1. Monitoring and Evaluation Systems for NARS organizations in Papua New Guinea
Day 4. Session 12.
Risk Management

2. Learning objectives
By the end of this session, participants will be able to:
Define risk management
Analyse risk management
Identify examples of risks to the program
Plan and develop strategies to deal with those risks

3. Risk
any factor (or threat) that may affect adversely the successful completion of an intervention
achievement of its results and objectives
adverse effect on resources, time, cost and quality

4. Risk Management
Purpose:
to apply a systematic process to reduce the effects of uncertainties that may compromise the achievement of the intervention’s results and objectives

5. Risk Management
process that assists managers at all levels to make correct and informed decisions
for organized assessment and control of risks
involves identification, analysis, evaluation and monitoring of risks, and
development of strategies to deal with those risks

6. Risk Management The risk management process comprises five steps:
Identification and definition of risks
identify, define and record risks with stakeholders
Conduct risk assessment
determine causes, quantify them and estimate their likelihood and consequences
Conduct risk evaluation
consider and prioritize according to potential impact; determine level of acceptability

7. Risk Management Develop risk management plan
identify the actions required to reduce, contain and control risk; assign responsibilities for actions; define risk indicators, risk monitoring arrangements and reporting mechanisms
Implement risk management plan – manage, monitor, update risks
implement mitigating actions; verify occurrence of risk using indicators; review/update risks regularly

8. Risk Management in NARS organizations
Risk management and monitoring at all four organizational levels.
organization
to analyse and manage risks that may impede the achievement of the vision and mission, or purpose and goal of the NARS organization
Program
to analyse and manage risks that may impede a particular program from achieving its purpose

9. Risk Management in NARS organizations
Project
to analyse and manage risks that may impede a particular project from achieving its outputs or purpose
Project activity
to analyse risks that may impede a particular project activity to implement its tasks (i.e. work plan), use its budget efficiently and achieve its outputs

10. Risk Management in NARS organizations
Risk Analysis
Collaborative approach involving the key stakeholders of intervention
Project activity and project
project leader and project teams, partners
Program
project and program leaders, program partners
organization
program leaders and senior managers, partners

11. Risk Management in NARS organizations
Risk Analysis
during the planning or design phase of the interventions
analyse risks separately for each organizational level
risk analysis for project and project activity levels may be conducted jointly
completed before the implementation of the intervention begins
becomes regular recurring activity during implementation
risk matrix is the tool used

12. Risk Matrix Risk Matrix Template
Adapted from: Tasmanian Government (2005) - Tasmanian Government Project Management Guidelines Version March 2005; Section 6: Risk Management (incl. Project Risk Register – Template and Guide Version1.3, April 2008); Inter Agency Policy and Projects Unit, Government Information and Services Division, Department of Premier and Cabinet, Tasmania

13. Risk Matrix
Risk Evaluation Table – a key to risk ratings and risk grade
Table 1: Rating for Likelihood and Level of Consequences for each risk L
Rated as Low E
Rated as Extreme (used for Level of Consequences only) M
Rated as Medium NA H
Rated as High
Table 2: Risk Evaluation Table – combined effect of Likelihood and Level of Consequences to determine the Risk Grade
Level of Consequences
Likelihood
low
medium
high
EXTREME 1 2 4 3
Adapted from: Tasmanian Government (2005) - Tasmanian Government Project Management Guidelines Version March 2005; Section 6: Risk Management (incl. Project Risk Register – Template and Guide Version1.3, April 2008); Inter Agency Policy and Projects Unit, Government Information and Services Division, Department of Premier and Cabinet, Tasmania

14. Risk Matrix – Table 3: Recommended actions for grades of risk
Risk Grade
Risk mitigation actions 4
Mitigation actions, to reduce the likelihood and level of consequences, to be identified and implemented as soon as the project commences as a priority. 3
Mitigation actions, to reduce the likelihood and level of consequences, to be identified and appropriate actions implemented during project execution. 2
Mitigation actions, to reduce the likelihood and level of consequences, to be identified and costed for possible action if funds permit. 1
To be noted - no action is needed unless grading increases over time.
Table 4: Change to Grade since Last Assessment
NEW
New risk
<
Grading decreased –
No change to Grade
>
Grading increased
Adapted from: Tasmanian Government (2005) - Tasmanian Government Project Management Guidelines Version March 2005; Section 6: Risk Management (incl. Project Risk Register – Template and Guide Version1.3, April 2008); Inter Agency Policy and Projects Unit, Government Information and Services Division, Department of Premier and Cabinet, Tasmania

15. Risk Matrix tool for managing and reducing the identified risks
document risks and risk mitigation strategies being pursued
documented framework from which risk status can be reported
ensure the communication of risk management issues to key stakeholders
mechanism for seeking and acting on feedback to encourage the involvement of the key stakeholders
identify the mitigation actions and associated costing

16. Risk Management in NARS organizations
Risk Analysis
results of risk analysis will be included as part of the intervention’s M&E documentation
risk matrix should be updated on an annual basis (or more often if required)
include risk matrix update in an M&E schedule of events for the intervention

17. Risk Management in NARS organizations
Planning risk mitigation actions
identify risk mitigation actions for severe or high risks
describe responsibilities for mitigation actions
establish timelines when mitigation actions will occur
record in the risk matrix
severe risks may require an adjustment to the planning and design of the intervention

18. Risk Management in NARS organizations
Planning risk mitigation actions
plan the risk mitigation actions further during implementation of intervention
possibly record in a separate document, such as a risk management plan
in smaller interventions the risk matrix may suffice
managers report on the timeliness and success of the mitigation actions in regular reporting

19. Risk Monitoring
risks need to be monitored throughout the life of the intervention
reviewing risk analysis annually ? is one method to monitor risks for medium to low risks
severe and high risks may require the development of risk indicators to measure the threat
monitor risk indicators as early warning when a risk may occur and whether a risk becomes inacceptable for the intervention