The purpose of a Business Risk Management (BRM) risk assessment tool at the project level is to enable a project team to properly evaluate the risk(s) that a project may introduce to the organization.
In order to make informed decisions throughout each phase of the project, a project team will:
- Identify areas or processes that are impacted.
- Assess the impact that the project, solutions, or changes will have on other areas or processes.
- Manage key risks by creating action plans to minimize impacts.
1. Competitor risk: New entrants, exits, or actions of competitors in the market that impact the organization.
2. Economic risk: Changing economic conditions (e.g. local, regional, and/or global) that impact the organization.
3. Legal/Regulatory risk: Changing or new laws or regulations that impact the organization.
4. Market requirements risk: Changing or new market/customer requirements that impact the organization.
5. Political risk: Changing political conditions in a country or region that impact the organization.Technological innovation risk: Changing or new technologies in the external market place that impact the organization.
Financial Risks – These risks arise from activities that provide input into business and financial reporting, impacting the achievement of the organization’s objectives.
1. Budget & forecasting risk: Unreliable, unrealistic, or non-existent budgeting and/or forecasting information or processes including S&OP and the annual budgeting process.
2. Credit risk: Exposure to loss or opportunity cost as a result of financial default, or other financial failure by a customer, dealer, or third party.
3. Financial & regulatory reporting risk: Incomplete, inaccurate, or untimely financial or regulatory reporting (internal or external).
4. Fraud risk: Fraudulent activities (e.g. achieving personal gain while causing injury to another party, unfair or unlawful gain, misleading others for personal benefit) by employees, customers, suppliers, agents, brokers or third-party administrators.
5. Investment evaluation & monitoring risk: Lack of relevant, reliable, or complete information supporting investment decisions, including ongoing monitoring of investments.Liquidity risk: Inability to meet cash flow obligations in a timely and cost-effective manner, including unplanned cash flow fluctuations or concentration to a limited group of counter parties.
People Risks – These risks arise from activities of people, including employees or external parties, impacting the achievement of the organization’s objectives.
1. Communications risk: Inconsistent, ineffective or non-existent communications.
2. Employee engagement risk: Absence of alignment or misalignment between employee and organizational objectives, principles, or values.
3. Employee knowledge/skill risk: Shortage of human resources or lack of knowledge, skill, or experience among the organization’s existing workforce.
4. Health & safety risk: Failure to provide a safe and/or healthy working environment.
5. Knowledge capital risk: Failure to effectively capture and share knowledge.
6. Leadership risk: Failure to provide effective leadership (e.g. direction, focus, motivation, credibility, trustworthiness) to employees, stakeholders, and process partners.
7. Legal compliance risk: Failure to comply with laws or regulations (environmental, financial, trade, etc.).Process/Policy compliance risk: Lack of or failure to comply with organizational processes, policies, or procedures.
Operational Risks – These risks arise from ongoing operations impacting value creation, customer satisfaction, or achievement of the organization’s objectives.
1. Business interruption risk: Inability to operate due to disruptions to information systems, utilities, workforce, or other resources (e.g. catastrophic events, natural disasters, labor strikes, computer viruses etc.).
2. Capacity risk: Failure to appropriately respond to changes in production or service demand.
3. Customer satisfaction risk: Failure to meet customer or process partner expectations.
4. Distribution channel risk: Poorly performing distribution channels (e.g. dealers, distributors, etc.) impact the organization’s ability to effectively service current or potential customers.
5. Information access risk: Failure to appropriately grant or restrict access levels to information.
6. Information infrastructure risk: Information technology systems (e.g. hardware, networks, or software) that do not effectively support user requirements.
7. Information relevance risk: Lack of relevant or correct information.Inventory management risk: Inability to manage inventory to desired targets.
8. Partnering/Supplier management risk: Ineffective alliances, joint ventures, affiliates, suppliers, or other external relationships (non distribution channel partners).
9. Performance risk: Inability to perform at world class levels (e.g. Baldrige criteria, Quality Certification, Operational Excellence).
10. Performance measurement risk: Unreliable, unrealistic, irrelevant, or non-existent performance metrics or measures.
11. Quality risk: Faulty or non-performing products or services.
Strategic Risks – These risks arise from activities to determine and support the future direction of the organization, impacting the achievement of the organization’s strategies.
1. Alignment risk: Failure to align business unit objectives with either process partner or enterprise wide objectives and/or strategies. This may also include an ineffective organization/reporting structure.
2. Business intelligence risk: Absence of sufficient or accurate knowledge of the external business environment.
3. Intellectual property risk: Failure to adequately protect intellectual capital, proprietary processes, trademarks, brands, designs, etc.
4. Planning risk: Failure to adequately develop, update or change plans.
5. Product development risk: Failure to develop viable or innovative products or services.
6. Product/Service pricing risk: Failure to price a product or service within a range that is acceptable to the customer and delivers appropriate profitability to the business unit.
7. Resource allocation risk: Inability to efficiently allocate resources (e.g. time, assets, people) or the absence of sufficient levels of these resources.
Unbalanced measurements risk: Overemphasis on a particular metric or measurement at the expense of other metrics or measures (e.g. cost versus quality).
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