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How to Prevent, And Manage Risks

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Executive Summary

The main objective of this research is to test the validity of the statement that new product
development projects comes with high risk and organizations understand that better risk
management makes them less vulnerable. To achieve this, prevention and management of risks
in general and information system is analysed to determine the importance of the process in
organisations. From the findings it is evident that organisations face an array of risks that affect
the performance and outcomes of the projects they try to implement. Organisations understand
the importance of risk management practices by setting effective managerial actions and putting
in place specific contingencies per project. As a result, such organisations have been enjoying
success in the current competitive business environment since they are in a better position to
detect risks in their early stages of the project life cycle and mitigate them before they affect the
performance of the project. It is therefore recommendable that organisations engage all
stakeholders in the process, offer training about risk management, and instill a risk culture.

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Introduction

Organization thrive through development of new products with less or no risk of overstocks.
With the changing customer preferences, it is hard to achieve that automatically calling for better
risk management strategies especially when it comes to information systems projects.
Organisations are now very reliant on the existing standard risk management procedures such
that disruption or any change should be handled with care to make sure they are not vulnerable.
As a result, a comprehensive understanding of potential risks and development of mitigation
strategies is required to make sure that the implementation of the project is a success. The main
objective of this research is to test the validity of the statement that new product development
projects comes with high risk and organizations understand that better risk management makes
them less vulnerable with reference to information systems projects.

Scope of the Literature Review

Key Terms Databases Journals

Risk management
New product development
Risk in information systems
projects
Project management
SAGE Publications, Wiley
Online Library
Inderscience Publishers,
Korean Institute of Industrial
Engineers,
Wiley Online Library,
Informing Science Institute,
Proquest
Elsevier BV, ScienceDirect
Project Management Journal,
Risk Management and
Insurance Review
Industrial Engineering and
Management Systems,
International Journal of
Business Continuity and Risk
Management
International Journal of
Digital Information and
Wireless Communications,
Research-Technology
Management,
Interdisciplinary Journal of
Information, Knowledge, and
Management
International Journal of

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Project Management
Risks and project Elsevier BV, SpringerLink International Journal of
management Project Management,

Background

Project management overview

Project management entails coordination of unidisciplinary groups to make sure the project
components are performed as expected by each team to achieve the common desired objectives.
The responsibilities of project management are a proper function of all the involved managers
but not solely the project manager (Frefer, et al. 2018). With organisations engaging in
continuous change and innovation as they try to meet the preferences of the customers, project
management is becoming more important since almost every manager is now being involved in
managing one or more projects.

Understanding Risk and Risk Management

Organisations face an array of risks that affect the performance and outcomes of the projects they
try to implement. There are hazard risks which inhibit what an organization is trying to achieve
while control risks create uncertainty regarding the success of the projects in progress. The
success of projects is highly influenced by the risk and risk management (Marcelino-Sádaba et
al. 2014). For instance, when it comes to information systems projects, they entail use of
knowledge as a major resource and require continuous adoption of new technologies which
underlines why such projects are more likely to fail (Neves et al. 2014). Therefore, systematic
risk management is needed to ensure risks are not only identified but are also managed
successfully.

History of Risk Management

Risk management is a frame work that has existed for longtime used in identifying, evaluating,
managing, and communicating risk to avoid conflicts and losses which come with projects (Steen
2015). It has existed since the second world war and has been for a while associated with
protecting organisations from losses associated with uncertainties and accidents. Through

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evolution risk management has now taken a new look by taking a more general approach on how
organisations can handle risk and uncertainty (Dionne 2013).

Risk Management Standards

There exists an international risk management standard that offers a generic approach towards
risk management of different types of risks. Based on the ISO 31000 Risk management
standards, managers have a basis from where they can understand, implement, and maintain
effective risks management in their organisations (Dufour & Draghici 2020). Through strategic
decision-making and proper management of change based on the provided guidelines which
require them to embed risk management to sound leadership, involving all stakeholders,
implementing a learning culture, shifting attitude towards accountability rather than blame, and
establishing a communication up and down and across the organization (Haddad & Laghzaoui
2020).

Risk Management Process

In the initial step, the framework allows identification of the situations and events within a
specific project that could derail its success. For instance, in information systems a pilot system
can be developed to test consumer acceptance (Denic et al. 2014). After identification of the
risks, it is important to carry out analysis to establish the causes and sources as well as identify
the level of residual risk. The next step in the process is all about carrying out evaluation to
determine if the residual risk can be tolerated or not. Risk treatment is also part of the process
which focuses on managing the likelihood and magnitude of the outcomes of the risk whether
positive or negative to make sure the benefits are maximized. Establishing the context of the risk
is the next step in the process which its main purpose is to define the scope of the risk
management process by incorporating external factors like stakeholder expectations, market
conditions, and regulatory environment with internal elements in the organization like employee
expectations, organization policies and objectives, culture, and the governance and how the
consequences of a given risk would impact them (Olechowski et al. 2016). One of the main parts
of the process is monitoring and review as it aids in determining the performance of the risk
management process against the set key performance indicators to determine if its effective or
not. Communication and consultation is part of the process which takes place continuously to
make sure all stakeholders are on the same page and their interests and concerns are fully

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addressed by the decisions made regarding specific risk treatment options (Steen 2015). This
process does not offer any specific solution for a given project but rather gives a uniform and
systematic approach towards risk management.

Advantages and Disadvantages of Risk Management

One of the main advantages is that it allows organizations to have a clear picture about potential
threats and opportunities hence they are well prepared to handle them in time and effectively
(Didraga 2013). On the other hand, risk management has one great disadvantage in that allot of
investment is sometimes done on unlikely events while those resources could have been diverted
tom a more profitable investment (Saunders 2014).

Discussion

From the research, it is evident that majority of organisations prioritise risk management because
they fully understand the consequences of failing to do so. Innovation has been on the rise as
companies look to meet their ever changing customers’ preferences and the chances of product
rejection is very which increases the risks associated with the innovation process. It is also
evident that, the market is very competitive which also introduces another risk especially where
organisations are intending to introduce a new product in the congested and competitive market.
A good example is the information systems projects which are very susceptible to failure. As
Kutsch et al. (2014) indicates, such projects rely mainly on knowledge as a resource which
makes them very risk because the end product depends mainly on how the product is produced
form design, production, launching, to marketing. The uncertainties associated with current
projects mean the preventing and managing risk is crucial and this is the reason why most
organization value the process.

Recommendation

It is recommendable that the organisations engage all stakeholders in the organisation to ensure
they are responsible for managing some aspect of risk.

Conclusion

Projects come with high risk and organizations understand that better risk management makes
them less vulnerable. Organisations face an array of risks that affect the performance and

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outcomes of the projects they try to implement. Organisations understand the importance of risk
management practices by setting effective managerial actions and putting in place specific
contingencies per project. The risk management process involves risk identification, risk
analysis, risk evaluation, risk treatment, establishing context, monitoring and review, and
communication and consultation. Risk management allows organizations to have a clear picture
about potential threats and opportunities hence they are well prepared to handle them in time and
effectively. The uncertainties associated with current projects mean the preventing and managing
risk is crucial and this is the reason why most organization value the process.it is recommendable
that organisations engage all stakeholders in the process, offer training about risk management,
and instill a risk culture.

Reflection

The research was tougher than I expected. the process of risk management is not a straight one
and I faced challenges coming up with evidence regarding its importance to test the validity of
the statement provided for the research. The main limitation for this research was time since I
had to attend to other duties and subjects too. Despite that, it has helped me a lot in terms of
understanding what risk management really entails. Also, the work has helped improve my
writing skills as far as sentence and paragraph structure is concerned. I am also now comfortable
using the endnote software thanks to this work.

References

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