NHBK Case Study Assignment: Risk Management (RM)

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Case Study
Definitions
Risk Management (RM)
Risk management entails recognition of existing uncertainties through assessment, and application of strategies in order to control implications of these uncertainties to acceptable levels (Ennouri, 2013). Most projects, especially those that are executed under engineering systems frameworks such as the National Aeronautics and Space Administration (NASA), involve risks or uncertainties. These uncertainties necessitate coming up with the right strategies in order to identify them and come up with the best ways to address hem in order to meet the set objectives. It is therefore a standard procedure for risk management to provide the course of action that will ensure efficiency in identification, assessment as well as communicating the issues associated with the risks to the relevant levels of administration (Berg, 2010).
Risk-Informed Decision Making (RIDM)
According to Dzefuli, Benjamin, Everett, Maggio, Stamatelatos, and Youngblood (2013), Risk-Informed Decision Making (RIDM), refers to a process by which the best in alternative in risk management is selected in order to make sure that there is effectiveness in attaining the set objective. This involves a three-step-process of alternative risk identification, risk analysis and alternative selection as per the set performance requirements.
Continuous Risk Management (CRM)
Dzefuli, et al (2013), defines Continuous Risk Management (CRM) as a process which focuses on the execution of the best alternative which has been selected in risk management stage with an aim of ensuring that all the set requirements are accomplished. The implementation of the alternative is undertaken at different levels depending on the project management hierarchy levels and the risk level of the uncertainty being mitigated. The implementation should be carried in a way that it helps the project to meet its timelines as well as within the budget allocated to the project.
Relationships between RM, RIDM and CRM
Risk Management, Risk-Informed Decision Making and Continuous Risk Management are closely related in that, RM is an extensive process within which the identification of underlying uncertainties as well as possible mitigation strategies in the process of undertaking a project are considered. The actual process revolves around RIDM and CRM. This relationship is best demonstrated in the figure 1. Below.
Figure 1: RM as an integral part of interaction between RIDM and CRM (source: Dzefuli, et al, 2013).
From figure 1 above, the RIDM involves the selection of the best alternative from a list of a number of possible alternatives is selected to be implemented in the next stage of CRM. The figure also shows that, CRM may be executed at different levels depending on the desired performance requirements or outcomes in reference to RIDM.
Meaning of statement cost effectiveness in instituting risk management
Risk management itself is an added cost to a project, therefore, there is a need to ensure efficiency through cost optimization by choosing an alternative that is less costly but meets the required standards in terms of safety and other quality standards. This the...