Project Risk Management: Essential Methods for Project Teams and Decision Makers

CHAPTER SEVEN

Risk Management Governance and Organizational Context

Questions Addressed in Chapter 7

• What risk management keys are required for decision gates?
• How unique should a project be allowed to be?
• What is the role of ownership in risk management?
• What is the terminology for various types of risks?
• What forms should risk reporting take?
• What sort of risk management system health self-check should be in place?
• Is a risk manager really a manager or a leader?
• What is the role of bias?

THE METHODS AND TOOLS described in this book should become part of project governance in order to assure their consistent application and real positive impact on project performance. Consistent development and execution of a project according to corporate processes enhances the predictability of the project outcome. Besides this, the role of project governance has two specific implications. First, project cost and schedule reserves approved as part of a sanctioned project budget and duration at the final investment decision (FID) are subject to presumed execution. Second, these reserves are meaningful only if project execution includes all approved addressing actions. These two additional conditions are crucial for credibility of project cost and schedule reserves derived from probabilistic models. Development of project reserves is discussed in detail in Chapter 12. In the meantime, we ...