Friday, 18 July 2014

Week 7: Risk Management

Cannot be denied, there must be risks while planning, constructing development. We have been taught by San Liew on few steps taken on risk management:
  • Risk identification
  • Analyse how the risks possible to happen and how serious can it be
  • Risk handling: Receive, Transfer, Reduce, Quit
  • Risk prevention / mitigation
I have learnt how to analyse the risks and I have used it in module assessment. One of the examples given is flood risk:

Risk Identification
First of all, identify the possible risk happened. flood is considered happened in low possibility because it happened once in 10 years ago; 

Risk Analyse and impact
it might be happened due to the water level in river raising, or the rainfall increase suddenly. If flood really happened, the completed building will be damaged. It can be more serious, disease and illness may be happened. So, it is considered as High impact. Although it is low in happening possibility, but if it really happened, it brings high effects.

Risk Prevention 
There are two ways to overcome this issue:
  • Risk Transfer to insurance company - Insurance pay the damage.
  • Risk Avoidance - Deeper trench / river / drain to mitigate the happening of flood.
Another common risk always happened in construction work is cash flow problem. According to RICS, the cash flow problem come from mismatch of cash flow forecast in the case of unexpected situation for example effects of inflation, variation and so on (RICS, 2012). Therefore, cash flow forecasting shall make allowance for risk spend, variation, provisional sums to avoid the risk of bankruptcy or abandonment of project.


Risk management is useful no matter now or future; assessment or other sector. It is because human cannot 100% expected the risks happened and the effect of it. The only thing can be done is prevent and reduce it happened. By managing them properly, I can prepare and take action on it if really happened.

Reference:
RICS (2012) Cash flow forecasting [online]. Available from http://www.joinricsineurope.eu/uploads/files/Part2RICSCashflowforecastingglobalBlackBook.pdf [Accessed 2 August 2014].

3 comments:

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  2. yes, this is undeniably risk management is crucial as risk occur in every project. good job.

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