Coping With Multiple Uncertainty Factors Through Risk Management

In the past decade, the need to improvenegative implications of business events and
organizations' capability of coping with the changingpreventing it. However, the risk management
environment and multiple uncertainty factors hasstandard rules that exposure to risks may have a
risen significantly. Managers from different marketpositive outcome for an organization based on the
sectors are implementing various methods anddefinition of risk as an exposure to uncertainty
processes in order to handle uncertain eventsresults, or a deviation from the planned or the
with an emphasis on managing their negativeanticipated.
impact on organizations and projects managedRisk Management Process
within them.The process described in the new standard is
The reasons for this are many. Technology andpresented in Figure 1 below. As it was mentioned
work methods are becoming more complex, whileabove, it fits the internationally acceptable
the business landscape is characterized bystandards and processes to operational risk
competitive play rules and regulatory norms, suchmanagement and to the risk management
as the Sarbanes- Oxley (SOX) Act and Bazeldefinition of the PMI®. The process comprises
regulations, and international models, such asseveral iterative phases that have to be
CMMI®. Recent research has demonstratedassimilated into the procedures and culture of an
that those organizations that are implementingorganization for achieving continuous improvement
effective risk management processes areand the best management practice.
significantly increasing their chance to reach theRisk Management Process - Main Components
goals set before them by reducing operationalEstablishing Context
costs.The analysis of the internal and external contexts
While attempting to meet the challenge, a projectof the risk management process that form the
manager is confronted witha myriad of tools andprocess landscape setting up measurements and
methodologies hosted under the same roof ofcriteria required for risk measurement and
"Risk Management" promising streamlined solutionsanalysis.
to managing operational uncertainty within anRisk Identification
organization. It is not surprising that Googling forIdentifying the risks the organization/project
"risk management software" yields not less thanprocess are exposed to, including their
135 million results.characteristics- period of occurrence, possible
In the course of many years, national andreasons for occurrence, ways of expression and
international risk management regulations aimed atimpact on organizational activities, including their
streamlining risk management methodologies haveimpact on preventing the realization of
been circulated in several countries, Australia, theorganizational goals, or, on the contrary, their
UK, Canada, the US, and Japan among them. Incontribution to it.
addition to that, many international institutions,Risk Analysis
such as the Project Management Institute, theEvaluating the relative significance of identified
Institute of Electrical and Electronic Engineers, therisks, the probability of their occurrence and
International Electro Technical Commission and theimplications. This analysis will be performed versus
Federation of European Risk Management havethe probability of risk occurrence results.
done the same.Risk Ranking and Evaluation
The Israel Standard for Risk ManagementA comparative risk level assessment calculated
The Israel Standards Institute established aagainst the measurements periodically defined, or
Technical Committee for Risk Management aiminga calculated comparison of possible gains versus
to assess the ways this issue is regulated in thelosses, thus, enabling one to make management
country. The committee set two tasks beforedecisions tailored to the required risk handling
itself:o Formulating the Israel risk managementscope.
standard customized to the public needs andRisks Treatment
cultureo Knowledge flow related to riskEstablishing and implementing action plans
management and emphasizing assistance toassessed in terms of costs benefits aimed at
institutions operating on the international marketincreasing the possible benefits and reducing the
After two years of extended research activities itpossible costs.
was decided to base the new Israel riskMonitoring & Reviewing
management standard on the existing one of theThe monitoring of risk management phases is
Standards Institute of Australia and New Zealandaimed at achieving the state of continuous
- AS/NZS 4360:2004. This standard has beenimprovement. Moreover, there is a commitment
updated several times reflecting very well theto monitoring the risks themselves and
leading methodologies in this field. The neweffectiveness of the actions taken to handle
standard is not intended for certification purposes.them. The monitoring process enables an
It has an instructive purpose for differentorganization to use relevant action methods
organizations that target establishing operationalversus the changing circumstances.
risk management processes on the basis of bestCommunication and Consulting
practices worldwide.Consulting with different stakeholders within the
The standard is compatible with a wide range oforganization in relation to the relevant information
international standards and its process relatedderived from the risk management process,
concept is similar to the one found in the qualityacross all of its phases.
group of standards. The standard containsSummary - Added Value to the Organization
relatively general instructions; therefore,Working According to the New Standard
organizations adopting it can customize tools andImplementing the risk management standard as
methods to its needs implementing the proposedpart of organizational procedures and tailoring it to
process across its different phases. The standardthe specific needs of the organization will yield
is accompanied by an instruction guide that detailsimproved functioning, better organizational culture
the tools that can be used for implementing theand more effective resource allocation.
process the way it is set forth in the standard.Organizations will be better geared to identify
The New Israel Standard - Major Characteristicsthreats and utilize the untapped positive potential
and Updatesof uncertainty. PME TEFEN is well-familiar with
Risk Management Conceptmany market sectors and business landscapes.
The standard defines risk management within anThe company consultants (many are
organization as an iterative process aimed atPMP®-certified) have accumulated extensive
reaching an appropriate balance between profitexperience in implementing risk management in
opportunity utilization and reduced losses on theleading companies. Our professionals are well
one hand, and improving decision making andexperienced training instructors that will assist
organizational performance on the other.your organization in establishing a risk
The standard positions risk management as anmanagement training program and workshops,
integral part of organizational management andcoaching your stakeholders and supporting the
culture relating it both to setting up streamlinedprocess from the plan preparation phase to
work processes and customized tools that willcustomized implementation integrating the process
enable the organization to manage them. Initself within the organizational procedures and
management circles, it has been customary toculture.
regard risk management as dealing with the