Guest Post by Simon Buehring
Millions of visitors are about to descent on London for the UK’s biggest ever sporting occasion – the Olympics. If you are a Londoner you will understand the daily frustrations that commuters put up with when travelling to work. With millions of extra journeys expected during the Games, it’s anyone’s guess whether the already overloaded transport infrastructure will cope.
Businesses are being encouraged to assess the impact the games will have on staff, customers and suppliers, and to plan accordingly. This is where risk analysis comes in. Whilst risk analysis is a standard activity on any project, performing an analysis of the risks associated with the Games can help businesses mitigate the worst effects on their everyday business as usual.
But what is a risk? A risk is an uncertain event that may or not occur in the future, so businesses need to think ahead and ask the question “what if?” some uncertain event is to occur. If it does occur, what would its impact be? And, what can we be done about it? Let’s look at these steps to see how it could be applied to the Olympics.
1. Risk identification
Every risk (i.e. uncertain event) has an underlying cause i.e. the increased demand for transport due to the Olympics.
What uncertain event may occur? Actually there are probably several, but we’ll just focus on one – that employees may not be able to travel to work on time.
What will be the effect of this risk? Every business must consider this. If staff were late getting to work, this will clearly have a detrimental effect on the daily activities of your business. If your business is a cafe, for example, what would the effect be on revenues if the shop were unable to open on time?
We have now identified the cause or the risk, the event itself, and its effect.
2. Risk assessment
Step two is to assess the risk in terms of its likelihood (probability) to occur, its impact if it does occur, and when in the future is it likely to occur (i.e. proximity).
If your business is nearby an Olympic venue, then the probability is going to be high due to very large number of people using the stations in the area. The impact of the risk again depends upon the nature of the business. A cafe might consider the loss of sales due to delayed opening. The proximity of the event will be between 27th July and 12th August.
3. Planning responses
Step three would be to plan one or more than one response. These could be one or more of:
- Avoidance – i.e. take steps to prevent the event occurring. This could be achieved by shutting down the business during the Games and to ask staff to take a holiday. However, this is probably not a good idea because no revenues will be obtained during this period.
- Reduction – i.e. take steps to reduce either the probability or the impact. Asking staff to set off 30 minutes earlier than normal when travelling to work could reduce the likelihood of the event occurring.
- Acceptance – i.e. keep your fingers crossed and hope for the best.
- Transfer – i.e. reduce the financial impact, possibly by taking out insurance against the risk. Although in this particular example, insurance is probably not going to be available.
- Fallback – i.e. have a fallback plan (plan B) in place. This would only get executed if the uncertain event does actually occur e.g. if a supplier is unable to deliver because the café is closed, then re-schedule the delivery for a later date.
4. Implementation of responses
Step four is to implement one or more of the chosen responses and to monitor their effectiveness. When choosing which responses to implement, each option must be weighed up for the advantages to be gained, versus the costs associated with implementing the response.
Step 5 is to communicate (via reports) the status of each risk and the effectiveness of the responses on a regular interval. The reports need to be sent to people in your business responsible for making decisions. The responses should be changed if they are not having the desired effect.
By applying good risk management activities within your business, the risk themselves may not necessarily be removed, but they can certainly reduce the overall effects of the risks.
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Simon Buehring is a project manager, consultant and trainer. He is the MD for KnowledgeTrain which offers PRINCE2 online courses and project management training. Simon has extensive experience within the IT industry in the UK and Asia and can be contacted via the KnowledgeTrain website.