A Practical Approach to

Risk Management
 Worst-‫ب د ت رین‬

Why do we need Risk Management?

The only alternative to risk management is crisis management --- and
crisis management is much more expensive, time consuming and
embarrassing.
JAMES LAM, Enterprise Risk Management, Wiley Finance © 2003

Without good risk management practices, we cannot manage our

resources effectively. Risk management means more than preparing for
the worst; it also means taking advantage of opportunities to improve
services or lower costs.
Sheila Fraser, Auditor General of Canada
 Basic Definition

A risk is ANYTHING that may affect the achievement

of an organization’s objectives.

It is the UNCERTAINTY that surrounds future

events and outcomes.

 Assess-‫اندازہ ل گانا‬/‫تشخیص‬

A Simple Framework

Step 1 Step 2 Step 3 Step 4 Step 5

Assess
Assess
Identify
Identify Evaluate
Evaluate
Establish
Establish Risks
Risks&& Monitor
Monitor
Risks
Risks&& &&Take
Take
Objectives
Objectives Controls
Controls &&Report
Report
Controls
Controls Action
Action

Communicate, learn, improve

 Impact vs. Probability
High Medium Risk High Risk

I
M Share Mitigate & Control
P
A Low Risk Medium Risk
C
T
Accept Control

Low PROBABILITY High

Impact vs. Probability
‫‪-Contingency‬ہنگامی ‪ - Fallback‬مشکل وقت میں آسرالینا‪ ،‬سہار پکڑنا۔‪  ‬خلوـص سـےـ‪ Workaround-‬‬

‫‪Plan Risk Responses/Risk Handling‬‬

‫کـــنا‪Mitigate-‬‬
‫کـــ رـ‬
‫م‬ ‫کـــ الــنا‪Exploit-‬‬
‫بــــےـ ار‬
‫روـئ‬
Identify risks that the cyclists faces in cycling
Risk Factors – the weather, the road, visibility, the bike,
the lock

.
 Risk Factors – the driver

.
 Reputation-‫ش ہرت‬

Risks
Threats: Opportunities:
 Death  Exercise
 Head Injury  Sunlight
 Injury  Reputation
 Reputation  Financial
 Financial  Role model
 Damage to the bike  Environment
 Sunburn/frost bite
 (To reduce)

Mitigation Strategies for threats

 Death, head injury, other injury – helmet, bright clothes, lights, bell,
CAN bike course, obeying traffic laws, positive attitude, anger
management course
 Reputation – great outfit, change of wrinkle-free clothes, shower,
time management
 Financial – high quality locks, “beater”, stopping at stop signs
 Damage to the bike – regular maintenance, avoiding pot holes

 Sunburn/frost bite – sunscreen, mittens, hats, token/change

 Dehydration- filled water bottle
It can be complex and messy sometime
Keep it simple
TAKE SMALL BITES………. Risk IMPLEMENTATION
Any Comment…?
• Risk management is a time
bound activity Because risk
causes are always dynamic

• If you don’t tackle

opportunities early, you
could loose it

• If you don’t tackle threats

early, it could turn you into
a looser.
When America fought the

Vietnam war, it resorted to

carpet bombing. It had the

excess resource and

firepower to spend and

thought that was the

easiest route to victory

When China fought the proxy war in

Vietnam they deployed guerilla warfare

tactics. Here each enemy soldier was

tracked one by one in the deep forests

and killed by surprise individual attacks.

Resources used were lesser, but effort

and tracking skills needed were

phenomenal
Manage the Project and its Risk;
I have never known a battle plan to survive a first
contact with the enemy.
Risk Management in Construction
 Introduction

Cost Success

Project
Constraints
Quality Time
Introduction

Cost
overrun

Risks
Poor
Quality
Project
Constraints Delays
 Endeavor-‫ک وششک ریں‬

What is a Risk?

Unknown

Unexpected
endeavor
Risk
action
Undesirable

Unpredictable
 Risks in Construction
Economic Factors
Client

Contractor Supplier

Environmental Factors
Social Factors

Architect Quantity
Survey

Engineer Project
Manager

Inspector`

Political Factors
 Types of Risks in Construction

Physical
Acts Financial
of &
God Economic

Risks

Political
Const.
&
Related
Environ.
Design
 Types of Risks in Construction

Physical
Acts Financial
of & Acts of God
God Economic
 Flood
 Earthquake

Risks  Landslide
 Fire
 Wind damage
Political
Const.
&
Related
Environ.
Design
 Types of Risks in Construction

Physical
Acts Financial
of & Physical
God Economic
 Damage to structure
 Damage to
equipment
Risks  Labor injuries
 Fire
Political
Const.
 Theft
&
Related
Environ.
Design
 ‫ مہنگائی‬-Inflation
Types of Risks in Construction

Physical
Acts Financial
of & Financial &
Economic
God Economic
 Inflation
 Availability of funds
Risks
 Exchange rate
fluctuations

Political
 Financial default
Const.
&
Related
Environ.
Design
 Types of Risks in Construction

Physical
Acts Financial
of & Political &
Economic
God Environmental
 Changes in laws
and regulations
Risks  Requirement for
permits
 Law & order
Political
Const.
&  Pollution and safety
Related
Environ. rules
Design
 Types of Risks in Construction

Physical
Acts Financial
of & Design
God Economic
 Incomplete design
scope
 Defective design
Risks
 Errors & omissions
 Inadequate
Political specifications
Const.
&
Related
Environ.
Design
 Types of Risks in Construction

Physical
Acts Financial
of & Construction
Economic
God Related
 Labor disputes
 Labor productivity
Risks  Different site
conditions
 Design changes
Political
Const.
&
Related  Equipment failure
Environ.
Design