Risk permeates everything, and extends far beyond cost, affecting workers’ safety, the firm’s security in respect of its operating systems, even its governance and the effects of its operations on the environment. More companies are beginning to proactively apply ERM principles to the management of their risks, and are finding it highly effective. Thus, it is being increasingly incorporated into strategy and, more importantly, the processes that support the firm’s decision-making. But managing risk at enterprise level, and managing it at project level may vary quite extensively. Project risk management relates directly to risks that arise from, or because of, the project.
It includes the identification and evaluation of project risks; the development of appropriate plans to mitigate those risks; implementing these mitigative measures and monitoring throughout the project period. All this is geared towards making better decisions so that the project’s objectives may be achieved. ERM, with its scalability and focus on understanding issues, processes and procedures, will go a long way towards the risk management of individual projects. One of ERM’s pillars is understanding the kind of risk that challenges the firm; it applies the same level of analysis to all enterprise risk including operational, financial, governance, strategic and compliance risk.
3 The IERP® Monthly Newsletter December 2021
Can ERM Knowledge Be Applied To Managing Project Risk