Risk Management Subsection
The Sub-Planet Company (SPC) is involved in a multinational endeavor. SPC plans to perform market research and promote its product in worldwide markets, which will need project management methods. The study aims to perform market research on the elements that impact British customers’ purchasing decisions for sports shoes. Unlike the domestic market, the overseas market is dynamic and has unique problems. As a result, before starting operations in the United Kingdom, SPC needs a thorough market investigation. SPC is concerned with the firm’s contracts with other parties, including suppliers and customers, and the regulatory environment in which it will operate. The project includes inherent hazards that need the use of project management techniques. Identifying risk, developing a reaction plan, and monitoring project aspects are all part of the risk management process.
Identifying hazards is an important part of risk management for the SPC project. The approach will help SPC document risk sources for the market research project. Moreover, it leads to gathering information needed to launch a proper reaction (Russell, 2018). First, expert consultation was employed by SPC to identify dangers in the market research study. Individuals with a specialist understanding of related business sectors are consulted as part of the process. The experts will offer advice on many aspects of the project.
SPC will need to identify dangers, and for this purpose, data collection and analysis will be vital. Contributions will be required from project members, including stakeholders; this process will be conducted as an interview. In terms of data collection, brainstorming with the project team is also a valid option. A SWOT analysis will be beneficial in finding organizational strengths and weaknesses that mitigate risk or leave the project vulnerable when it comes to data analysis (PMI, 2017).
A risk breakdown structure will categorize project hazards in the market research project. The risk breakdown structure will enable project members to assess the full range of potential project risk sources (PMI, 2017). The risk breakdown structure deployed by SPC for the market research is represented in the appendix. However, the structure contains categories and subcategories that can be expanded for clarity. Technical, management, financial, and external risks are all present in the market research study as the primary sections. Each category is broken down further into subcategories that detail the dangers associated. Technology and process are subcategories of the technical category. The project necessitates using technology to acquire data systematically. The management subcategories include resourcing in terms of suitable employees and accurate communication. Financial risk can also be found in the form of supplier capability and attractive contract conditions. Finally, external hazards, which might be manifested through legislation or changes in currency rates, are included in the last category.
Probability and Impact Matrix
SPC’s probability and impact matrix for the market research project is also represented in the appendix. After evaluating project risks, the next step is to prioritize them to allocate resources for mitigation properly. The chance of risk occurrence will be ranked using a predetermined criterion for the market research project. In the criterion, there are four levels of probability: high, medium-high, medium-low, and low. On the other hand, the risk effect will be high, medium, or low. A probability and impact matrix will be created using the probability and impact definitions. The matrix will prioritize risks in the market research project and act as a reference for making vital risk management decisions.
The risk register deployed by SPC consists of five columns: category, risk ID, name, description, and potential mitigation. The market research study will use a risk register to document identified hazards. A list of potential hazards and actions will be the main components of the risk register. A unique identity and description are assigned to each risk. A possible response is added to the risk register after recognizing project risk. The potential mitigation category can consist of brainstorming ideas that the team members develop to address risks identified. The possible hazards in the risk register correspond to the risk categories in the risk breakdown structure. Technical, managerial, financial, and external are the four categories. Technological failure, inefficient procedures, inefficient staff, and supplier delays are just a few of the dangers included in the register. The risk register for the market research project in its entirety can be found in the appendix.
Quantitative Risk Modeling
SPC will need to measure the impact of each project risk, and for this, the market research study will conduct a quantitative risk analysis. Risk responses will be developed using the findings of the quantitative risk analysis. A decision tree analysis is the data analysis approach that the market research will use to examine risk management decisions. The decision tree will assist the project manager in determining the best course of action (PMI, 2017). Each relevant branch in the decision tree represents a choice and associated costs. Personnel training will focus on the market research project’s decision tree. Personnel is a possible project risk since acquiring or training qualified workers strongly influences the project. Training staff or employing new personnel are the two main branches of this risk. An important aspect to consider between the two decisions is which of the branches effectively utilizes financial resources and increases the efficiency of achieving project objectives.
Strategies for Negative and Positive Risks
Following the classification and identification of project risks using a breakdown structure and register, the next step is to devise methods for dealing with negative and positive risks. The SPC project will deal with possible dangers or negative risks by relying on four tactics. The first technique prevents risk by altering project components or operations to remove or considerably lower the hazard (PMI, 2017). For SPC, this may include eliminating a project activity to avoid its associated risks. The project’s next strategy is to transfer project risk; this will be done through acquiring insurance to mitigate the damage a risk may cause. Insurance will also help SPC transfer risk to a third party; in this case, the third party is the insurance company. Risk mitigation is another strategy because the project contains a risk register for prospective dangers. Supplier delays, for example, are marked as a possible risk in the register. As a result, a comprehensive supplier study might be used as a mitigation approach for this hazard.
Acceptance is the last technique for dealing with financial risks posed by external risk variables such as exchange rate fluctuations (Russell, 2018). The market research project may have no option but to accept risks posed by external project factors because they have no control over these aspects. When combined with escalation tactics, acceptance is also efficient in dealing with positive risks. Accepting positive risks does not need aggressive action on the project team members. On the other hand, SPC may apply escalation by instructing the program-level managers or activity leaders to manage any opportunities that arise from positive risks.
Conclusion and Recommendation
Risk management is an important part of project management that greatly influences the project’s success. In the United Kingdom, the SPC firm has a worldwide service project in market research. Risk management for a market research study requires categorizing and identifying relevant hazards. A risk register effectively documents risks identified and potential responses during a brainstorming session. Consultation with specialists and discussions with team members are the initial steps in identifying concerns. Afterward, a risk breakdown structure is required to categorize project components and assess possible risk sources. The primary strategies for dealing with positive risks are acceptance and escalation. On the other hand, tactics for dealing with negative risks in the market research project are acceptance, mitigation, altering project components, or transferring risks.
Russell, J. S., Pferdehirt, W. P., & Nelson, J. S. (2018). Managing Project Risks. Technical Project Management in Living and Geometric Order.
PMI. (2017). A Guide to the Project Management Body of Knowledge: (PMBOK guide) (6th ed.). Project Management Institute.
Risk Breakdown Structure
Market Research Risks
Probability and Impact Matrix
|IMPACT||High||Very High||Very High||High||Moderate|
SPC Market Research Risk Register
|Category||Risk ID||Name||Description||Potential Mitigation|
|Technical||1.1||Technology failure||Breaking down of device required to capture information||Install redundancy IT systems|
|Technical||1.2||Inefficient process||The data acquisition process is time-consuming||Revert to performing only essential activities.|
|Management||2.1||Inefficient personnel||Employees are unable to produce project deliverables||Perform thorough recruitment or training.|
|Financial||3.1||Supplier delay||The project suppliers are not able to deliver on contract promises||Conduct thorough supplier selection.|
|Eternal||4.1||Legislation||The U.K enacts legislation that changes project scope||Consultation with market experts|
|Eternal||4.2||Exchange rates||A shift in exchange rates that makes the project more expensive||Manage the project from within the U.K|
Market Research Train or Hire Decision Tree
No change in Efficiency
No change in Efficiency
Train or Hire Staff