Structuring Risk Management

In managing risk, consider creating two important documents. Both well-suited to a tabular system, these are:

• the risk register
• and the risk treatment schedule.

The risk register should include the process of analysis and mitigation, with the tabular identification of risks by project phase and risk type. In a summary tabulation the columns state external risks, design risks, organizational and management risks, and risk during construction and start-up.

Horizontal rows would list the various risk types in each category. For example in the external risk column categories such as public approvals, permits, financial conditions, and site and climatic issues might be listed.

Each of the headings in each of the columns would have its own back-up sheet detailing with description of the risk, consequences and probability, adequacy of existing control measures, priority and costing.

The mitigation plan, or risk treatment schedule, is devised in a similar manner, again using a separate fact sheet for each identified risk group. It would again state the risk, the priority rating from above, the possible treatment options, a preferred option, risk rating after treatment, costs, timetable for implementation and method of monitoring.

This approach then presents a risk summary and a detailed analysis and mitigation plan for each risk group. The summary and the individual back-up sheets will be living documents; they are updated as more and new information becomes available.

The sponsor of a development is thus aware of the costs of risk management and the necessary approaches. These costs are additional to the estimated cost of the facility, and they represent an invaluable piece of information when deciding on project contingencies.

The engineer is often in the best position to manage the preparation and up-dating of these risk profiles. A clear understanding of the process and methodology will help explain the value of the approach to all project participants.

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