Risk Management Assignment: Case Analysis of 3GW Renewable Energy Power Generation Facility Project

Question

You are employed by the organization (of your choice). You have been appointed by the CEO as Risk Officer, in addition to your substantive role. For this role you will be reporting directly to the Operations Manager.

You have been charged with designing, developing, implementing and embedding a Risk Management Framework into the company. You have been given six (6) months to design and implement this project. You have the responsibility for the implementation and will take the role of a Project Manager.

Your submission for risk management assignment will comprise:

1. A brief description of the selected framework (1 – 2 paragraphs with diagrams);
2. A plan to design, develop and implement a Risk Management Framework into the organization.

Answer

Task

1. Introduction
The main concern of this risk management assignment is the process of managing risk which is an essential aspect of any organisation and it essentially involves identification and management of the risks that might occur at any time in the life cycle of the organisation or the projects conducted by the organisation. Risks are of different magnitudes and may or may not a considerably negative impact on the organisation but it is advised to identify the risks early and implement appropriate risk management plan such that that the risks are either mitigated or the opportunities arising from the risk are accepted and utilised by the organisation (Shad et al., 2019). The organisation in focus is Risk Managed Renewable Energy (Australia) Pty Ltd (RMRE), which is developing a new 3GW Renewable Energy Power Generation Facility in Central Queensland. While the company has a clear roadmap for the development of the facility and the project overall, the company also needs to be aware of the risks that might occur during the course of the entire project. Since this is a large scale and complex project, simply identifying and take actions against the risks will not be sufficient. It will be essential to select a specific and standard risk management framework in order to identify the risks and apply specific procedures to manage such risks.

The purpose of this report is to analyze the case study of 3GW Renewable Energy Power Generation Facility project and develop a suitable risk management framework that will be implemented by the company to manage and handle the risks associated with the project.

2. Description of Selected Framework
There are multiple different risk management frameworks that have been approved and published by the Australian government. These frameworks generally consist of different approaches that deal with different kinds of risks. Considering the nature of this particular project and the types of risks that might occur, the chosen risk management framework that will be implemented is ISO 31000:2018 (Khan & Ali, 2017). This particular framework is suitable for enterprise level construction projects and can be used to mitigate risks throughout the life cycle of the project.

The details and features of this risk management framework are discussed as follows.

Publication History – This particular framework was published in 2018 and is a modified and updated version of ISO 31000:2009, which was scrapped at the same time. The framework consists of 16 pages of detailed standards, guidelines and information regarding enterprise level risk management that can used and implemented by the different corporate level organizations and enterprises.

Customization – In spite of providing specific standards and guidelines, the framework itself is very flexible in nature and the organizations are allowed to customize specific standards based on their own requirements. Due to this particular feature, organizations prefer this particular framework over others.

Flexibility of Nature – In addition to the flexibility in customization, it is also flexible in terms of nature and is not specific to any specific industry or sector. As a result, this particular framework can be customized and used by any enterprise level organization without having to worry about any specific nature of the guidelines (Lin et al., 2017). Hence, this framework is suitable for all kinds of organizations and moreover, this framework provides a common approach towards any risks that are easily understandable and implementable by the organizations.

Application – Another major feature of this framework is that it can be applied at any time within the life cycle of the project and also to any activity including decision making. There are many frameworks that do not offer such flexibility and the ability to use the framework for decision making process.

Considering the above the points, it can be said that ISO 31000:2018 is the most suitable framework for this particular project. This framework will provide significant amount of flexibility to the project and will also help the project team members to identify, handle and manage the risks that might occur at any point of the project life cycle.

3. Risk Management Plan Implementation

3.1 Scope Statement
The development and implementation of an Enterprise Risk Management (ERM) framework is essential to identify and manage the risks that can occur during the course of the project. The main idea is to develop a framework that will cover all kinds of risks associated with the project and ensure the stakeholders and the team members have a clear plan to combat the risks of the project.

The main scope of this risk management plan is to identify all the major and minor risks associated with the project and develop a transparent plan that will help the stakeholders to take appropriate steps that will mitigate the risks or even use the opportunities arising from the risks (Callahan & Soileau, 2017). It is expected that this framework will be very helpful in creating a risk focused culture and the project can be considered a success if all the risks are managed as per the plan without facing the negative effects of the risks.

Other aspects of the project are not within the scope of this plan and the main plan of the project will be developed separately.

The main assumption is that the overall framework will be sufficient to cover all the risks within the project but the main constraint is that this project has 3 different major components and hence, they needed to be treated differently in order to manage the risks effectively.

3.2 Implementation Strategy
The risk management plan will be implemented in such a way that the resources are utilised effectively and efficiently while also ensuring the risks are managed in a proper manner. Management of some of the risks includes purchase and use of resources like safety gears for the worker, use of insulation equipments and others and hence, the company needs to purchase only the right quantities of these resources (Li, 2018). Logistics services can be hired as necessary to procure the resources for risk management.

A timeline for the entire risk implementation along with milestones is shown as follows.

Once the risk management plan is developed, the risk management duties will be allocated to the different stakeholders. The stakeholders will have to be responsible for implementing specific measures and actions that are specified by the ERM framework implemented in the project.

3.3 Benefits of ERM to Stakeholders
The Enterprise Risk Management framework will not only benefit the project in managing and handling the risks but will also benefit the stakeholders of the project as well. This is because the stakeholders are integral components of the project and the ERM framework will help them become more involved in the project with increased focus on the risk management and success of the project. The main benefits of the ERM framework to the stakeholders of the project are listed as follows.

Benefit 1: The ERM framework helps the stakeholders to develop a more risk focused culture within the organisation. The main advantage of a risk focused culture within an organisation is that the awareness of the risks is always high and the stakeholders are able to identify the risks early (Bogodistov & Wohlgemuth, 2017). As a result, the development of risk management plan becomes easier for the stakeholders while executing a project.

Benefit 2: Due to the use of a standard ERM framework, the risk reporting process also becomes standardized. Without a specific framework, there is no standard risk reporting process and hence, they become irregular and incomplete in most cases. This issue results in the stakeholders remaining poorly informed about the actual risks identified in the project and as a result, the organisation faces major complications in later stages of the project.

Benefit 3: The ERM framework increases the focus and perspective of the stakeholders regarding risk identification and management. The stakeholders are now more aware about different varieties of the risks that might occur in the project and not just certain and specific generic risks.

Benefit 4: The use of ERM framework by the stakeholders increases their efficiency in handling and managing the resources for risk management within the project. Without the framework, the stakeholders often do not have proper knowledge or efficiency regarding resource usage and as a result, there is often wastage of resources in the project.

Benefit 5: While managing risks in major scale projects, the organisations need to comply with standards and guidelines set by the government. However, the stakeholders are not always aware of these standards and thus compliance often becomes a major issue in the projects (Lai & Shad, 2017). The use of ERM framework ensures coordination of the actual risk management procedure in the project with the regulatory and compliance matters that are essential for all organisations to follow.

3.4 Organisational Policies, Strategies and Objectives
The implementation of the ERM framework will also have to comply with specific organisational policies, strategies and objectives. The company has a clear roadmap for the development of the facility and the project overall and the risk management framework needs to be aligned with the organizational policies and strategies. In other words, the risk management framework must not suggest any specific actions that violate the organizational policies and strategies. The stakeholders should be aware of this factor and ensure the risk management framework is verified and aligned with the organizational policies before implementing the same in the project.

3.5 Approval Form from Governing Bodies
In order to implement the risk management framework in the project, it will be required to earn approval form from governing bodies that are directly or indirectly associated with the project. Without the approval of any one of the governing body, the plan will be rejected and the project will go through without a specific risk management plan in place. The first main governing body, whose approval is necessary, is the Queensland government. This is a very large scale project and even the risk management framework will involve use of major quantities of resources (Rehman & Anwar, 2019). Hence, prior to the start of the project, the approval of the Queensland government is necessary regarding the use and application of risk management plan in the project. The government will analyse and study the risk management plan to determine if it meets specific guidelines and standards regarding the risk management procedures in large scale enterprise based projects. If the review results are satisfactory, the government will then approve the plan for use in the specific project.

In addition to the government, the approval of the project steering committee will also be necessary. Once the risk management plan is developed, the steering committee will review the entire plan to determine whether it is realistic and feasible or not. If the plan is deemed realistic and feasible and approved by the government, the steering committee will sign off the approval for the implementation of the plan in the project.

The approval form is shown as follows.

4. Development of the Plan and Justification
This particular plan was developed after an in-depth study of other case studies as well as information provided in various literature works. The analysis of literature as well as study of secondary data helped significantly in the development of this report and suggestion of appropriate risk management strategy for the company. The basis of the research was the risk management framework that was necessary in order to handle and manage this project without any major problems or complications. The mass scale of the project means it is always likely to face major risks throughout its life cycle and without a standard risk management framework in place; there are high chances of negative impacts and issues that can occur for the project and cause significant problems for the organisation. Again, without a suitable risk management framework used, the organisation may not be able to handle and manage the risks occurring in the project. Hence, a great deal of research and data analysis was necessary in order to develop a suitable risk management plan for the organisation. This particular plan will help the organisation to have a suitable framework in place for identification and management of the risks throughout the project lifecycle and complete the project successfully without any major complications.

References
Bogodistov, Y., & Wohlgemuth, V. (2017). Enterprise risk management: a capability-based perspective. The Journal of Risk Finance.

Callahan, C., & Soileau, J. (2017). Does enterprise risk management enhance operating performance?. Advances in accounting, 37, 122-139.

Khan, S. N., & Ali, E. I. E. (2017). The moderating role of intellectual capital between enterprise risk management and firm performance: A conceptual review. American Journal of Social Sciences and Humanities, 2(1), 9-15.

Lai, F. W., & Shad, M. K. (2017). Economic Value Added Analysis for Enterprise Risk Management. Global Business & Management Research, 9.

Li, L. (2018). A study on enterprise risk management and business performance. Journal of Financial Risk Management, 7(01), 123.

Lin, Y., MacMinn, R. D., Tian, R., & Yu, J. (2017). Pension risk management in the enterprise risk management framework. Journal of Risk and Insurance, 84(S1), 345-365.

Rehman, A. U., & Anwar, M. (2019). Mediating role of enterprise risk management practices between business strategy and SME performance. Small Enterprise Research, 26(2), 207-227.

Shad, M. K., Lai, F. W., Fatt, C. L., Klemeš, J. J., & Bokhari, A. (2019). Integrating sustainability reporting into enterprise risk management and its relationship with business performance: A conceptual framework. Journal of Cleaner production, 208, 415-425.