Almost everything we do in today's business world involves a risk of some kind: customer habits change, new competitors appear, factors outside your control could delay your project. But formal risk analysis and risk management can help you to assess these risks and decide what actions to take to minimize disruptions to your plans. They will also help you to decide whether the strategies you could use to control risk are cost-effective.
Different people will have different views of the impact of a particular risk – what may be a small risk for one person may destroy the livelihood of someone else. Risk analysis allows you to examine the risks that you or your organization face. It is based on a structured approach to thinking through threats, followed by an evaluation of the probability and cost of events occurring.
As such, it forms the basis for risk management and crisis prevention. Here the emphasis is on cost effectiveness. Risk management involves adapting the use of existing resources, contingency planning and good use of new resources.
To carry out a risk analysis, follow these steps:
1. Identify Threats:
The first stage of a risk analysis is to identify threats facing you. Threats may be:
· Human - from individuals or organizations, illness, death, etc.
· Operational - from disruption to supplies and operations, loss of access to essential assets, failures in distribution, etc.
· Reputational - from loss of business partner or employee confidence, or damage to reputation in the market.
· Procedural - from failures of accountability, internal systems and controls, organization, fraud, etc.
· Project - risks of cost over-runs, jobs taking too long, of insufficient product or service quality, etc.
· Financial - from business failure, stock market, interest rates, unemployment, etc.
· Technical - from advances in technology, technical failure, etc.
· Natural - threats from weather, natural disaster, accident, disease, etc.
· Political - from changes in tax regimes, public opinion, government policy, foreign influence, etc.
· Others
2. Estimate Risk:
Once you have identified the threats you face, the next step is to work out the likelihood of the threat being realized and to assess its impact.
One approach to this is to make your best estimate of the probability of the event occurring, and to multiply this by the amount it will cost you to set things right if it happens. This gives you a value for the risk.
3. Managing Risk:
Once you have worked out the value of risks you face, you can start to look at ways of managing them. When you are doing this, it is important to choose cost effective approaches - in most cases, there is no point in spending more to eliminating a risk than the cost of the event if it occurs. Often, it may be better to accept the risk than to use excessive resources to eliminate it.
4. Reviews:
Once you have carried out a risk analysis and management exercise, it may be worth carrying out regular reviews. These might involve formal reviews of the risk analysis, or may involve testing systems and plans appropriately.
Saturday, April 24, 2010
10-day MBA: D5 QA about Cash flow Analysis
Cash is the gasoline that makes your business run. Cash flow can be defined as the way money moves into and out of your business; it is the difference between just being able to open a business and being able to stay in business. A cash flow analysis is a method of checking up on your firm’s financial health. It is the study of the movement of cash through your business, to determine patterns of how you take in and pay out money. The goal is to maintain sufficient cash for firm operations from month to month.
10-day MBA: D5 QA about Decision Analysis
The analysis should give project managers enough data to make an informed decision. Even with most advanced analytical tools and techniques, interpretation of the results of the analysis is the subject of multiple mental traps.
a. Determining what is Most Important
A model of a project may include a considerable number of variables: large numbers of tasks, resources, risks, and other parameters. For example, certain risks will cause failure of the project, while others risks will have no noteworthy affect on the project. To determine which project parameter is the most important, project managers can use sensitivity analysis.
b. Quantifying Risks Associated with the Project
Uncertainties associated with input parameters were already quantified during modeling step. It is important to analyze how the combination of all these uncertainties could affect the project. A number of analytical techniques can be applied for this analysis.
c. Determining the Value of New Information
One of the useful decision analysis techniques is to assess a value of new information. For example, the goal is to select new development tools for the software project based on performance. Tests can be done to determine performance, but it could be costly and time consuming. Alternatively, it is possible to select the tools based on specifications, without specific tests. The analytical technique helps to establish the value of new information, which in this case would be the testing results, and to determine whether the money should be spent on the test.
d. Deciding on a Course of Action
In many situations, selection of alternatives is not so trivial. Sometimes, decisions are made using many criteria, which complicates the selection of the most efficient alternative.
a. Determining what is Most Important
A model of a project may include a considerable number of variables: large numbers of tasks, resources, risks, and other parameters. For example, certain risks will cause failure of the project, while others risks will have no noteworthy affect on the project. To determine which project parameter is the most important, project managers can use sensitivity analysis.
b. Quantifying Risks Associated with the Project
Uncertainties associated with input parameters were already quantified during modeling step. It is important to analyze how the combination of all these uncertainties could affect the project. A number of analytical techniques can be applied for this analysis.
c. Determining the Value of New Information
One of the useful decision analysis techniques is to assess a value of new information. For example, the goal is to select new development tools for the software project based on performance. Tests can be done to determine performance, but it could be costly and time consuming. Alternatively, it is possible to select the tools based on specifications, without specific tests. The analytical technique helps to establish the value of new information, which in this case would be the testing results, and to determine whether the money should be spent on the test.
d. Deciding on a Course of Action
In many situations, selection of alternatives is not so trivial. Sometimes, decisions are made using many criteria, which complicates the selection of the most efficient alternative.
10-day MBA: D5 Quantitative Analysis
Quantitative Analysis provides data-driven analytical services for a range of business challenges, specializing in statistical models for site selection decisions.
In today's environment, the volume of data available for business decisions has increased dramatically. Yet too often data is not fully leveraged as a business asset because of trim analytical staffs and information overload. Quantitative Analysis can assist by applying advanced statistical analysis techniques to help you get more from your data, as well as external data sources. With Quantitative Analysis, you’ll find that even a modest investment in analysis can yield great returns in increased revenues, improved profits, and better understanding of the decision at hand. That is why we need to learn how to fully analyze the appropriate data, and deliver profitable decision-making tools and knowledge.
In today's environment, the volume of data available for business decisions has increased dramatically. Yet too often data is not fully leveraged as a business asset because of trim analytical staffs and information overload. Quantitative Analysis can assist by applying advanced statistical analysis techniques to help you get more from your data, as well as external data sources. With Quantitative Analysis, you’ll find that even a modest investment in analysis can yield great returns in increased revenues, improved profits, and better understanding of the decision at hand. That is why we need to learn how to fully analyze the appropriate data, and deliver profitable decision-making tools and knowledge.
10-day MBA: D4 OB-about motivation
Motivation starts within a person. As you aspire to be more successful in life, your attitude towards yourself and others will play a huge role. Positive people learn how to handle life's challenges differently and use these opportunities to grow. Everyone wants a better life and if you are constantly working on self improvement, you will develop more self-confidence, better self-esteem and greater internal motivation to be the best. When you learn the secrets of teamwork and leadership, interpersonal communication skills and service, you can apply them to all aspects of your daily life.
10-day MBA: D4 OB-about leadership
Leadership, a critical management skill, is the ability to motivate a group of people toward a common goal. Here are some famous quotes about leadership.
Peter F. Drucker: Management is doing things right; leadership is doing the right things.
George S. Patton: Don't tell people how to do things, tell them what to do and let them surprise you with their results.
Dwight Eisenhower: Leadership is the art of getting someone else to do something you want done because he wants to do it.
Theodore Roosevelt: The best executive is the one who has sense enough to pick good men to do what he wants done, and self-restraint to keep from meddling with them while they do it.
Peter F. Drucker: Management is doing things right; leadership is doing the right things.
George S. Patton: Don't tell people how to do things, tell them what to do and let them surprise you with their results.
Dwight Eisenhower: Leadership is the art of getting someone else to do something you want done because he wants to do it.
Theodore Roosevelt: The best executive is the one who has sense enough to pick good men to do what he wants done, and self-restraint to keep from meddling with them while they do it.
10-day MBA: D4 Organizational Behavior
Organizational Behavior is the study of individuals and their behavior within the context of the organization in a workplace setting. It is an interdisciplinary field that includes sociology, psychology, communication and management. It is application of knowledge about how people, individuals, and groups act in organizations. It does this by taking a system approach. It interprets people-organization relationships in terms of the whole person, whole group, whole organization, and whole social system. Its purpose is to build better relationships by achieving human objectives, organizational objectives, and social objectives.
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