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Risk Types

The document outlines various categories of risk that an organization should consider when identifying risks related to projects or programs. It provides examples of strategic/commercial risks, economic/financial/market risks, legal and regulatory risks, organizational/management/human factors risks, political risks, environmental risks, and technical/operational/infrastructure risks that a project or program may face.

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34 views

Risk Types

The document outlines various categories of risk that an organization should consider when identifying risks related to projects or programs. It provides examples of strategic/commercial risks, economic/financial/market risks, legal and regulatory risks, organizational/management/human factors risks, political risks, environmental risks, and technical/operational/infrastructure risks that a project or program may face.

Uploaded by

Bacet Ale
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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The following categories can be used as a starting point for identifying your organisation's main areas of risk

in relation to projects or programmes.

Strategic/commercial risks
 Under-performance to specification
 Management will under-perform against expectations
 Collapse of contractors
 Insolvency of promoter
 Failure of suppliers to meet contractual commitments, this could be in terms of quality, quantity,
timescales or their own exposure to risk
 Insufficient capital revenues
 Market fluctuations
 Fraud/theft
 Partnerships failing to deliver the desired outcome
 The situation being non-insurable (or cost of insurance outweighs the benefit)
 Lack of availability of capital investment.

Economic/financial/market
 Exchange rate fluctuation
 Interest rate instability
 Inflation
 Shortage of working capital
 Failure to meet projected revenue targets
 Market developments will adversely affect plans.

Legal and regulatory


 New or changed legislation may invalidate assumptions upon which the activity is based
 Failure to obtain appropriate approval, e.g. planning, consent
 Unforeseen inclusion of contingent liabilities
 Loss of intellectual property rights
 Failure to achieve satisfactory contractual arrangements
 Unexpected regulatory controls or licensing requirements
 Changes in tax or tariff structure.

Organisational/management/human factors
 Management incompetence
 Inadequate corporate policies
 Inadequate adoption of management practices
 Poor leadership
 Key personnel have inadequate authority to fulfil their roles
 Poor staff selection procedures
 Lack of clarity over roles and responsibilities
 Vested interests creating conflict and compromising the overall aims
 Individual or group interests given unwarranted priority
 Personality clashes
 Indecision or inappropriate decision making
 Lack of operational support
 Inadequate or inaccurate information
 Health and safety constraints.

Political
 Change of government policy (national or international), e.g. approach to nationalisation
 Change of government
 War and disorder
 Adverse public opinion/media intervention.

Environmental
 Natural disasters
 Storms, flooding, tempests
 Pollution incidents
 Transport problems, including aircraft/vehicle collisions.

Technical/operational/infrastructure
 Inadequate design
 Professional negligence
 Human error/incompetence
 Infrastructure failure
 Operation lifetime lower than expected
 Residual value of assets lower than expected
 Increased dismantling/decommissioning costs
 Safety being compromised
 Performance failure
 Residual maintenance problems
 Scope 'creep'
 Unclear expectations
 Breaches in security/information security
 Lack or inadequacy of business continuity.

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