Step 3: Response
The third and last column is probably the most important because it is here that you determine how to respond to each of the risks previously identified and assessed. Risk management strategies you might employ include: • following your firm’s policy to concentrate on specific project types to garner expertise; • seeking repeat clients with whom you have already established a rapport; • creating a system of effectively communicating with your client on a regular basis; and • consistently documenting that communication to confirm your mutual understanding in writing. Some of the information you will need to complete the matrix may be unavailable in its entirety as you begin to consider undertaking a new project. However, the matrix is designed to facilitate the fourth step of risk management: control. The matrix can be updated and reassessed as the project progresses. Step 4: Overall Assessment There are summary lines (“Overall Assessment”) within each broad category of risk identified. These lines permit two types of analysis. First, you may determine after looking at the first category or two that a project is simply too risky—even with all of the risk management tools available to you, you cannot find a way to effectively manage the risks. If you find this to be the case, your best risk management strategy is to avoid the project altogether. The other reason for the individual summary lines is that once you have completed the entire matrix, you will be able to go back and assess which aspects of the project are most risky. This will help you in devising your overall risk management strategy. The final step in completing this matrix is to carry each of the summary lines down to the last section, “Overall Assessment.” This allows you to have a clear, concise picture of the risks associated with the project. Your final analysis can be entered in the line labeled “Result.” Then, based on this final analysis, you can complete the “Recommendation” section.
Step 5: Recommendation
The “Recommendation” section is analogous to a traffic light: • Proceed” is a green light —this project should go smoothly as long as you follow the risk management strategies you have defined. • “Proceed with Reservation(s)” is a yellow light —in this case, you have some concerns, but no clear plan yet for addressing these concerns. This may happen because you do not have enough information to effectively complete the matrix. You have two options: (1) obtain the needed information or (2) establish appropriate contingencies to assess and manage the risks as the project progresses. • “Proceed Only with Change(s)” is another yellow light —in this case there are a few issues that concern you, but these can be addressed with a few changes. You can check these recommended changes off right on the matrix as they are made. • “Do Not Proceed” is a red light —there are too many risks or not enough strategies to manage the risks to consider contracting for this project. We hope this matrix provides you with a helpful tool in managing your firm’s risks. You can refine it and update it over time to make it most useful to you. Remember: firms that tend to profit the most are firms that learn to most effectively manage their risks. 44 • From Risk to Profit - Benchmarking and Claims Studies Victor
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