As I mentioned in another thread/ topic, I'm doing a bit of research on the subject of risk management and I'm curious t know how others have incorporated their organization's risk appetite into day to day decisions to determine risk tolerance levels. Does your organization have a well defined risk appetite statement? Is it promulgated and well understood by PM practitioners? How is it used in practice to determine project specific risk tolerances? Saving Changes...
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Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
Is not about risk appetite. Is more simple than that. First question is: why organizations started projects? To create a product/service/result that help the organization to achieve its objectives. How the organization achieve the objective? By getting an opportunity. Will the organization sure about the opportunity will get with the product/service/result to create?. Not. So "sure" is the source to define the associated risks. That´s all the organization need to know to work with all related to risks.
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1 reply by Steve Ratkaj
Apr 09, 2019 3:07 PM
Steve Ratkaj
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Sergio;
I'm aware that English is not your first language, but I'm not sure if I entirely understand your response. I'm assuming before your organization begins a project, someone has analysed the risks of the project being successful in terms of ROI, etc. If so, I'm assuming some criteria is used to determine if the overall project risk is beyond that of what senior management is willing to accept. That is the risk appetite of the senior management and it is a key component of Enterprise Risk Management.
Is not about risk appetite. Is more simple than that. First question is: why organizations started projects? To create a product/service/result that help the organization to achieve its objectives. How the organization achieve the objective? By getting an opportunity. Will the organization sure about the opportunity will get with the product/service/result to create?. Not. So "sure" is the source to define the associated risks. That´s all the organization need to know to work with all related to risks.
Sergio;
I'm aware that English is not your first language, but I'm not sure if I entirely understand your response. I'm assuming before your organization begins a project, someone has analysed the risks of the project being successful in terms of ROI, etc. If so, I'm assuming some criteria is used to determine if the overall project risk is beyond that of what senior management is willing to accept. That is the risk appetite of the senior management and it is a key component of Enterprise Risk Management. Saving Changes...
Although someone may define risk appetite at some level like they do for cost thresholds for management approvals, risk appetite is always kind of a mystery where I work. We tend to observe the decision makers and try to figure it out based on their comments and previous decisions. As soon as I think I'm figuring it out however, strategies and org charts change, and it's often anyone's guess again. Saving Changes...
Organizational risk appetite needs to be translated into practical metrics or standards by risk owners. For example, with my current banking client, their risk appetite is clearly articulated and translated to be meaningful across the different LOBs such that project sponsors and teams can determine whether risks taken at the project level are in alignment with the overall risk appetite. Ensuring this alignment is the responsibility of all players in the risk framework.
Kiron
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1 reply by Steve Ratkaj
Apr 10, 2019 8:25 AM
Steve Ratkaj
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Kiron;
I agree 100%. It is really the banking and insurance sector that is driving ERM. Everyone one else is playing catch-up. I just wish we were as advanced.
Organizational risk appetite needs to be translated into practical metrics or standards by risk owners. For example, with my current banking client, their risk appetite is clearly articulated and translated to be meaningful across the different LOBs such that project sponsors and teams can determine whether risks taken at the project level are in alignment with the overall risk appetite. Ensuring this alignment is the responsibility of all players in the risk framework.
Kiron
Kiron;
I agree 100%. It is really the banking and insurance sector that is driving ERM. Everyone one else is playing catch-up. I just wish we were as advanced. Saving Changes...
Most traditional organisation are risk adverse and normally risk taking is conducted amongst a number of different positions. Most decision are decisions by consensus and the degree of risk is only taken after detailed research on potential fallout. For new and start-up companies risk taking is part and parcel of the daily work environment as these new companies try to establish a presence in the market place for a new product and service. Saving Changes...
