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Question: Provide an analysis of the broad strategic business context of your selected project. Include details about the departments, stakeholders, location and area of business that may influence uncertainty, risks and issues related to this project. Explain why analysis of the business context is important in project risk appraisal. Answer: Risk management is an approach to identify, analyze and to either accept or to mitigate an event that has a probability of occurrence and could also have an adverse impact on the business of an organisation (BusinessDictionary.com, n.d.). Risk management is one of the most important tasks that the managers have to undertake right from the beginning of a project work as a project can be vulnerable to hundreds of risks that can hinder the operations of a project (Investopedia, 2005) Most of the times, the success of a project work depends upon the ability of the company to deal with the risks that come in the way of the project. If the management is well equipped to deal with the upcoming risks, the project has a greater chance of success whereas if a management does not have the tendency to deal with risks, it will be affected by uncertainties and will ultimately fail in the project (Mindtools.com, n.d.) CONSTRUCTION PROJECT A project related to the planning, coordinating and controlling the construction of residential, commercial, heavy civil, industrial, and environmental buildings is known as a construction project. Construction projects are the costliest projects in the world that account for almost 8-9 percent of the worlds gross domestic product. Due to their large budget and accountability, construction projects are highly vulnerable to a number of risks, which makes it crucial for the project managers to adopt a risk management strategy from the very beginning so that the project has higher chances of success. Further, the involvement of too many stakeholders, in the construction project, makes the project even more vulnerable to risks (Stakeholdermap.com, n.d.). The construction industry has been prone to high risks die to a number of factors. Below given is the lost of few of the factors that increase the risks to a construction project: Issues related to cost and time in the completion of the project High possibilities of disputes Intense competition in the construction industry Reduced margins and risk of losing profits Poor level of worker safety and occupational health Tendency of the contractors to save greater time and money Pressure related to safety and health of the workers Expectancy to receive higher returns of the investment made in the project RISKS IN CONSTRCUTION PROJECTS The risks which are not determined before or during a construction project can have a much greater effect on the project as compared to the risks that have previously been assessed by the management and the risks in construction project can cause very huge loss or damage to life, property and finances of the stakeholders. In general, the risks related to a construction project can be classified into business risks, financial risks, technological risks, project risks and political risks. Let us now discuss the risks that are associated with the construction projects: Risks related to the completion of a project these risks arise when a company undertaking a construction project is not able to complete the project within the specified time. The stakeholders involved in this risk are the contracting company, the contractor and the end users (if any). The contracting company suffers because the project gets delayed. The contractor on the other hand suffers because he/she has to pay for the delays in terms of pre-fixed penalties or deductions on the price of the contract. The contractor also loses his or her reputation for not completing the project on time. If there are any end users of the building being constructed, they suffer because they are deprived of the opportunity to use the structure (Cidc.in, n.d.) Price risk These risks are related to the price of the project, which can fluctuate due to the supply-demand factors. In general, the price of the projects is fixed in the very beginning by the contractors as they prepare the estimates and budgets of the project and required resources. Some contracts are awarded at fixed prices while some contracts can be awarded at variable prices, which means that the prices of the project could vary along the timeline of the project. As a result, any kind of fluctuation in the prices of the resources could actually have a huge impact on the contractor as well as on the contracting party. Resource risk these risks are related to the shortage of raw material that might be required for the day to day work operations of the project. Construction projects are very large in size and they require a vast variety of resources everyday. The unavailability of these resources ca actually has a very negative impact on the project as it might get delayed or the work might come to a halt while the contractor would still have to pay for the labor and operating charges. If the risks related to the availability of resources are not accounted for, the contractor might suffer as there will be delay in the project ("Construction Industry Development Council", n.d.). Technological Risks the technology being used in a construction project can also have significant risks as it might not be up to the mark and could also render wrong or inappropriate results. The technology being used can also effect the successful completion of the operations and the structures might not get built properly. Failure due to technological factors can have impact on the contractor, the contracting company and on the end users as well. The technology failures can easily be seen and are definitely bound to occur if not taken care of. If technological failures occur, the contractor would lose his or her reputation, the contracting party might incur losses while the end users will have to use a structure while is not properly constructed and is prone to the risk of failures. Political Risks Construction projects are also highly vulnerable to political risks as the changes in government, taxes, laws, regulations and policies can have serious impacts on the operations of the project. The local and the national government has a major role to play in the construction project work. Some projects can also face resistance from government agencies half way down the timeline and therefore, it is recommended that the constructors should assess the government risks right in advance and should work accordingly. If the construction project has been initiated by the government itself, then the contractors also include the risk of delays in payments, which can cause a breach in the trust between the two parties. The stakeholders in such risks are the construction companies, the government and the contracting firms. The construction company might lose its business if the political or legal system changes and is against the project (Schieg, 2006). Financial risks There are a great deal of financial risks involved in a construction project. Construction projects are usually very long in duration i.e. a smallest construction project can take up to 1 year to get completed whereas construction of huge buildings or infrastructures can take up 5-q0 years. In such conditions, the financial risks related to the project increase. The contractor needs to make a proper assessment of the time value of money so that he can estimate the cost of the project that would incur after the completion of the project, which would include the interest rates, hike in the prices of the resources, time value of money, exchange rate risks, etc. if these risks are not accounted for, the contractor might have to incur very heavy losses and would not be able to complete the project successfully ("Construction Industry Development Council", n.d.) Health and safety risks Another major risk in the construction industry is related to the health and safety of the construction workers. The employees working in construction industry have to deal with a number of complex machines and work in complex environment that has the risk of failure. Further, the material can sometimes be harmful and can cause injuries if it is not handled properly. It is considered to be one of the biggest risks in the construction industry as a number of workers become victims of health related issues and injuries on a daily basis. The key stakeholders in such risks are the contractor and the employees/workers. The workers would obviously be affected if the work conditions have an adverse impact on their health whereas the contractor might have to pay for the treatment of the employees in case they meet an accident while they are working at the construction site. Therefore, it is highly important for the construction companies to maintain a safe working en vironment ("Risk Management in Construction | process of managing risk", n.d.). The risks identified above are the most important risks when considered from the viewpoint of construction project managers as they can have the greatest impact on the operations of the project. These risks also involve the key stakeholders of the project and it makes it even more important for the managers to asses these risks right from the planning phase of the project. RISK ASSESSMENT TOOLS AND TECHNIQUES There are a number of risk management strategies, tools or techniques that the management of construction firms can use to assess the level of risks and their impacts that would likely be experienced by the organisation. The techniques and strategies used for risk assessment can vary from company to company, industry to industry and project to project. Let us now discuss some risk management strategies or tools that can be used by the managers to assess the risks in the construction project: Risk assessment matrix a risk assessment matrix is one of the best and the easiest ways in strategic and risk management to identify, analyze and manage any type of risks that might occur in the lifetime of a project. The matrix is also known by other names, such as probability and impact matrix. It is a tool that can be used right from the starting of a project to the end of the project and analyze the risks continuously throughout the lifetime of the project (Brighthub Project Management, 2016). Using a risk assessment matrix, the management aims at rating the risks according to the probability of the occurrence of the risk and the likely impact that it would have on the organisation if it actually occurs. The risks are arranged according to priority in the matrix while the priority is decided by computing the product of probability of occurrence of a risk and the likely impact that it would have on the organisation when it occurs. In general, the probability of the occurrence of a risk can be rated in percentage while the impact can be classified into negligible, minor, moderate, significant and severe. For example, if a risk is identified to have an 80-100% probability of occurrence and would have a severe impact on the project, the risk is classified as an extreme risk while a risk with a 1-20% possibility of occurrence and negligible impact on the organisation is classified as minimum risk. The risks are generally divided in to 4 categories, i.e. extreme risk, high risk, moderate risk, low risk and minimum risk ("What is a Risk Matrix?", 2013). Further, these risks can be related to consequences too. In general, minimum risks are known as insignificant risks that have a negligible amount of damage to the the project, low risks are known as marginal risks that do not have much significant damage to the project, moderate risks are the ones which are not a great threat but can still cause of sizable damage, high risks are known as critical risks as they can have significantly large consequences while extreme risks are the ones which have catastrophic consequences, i.e. these can render the project completely useless (Risk Matrix, 2005) The advantages of using a risk matrix are given below: The system of risk matrix is beneficial in promoting a robust discussion so that the actual discussion is much more useful than just the rating. Risk matrix provides a very useful approach that helps in the prioritizing risks according to their possibility of occurrence and possible impact on the organisation. It also helps the management in controlling and running a risk workshop By assigning priority to different risks, the management can efficiently deal with the risks that have a higher priority than the ones which have less possibility of occurrence and would also have a negligible impact. One of the best advantage of a risk assessment matrix is that it provides a graphical or a visual representation of the risk data. Risk Register the risk register is another efficient approach that helps in maintaining a record of all the risks and the results of qualitative risk analysis, quantitative risk analysis and risk response planning. The basic objective of risk register is to keep a detailed account of identified risks, including their description, category, possible causes, possibility of occurrence, impact on the objectives, proposed responses, owners and current status. The risk register is always shared amongst the stakeholders of the project so that they can experience a higher degree of involvement in the project risk management. It facilitates a system of decision making in the organisation by proper definition of the risks and by involving all the stakeholders in the process of risk management (Developing and Populating a Risk Register Best Practice Guidance, 2009) The main components of a risk register are given below: Date the first and the most important component of a risk register is the date. It is important to note the date on which the risks are either identified or modified. The other types of dates that can be included are target or completion dates. Description of the risk this is the column or the row that provides a detailed description of the risks Risk type this is a very important component of the risk register where the type of the risk is identified. This defines the area or the operations to which the risk is related or the business area which would be most impacted by the risks. Likelihood of occurrence the likelihood of occurrence basically provides a description of the possibilities that the risks has of occurrence. The possibility is generally divided into percentage, such as Low (0-30%), Medium (31-70%) and high (70%). Severity of effect it is another component of the risk register which defines the impact that the risks would have on the operations of the organisation. Risk Rank this component of the risk register defines the magnitude or the level of the risk. In general, the rank of a risk is defined as the product of the likelihood of occurrence and the consequences of the risk. Risk trigger these components basically define the triggers that would indicate that the right time has come for the management to deploy all the contingency or preventive measures that they had planned earlier. Prevention plan these are the plans that the management has planned earlier to deal and prevent the risks that had been identified. Contingency plans these plans are related to the situations where the management would want to address the risks once they have occurred (Development, 2013). Risk owner this component of the risk register identifies the people who are responsible for the implementation and prevention of risks using the prevention and contingency plans. Some of the risk owners can be stakeholders, the project team, the project manager, project sponsor. Residual Risk The risk that still remains after all the contingency and prevention plans have been implemented is known as the residual risk and even this is recorded in the risk register (register, 2016). Let us now discuss some of the importance of risk registers: It helps in gaining a better understanding of the risks that the organisation or a project is likely going to face in the near future. It increases the awareness of the project management teams about the extent of the risks that have been identified It helps in differentiation and identification of risks that the organizations management is ready to accept and the level of risks that the organisation itself is willing to accept. It helps in identifying the ability of the management to control and reduce the risk if it occurs (Roughnotes.com, 2016). It helps in reporting the status of the risk at any point of time throughout the lifetime of a project It helps in identifying the triggers and important events that help in recognizing the beginning of a risk related event. It has the greatest benefit of identifying the risk owners, the risk controllers and involving all the stakeholders in the decision making process by sharing the right information with them. It helps in differentiating between the contingency plans and the prevention plans (Roughnotes.com, 2016) It also has a benefit of recorded dates. It informs the management about each and every modification or changes made in the risk management plan (Healthandsafetyatwork.com, 2016). Both the above techniques identified for the purpose of risk assessment and management are two of the best techniques available for any of the organisation to increase the chances of success of its project by successful identification, planning and mitigation of risks. They are not only just flexible but also provide an approach that helps in identification of risks right from the beginning of a project to the end while there can be significant changes made in the running life cycle of a project. Therefore, it is important to undertake such approaches in the life cycle of a project which allows the project management team to have a flexible approach towards risk assessment, management, control and mitigation . IMPLEMENTATION AND RISK PLANS It is never enough to just have risk management strategies until and unless they are implemented along with all the appropriate resources to deal with the risk. An organisation that assesses the risk and is not able to deal with them is never successful in saving the project from the damages of the risks. In general, the risks can be positive and negative. The positive risks are the ones which, if occur, have the potential to get benefits for the company and the project on the overall whereas the negative risks are the ones which, if occur, can have major drawbacks for the company and can result in the failure of the project in extreme cases. Therefore, it is very important to incorporate risk management strategies along with all the required resources to make the best use of the positive risks and at the same time neglect or prepare to deal with the negative risks so that the project can be saved from failure. RISK MANAGEMENT IN PROJECT LIFE CYCLE A major area where the companies fail in the project management approach is when they are not aware of the stages in a project life cycle where as risk management program should be identified and implemented. In general, there is not such particular position in a project life cycle where the risks should be identified by the managers. Rather, the assessment of risks should be started well before the commencement of the project and should be carried out until the project is completed with success. In general, a project has to go through a number of stages and the long duration of construction projects greatly increase the vulnerability of the projects to the changes in risk. In construction projects, new risks can arise on a daily basis, which can be extremely dangerous and can be more drastic than the ones which had been already identified by the project management team. In such a condition, it is definitely required that the risks should be identified on a daily basis according to the changing situations. It should be ensured that with the completion of every short term goal and the beginning of a new operation, the management should once again check and identify the risks that might have a greater possibility of occurrence than before. The management should carefully compare the prevailing situations with the risk register and the risk assessment strategies to once again consider the risks that have failed to occur till that particular time while it would also provide an in sight to the upcoming risks according to the prevailing situations (Anon, 2016). The continuous assessment of risks throughout the life cycle of a project would render the following advantages to an organisation: A system of continuous assessment of risks helps in eliminating the redundant risks or the ones which have failed to occur. It helps in identifying new risks that may arise as a result of change in the situations It helps in reassessing the previously identified risks and assigning them new probabilities based upon the new probability of occurrence and updated impact that could be born by the organisation if the risk occurs. Sometimes, in construction projects, changes in weather conditions, employment rules regulations, governmental policies, etc. can introduce new risks in the project life cycle. Therefore, it helps in reassessing the risks and finding out the new ones. It helps in updating the risk registers and matrix continuously, throughout the life cycle of the project, until it reaches its final stage or is successfully completed. STRATEGIES TO UPDATE RISK REGISTERS THROUGHOUT THE ENTIRE PROJECT As discussed above, it is highly important for the project management teams to continuously make assessment of the risks that have occurred, that did not occur and the ones which have increased probability of occurrence. The risk registers require continuous update so that a better approach towards risk management can be ensured and the chances of success of the project can be increased exponentially. It is never enough to just create a register that contains components related to risks while there is no valid information or if the information is not updated from time to time. The risk registers should evolve along with the life cycle of the project. Let us discuss some strategies that can ensure regular updation of risk registers and other tools and techniques that the organisations or the risk management teams used to analyze and plan to deal with the risks that might occur in the life cycle of a project: It is essential that the risk registers are circulated in all the operational units of the project operational teams so that each one of them can give their feedback about the information contained in the risk registers or make changes that they feel are necessary to keep the register updated. The project manager can fix weekly meetings where front line leaders from all the operational units of a construction project can come together and help in the process of re-assessment of risks. Each of the front line managers are aware of the status of the project and have the ability to provide valuable information that can be used in the process of continuous updation of risk registers. The project manager can also implement a system where the managers or the leaders from all the departments can provide their feedback about the project status and the possibility and impact of future risks through a separate register, which would be continuously analyzed by the risk management team. The team would then extract valuable information from the feedback provided by the operational heads and would make the required changes in the risk registers. Another strategy that the project managers can use to ensure continuous updation of risk registers is to use computer based softwares to feed important data and information. Information systems have always proved their efficiencies in dealing with data and information and allowing the user to easily access and modify them whenever required. Using information systems and softwares, the project managers will be able to track the evolution of the risk registers throughout the lifecycle of the project and would be able to introduce the desirable changes whenever required. Keeping the risk registers and other strategies used for risk assessment is important not just for the project team but is also important for the stakeholders as it provides timely and important information to all and increases their awareness about what exactly is happening in the project. Some of the stakeholders might not be directly involved in the day-to-day activities of the project but they still deserve to know about what all is happening in the project. Further, as they are not involved in the business directly, they can provide valuable feedback to the management by assessing the information from risk matrix or registers from time to time, which might have been actually overlooked by the project management team. ROLE OF STAKEHOLDERS IN RISK REGISTERS There are a number of stakeholders in a construction project, such as the contractor, the sponsor of the project, the employees, the end users, etc. and all of them have their own roles and responsibilities. It is obvious that when the stakeholders have their own stakes invested in the project, they too have some responsibilities towards the project and the risks that are associated with the projects. It becomes the responsibilities of the project management team to involve the stakeholders in the decision making and risk management process and at the same time it is also the responsibilities of the stakeholders to actively participate in the project management process. The stakeholders should be informed of the project status from time to time. The risk registers or the risk matrix should be shared with all the stakeholders as there is always a chance of human error because of which the management could oversee some of the important risks that have a likelihood of occurrence whereas an external viewpoint of the stakeholders and their involvement would ensure that the important risks are not overlooked. Further, the important stakeholders of the project can also arrange for regular meetings or functions where the project management teams would have to come together and disclose all the important information and data to them. In a way, it also falls upon the stakeholders to decide the level up to which the stakeholders want the management to involve them in the decision making process related to risk management. OUTLINE OF RISK MANAGEMENT STRATEGY Risk management is not an easy task at all. There are a number of companies that have tried their best to assess and deal with the risks related to the project but millions of them have fallen victims to identified as well as unidentified risks. One of the major reasons behind the failure of companies and projects due to risks is that they do assess the risks and plan for the mitigation of risks but they do not adopt any approach that could help them reassessing and identification of new risks that come up due to changes in situation. Sticking to the risks and mitigation measures decided before the commence of a project makes a company more vulnerable to the changing environment and any new or unidentified risk can hinder the project lifecycle because the companies are not prepared to deal with them. Even with the implementation of risk registers, a number of companies have reported failure because they do not have proper knowledge and resources that could help the management in prop er utilization of risk register strategies. A number of experts have also given arguments that the failure of risk registers is not just because of individual errors but are also a direct result of the organisation culture and nature, which might not fit with the tools or techniques being used. Another major reason for the failure of risk registers is that it limits the thinking capability, gut feelings and emotions of the managers as they become largely dependent on the information that is explicitly available to them. Further, there is also a belief amongst the managers that risk registers mainly focus on the future which increases their chances of failure because the future can never be accurately determined (Budzier, 2011) Let us now prepare a plan that would help an organisation in preparing and dealing with the risks that might be experienced by them in the near future: First of all, the first and the foremost thing that the management needs to ensure is that the risk management should be incorporated at each and every level od the organisation. The risk management program should be provided with all the resources that are necessary for the success of the project (Blackman, 2015). Secondly, the risk management process should be commenced right from the beginning and should be carried out continuously till the end of the project. The management of risk should be focused on the present as well as on the future, rather than just limiting the program to either the present variables or the future possibilities. Thirdly, no matter what tools or techniques are used for the purpose of risk assessment and mitigation, each and every stakeholder in the project should be aware about all the important information and should also feel that they themselves have a responsibility towards the process of risk management. Regular meetings and sessions should be arranged to identify risks and make necessary modifications in the risk management tools and strategies. Fourthly, the management should actively prioritize the risks that are identified during the lifecycle of the project based upon their likelihood of occurrence and the management should be well prepared to either accept the risks, plan for the mitigation of the risks or to reduce the impact of the risks if they cannot be avoided at all. Fifthly, it is also important for the management to use information systems and technologies in the management of the risks because risk management and assessment is vulnerable to human error and companies cannot afford to lose their projects because of any kind of human error (Developing a Risk Management Strategy, 2005). Lastly, the organisation should never rely upon a single tool or technique to assess and manage risks. For example, organisations can rely upon risk registers to involve stakeholders and to assess and manage risks while it can also adopt a risk assessment matrix to graphically represent the status of the project and the risks associated with it from time to time. CONCLUSION Risk assessment and management is one of the most crucial program that must be carefully planned and executed by all organisations that take up any kind of project, small or big. The business organisations, in the present scenario, are working in a global environment which is highly complex and changing with every second. In such an environment, business organisations and their projects become vulnerable to the changing conditions, which introduce new risks at every turn. Therefore, risk assessment and management should be given a greater importance than it is given in the present times so that the chances of the success of the project can be increased exponentially. REFERENCES Blackman, A. (2015). Effective Risk Management Strategies. [online] Business Envato Tuts+. Available at: https://business.tutsplus.com/tutorials/effective-risk-management-strategies--cms-22887 [Accessed 10 Jun. 2016]. Budzier, A. (2011). The risk of risk registers - Managing risk is managing discourse not tools. 1st ed. [ebook] pp.5-15. 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