Almost every new business project or initiative is susceptible to risks both large and small which can range from inconsequential to potentially fatal. Due to the presence of these risks, the importance of thorough risk analysis at the outset of any new project cannot be understated. While identifying these risks can often be a challenging undertaking, the time and the resources spent on this process will always prove to be a solid investment which enables fast and efficient responses to risks either before or as they materialize.
The foundation of risk analysis is comprised of three determinations:
- Estimating the probability of specific risk events
- The negative consequences that will happen if a risk event occurs
- The most efficient response to the specific risk
Risk analysis at its best should be detailed and dig deeply into each of the three determinations listed above. This type of detailed analysis draws on developing information from a wide variety of factors including the project timeline, the money budgeted for the project, political implications, economic issues, as well as other information relevant to the project.
Risk analysis can be employed across a broad spectrum of company initiatives including:
- The very beginning of company projects to delineate inherent risks and develop plans to minimize potential problems.
- Helping to determine whether a project is feasible or not
- Assisting in the determination that the project can reach its ultimate goals and provide a return on time, resources, and capital invested in it
- Preparation for events such as labor issues, equipment failures, or natural disasters.
- Provision of advance planning for changes in the competitive landscape, the general economy, and/or the regulatory environment. Planning for risks can mitigate the risks before the project begins. With in-depth risk analysis by teams such as the one led by Dmitrij Harder at Solvo Group, project managers can proceed with confidence knowing that they are prepared with effective responses should risk events materialize.