Schedule risks: include uncertainties associated with critical and near critical path activities.

The results of quantitative risk assessment combines the impact of all three of these elements.

The source information for the quantitative risk assessment is the project schedule and estimate.

When doing a quantitative risk assessment VBKOM offers a choice of two different techniques,  the traditional method or the risk factor method.

The traditional method applies risk distributions line by line to estimate values (applying the Pareto 80/20 principle) and schedule durations for critical and near critical activities, while the risk factor method identifies common factors between risks in the project risk register and then decides if the risk is applicable to schedule or estimate. 

The outcome of the quantitative risk assessment is typically a probability histogram and sensitivity analyses.

Technical risk assessment

VBKOM facilitates technical risk workshops according to the 6 HAZOP stages and incorporates technical specialists as required. The below outline illustrates the 6 HAZOP stages:

Hazard Study

Project Phase Key focus areas

No 1: Concept

Understanding project objectives, materials involved, identification of project discreet  risks including environmental impact assessment (EIA) risks, establish a risk breakdown structure, cost estimate, design criteria and standards.

No 2: Pre-feasibility

Identifying schedule-related risks against agreed milestones with emphasis on legislative and regulatory requirements; risk criteria; site establishment; procurement strategy; health, safety and environmental (HSE) plans, design for safety, etc.

No 3: Feasibility

Reviewing the design/procedures to identify operational hazards (commonly called a hazard and operability (HAZOP) study) based on engineering drawings (P&ID and control loop) and diagrams as well as operating procedures.  Identifying significant hazards provides the opportunity for their elimination.  Emphasis on loss of containment scenarios and operational hazards.

No 4: Execution prior to construction

Key focus on construction risks as well as verifying that the project will be built to the intended design. Checking if the outcomes of previous hazard studies are incorporated into the design.

No 5: Execution - prior to commissioning

Key focus on commissioning risks in addition to previous hazard studies to ensure compliance to company standards and legislative requirements, employee health and safety, emergency management systems, safety procedures, facility site/building location and commissioning procedures and/or practises.

No 6: Shut Down/Operations

Identifying hazards during the operation of an item. Reviewing the plan and ensuring the proper shut down of operations of the facility.  Ensuring the shutdown is consistent with the design safety, health and environment compliance requirements.

VBKOM’s approach is to facilitate work sessions with key project stakeholders to evaluate the technical deliverables of the project according to the focus for the specific hazard study objective. 

Since we are not the content experts [TA1] it is important to include experts representing each technical discipline (process, mechanical, civil, electrical, etc.) relevant to the project. 

The outcome of a technical risk assessment is a risk register and risk response plan.

Our Workshop Approach

VBKOM follows a -three stage approach with the project (qualitative and quantitative) and technical risk assessment workshops.  All facilitated workshop sessions are preceded by a preparation stage. 

During workshop preparation a briefing document is prepared and distributed to all workshop participants, sufficiently in advance of the workshop, to ensure that all workshop participants are well informed and prepared. 

A workshop is usually followed by a reporting phase during which the relevant documentation is prepared, reviewed and approved.