Joint Risk Registers: How can you share your shared risk?
Posted 20 April 2015 by admin | 0 Comments
Good risk management is essential for a successful partnership. Whether you manage your projects within a large organisation, deliver services through partners or have an elaborate delivery chain, no risk register is complete unless it includes relevant risks presented by all organisations involved, and in some cases customers. The solution seems obvious – share your risks in a joint risk register.
In a joint risk register, partners take joint responsibility for an agreed set of risks. There are various degrees of joining up risk registers, ranging from a completely shared risk register to a narrowly defined area of a project. When you get it right, the benefits in terms of cost and schedule can be huge, and joint risk registers can provide a good basis for partnerships by ensuring an agreed approach to risks, responsibility for action and a monitoring system through escalation. Setting up a joint risk register can be a challenge however. Here are five tips to avoid pitfalls.
1. Agree a common approach to risk
This is essential, but often presents the most significant hurdle: different organisational cultures can have radically different perspectives on risk and how to manage it. For example, an immature customer may outsource a project or function, thinking they have transferred risk. However, without agreeing a common approach to risk at the outset, they may inadvertently increase risk by relinquishing control to a third party, with a very different risk taking attitude.
2. Define responsibilities
Lack of clarity regarding who owns what risk can lead to unwillingness to accept responsibility when risks materialise. Generating a sense of ownership is important. This can be strengthened further by establishing and maintaining a risk budget, with clear drawdown rules, providing timely funding to carry out proactive mitigation actions and necessary recovery actions.
3. Ensure all parties are motivated, and see the value of the joint risk register
Firstly, senior management need to demonstrate their support and understanding of the value of proactive risk management. In addition, incentives for managing risk and not rewarding fire-fighting should be established. This could be a regular award to recognise for proactive management of risk by team member(s), or a more tangible structure within the contract. For example, during the Heathrow Airport Terminal 5 build, some contractors chose to put risk payments normally costed in a supplier’s quote into an incentive fund.
4. Use risk to address grey areas
In an ideal world, grey areas wouldn’t exist, but every project has some. They are defined as areas no-one is sure how to deal with, or who is responsible for them. Grey areas typically occur in projects where there’s a lot of innovation, complex integration and/or a changing external environment, and this can easily trip you up. What’s needed is a mutual acknowledgement and definition of a grey area, followed by a mature discussion on how to deal with it in the joint risk register.
5. The right tool
Predict! risk management software is the ideal tool to facilitate a joint risk register. It’s easy to define permissions to facilitate this, so all parties only see the agreed shared risks they need to see. Monitoring and escalation can be managed from Predict!, as can any grey areas. A joint risk register can be implemented quickly and simply by assigning different risk owners and stakeholders, either read/write or read only to relevant folders representing areas of the project. Alternatively, Predict!’s comprehensive organisation-based security can provide a tried and tested separation of sensitive data, across internal departments and external stakeholders as required.
Sharing the glory
A shared risk register won’t work without a relationship and culture of openness and a genuine belief on both sides that they will benefit. Bearing in mind the tips in this article, and ensuring the relevant parties are trained to use a risk management tool efficiently, will ensure everyone benefits from the advantages a joint risk register brings to a project.