Project risk strategy
1, risk avoidance strategy
It refers to a risk management strategy of voluntarily abandoning the project or changing the project objectives and action plans to avoid risks when the potential threat of project risks is too great and the adverse consequences are too serious, and no other risk management strategies are available. For example, an enterprise is currently facing a project with immature technology. If it is found through risk assessment that the implementation of the project will face a huge threat, the project management organization has no other measures available to control the risk, and even the insurance company refuses to underwrite because of the great risk. At this time, we should consider giving up the implementation of the project to avoid huge risk accidents and property losses.
2. Risk transfer strategy
Refers to the transfer of risks to other people or organizations, with the purpose of transferring part of the losses to individuals or organizations capable of undertaking or controlling project risks in the event of a risk accident through contracts or agreements. The specific implementation can be manifested as financial risk transfer (such as banks, insurance companies or other non-bank financial institutions taking indirect responsibility for project risks). Non-financial risk transfer (transferring the property or project related to the project to a third party, or transferring the risk to other people or organizations in the form of contracts, while retaining the property or project that will generate risks).
3. Risk mitigation strategies
Risk mitigation strategy is to reduce risks, reduce the possibility of risks or reduce the adverse consequences of risks by means of mitigation or prediction, so as to achieve the purpose of reducing risks. This is a positive risk management method.
4. Accept the risk strategy
Accepting the risk strategy is also one of the risk management strategies, which means that the project team consciously chooses its own strategy to bear the risk consequences. When the cost of other risk avoidance methods exceeds the loss caused by risk events, the method of accepting risks can be adopted. Accepting risks can be proactive, that is, some risks have been prepared in the risk planning stage, so emergency plans are implemented immediately when risk events occur; Passive acceptance of risks means that the project management team has insufficient understanding of the existence and severity of risks due to subjective or objective reasons, and fails to deal with risks, and finally the project management organization personnel bear the risk losses themselves. In the implementation of the project, we should try our best to avoid passively accepting risks, and only when we are prepared in the risk planning stage can we actively accept risks.
5. Reserve risk strategy
Reserve risk strategy refers to making emergency measures and scientific and efficient project risk plan in advance according to the project risk law. Once the actual progress of the project is different from the plan, backup emergency measures will be used. Project risk emergency measures mainly include cost, schedule and technology. Budget contingencies are a sum of money prepared in advance to compensate for the influence of errors, omissions and other uncertain factors on the accuracy of project cost estimation. Budget emergency expenses should be listed separately in the project budget, and cannot be scattered under specific expenses, otherwise the project management organization will lose control of expenditures.
The ultimate goal of risk management strategy is to take measures to avoid risks, resolve and transfer risks, or weigh advantages and disadvantages to reduce the impact of risk losses. Enterprises should increase the risk management of projects, minimize failures, thereby enhancing the competitiveness of enterprises and making them invincible and develop for a long time.
Ways to deal with project risks
Among them, project risk control refers to taking all possible means to avoid and eliminate project risks, or taking emergency measures to control the risks that have occurred and possible risk losses within a minimum or acceptable range. Project risk control must be based on certain assumptions and costs. For example, avoiding risks means that project decision makers will lose the opportunity to get high profits at the same time or must deal with risks through high-cost technical solutions. Its essence is still to pay a lot of risk costs. In addition, project risk control means that decision makers must have enough experience and knowledge, early accumulation and financial support besides skills, otherwise effective project risk control will be difficult to achieve.
Project risk retention is also one of the treatment methods of project risk control. The premise is that through the risk assessment of the project, it is concluded that the probability of occurrence is small or large but the risk loss is small, or both probability and risk loss are large but within the expected range or acceptable range. In addition, it also includes that when the risk cannot be effectively controlled but the project is necessary, the project decision maker will also adopt the risk retention strategy. Most domestic projects do not carry out risk assessment, or set a small amount of project reserves (such as unforeseen expenses) to think that all risks can be contained, which is usually incorrect.
At present, the project management in China mainly focuses on risk control and risk retention. The economic root of its problems and disadvantages lies in that all project investments undertaken by large and medium-sized state-owned enterprises or government departments are usually paid by the government, and enterprises or project leaders do not have to bear the responsibility for project risk losses. The inefficiency of project risk management leads to the phenomenon of "three excesses" in project management, that is, the budget exceeds the estimated budget, the budget exceeds the estimated budget and the final accounts exceed the budget. With the establishment of China's socialist market economic system, the economic responsibility of investors (state-owned enterprises or governments) has become increasingly clear and specific, and project investment decision makers have begun to pay more attention to the accuracy of investment estimation, which has greatly improved the effectiveness of project risk management.
Compared with project risk control and project risk retention, project risk transfer is a more effective means to deal with project risk. For example, transferring the project to a professional insurance company or other venture capital institutions engaged in risk mergers and acquisitions is a fair transfer method that conforms to the laws of market economy. According to the regulations jointly formulated and promulgated by the former Ministry of Construction and the Administration for Industry and Commerce, the project owner and the project contractor can negotiate for insurance.
At present, because the actual insurance business involves fewer projects, the premiums charged by the three major domestic insurance companies are still relatively expensive, and the terms of insurance contracts are obviously unfavorable to the project parties. With the number of insured projects increasing year by year, the competition of insurance companies is becoming more and more obvious, the premium and service will change in the direction of benefiting the project side, and the project risk transfer strategy will become more and more perfect and mature.
Traditional risk coping strategies
The project risk can be evaluated to some extent. At present, the general risk assessment methods for estimating accident probability mainly include Bayesian estimation method, historical state method (recurrence period method) and Monte Carlo method. With the help of the evaluation results, the corresponding risk coping strategies for different risks can reduce the probability of risk occurrence, improve the feasibility of the project and ensure the smooth progress of the project.
On the basis of risk analysis and evaluation, the scheme is optimized by scientific means, and the best scheme is eliminated from many schemes to make the best decision. This is the risk strategy and the core of the whole risk management. Common risk strategies mainly include risk control, risk avoidance, risk transfer and risk retention.
1, risk control
For controllable risks, risk control is to take certain measures to prevent and reduce losses before risks occur. This is the main risk prevention measure applied in most projects. Risk control measures must be put forward according to the actual situation of the project and the specific problems of the project, which are mainly divided into introverted and extroverted. Take certain management measures, engineering measures and technical measures to control risks within the project; At the same time, we can also adopt the way of outward dispersion to reduce the risks undertaken by the project. Natural disaster is one of the biggest risks in water conservancy project construction, and flood is one of them. However, for different grades or types of floods, we can analyze their velocity, water level and submerged range, from which we can estimate the loss results caused by floods to a certain extent, and take necessary measures, such as flood discharge and transfer of downstream property, to minimize the losses, so as to achieve the purpose of protecting the people.
2. Risk aversion
In some projects, when the risk is likely to occur, the risk is high and the risk control is difficult, it is a way to give up the project actively, so as to avoid all the risks and losses brought by the project, which is risk avoidance. Although risk avoidance completely eliminates the risks that may be brought by project implementation, it also loses the benefits that may be brought by project implementation. It is not only the most thorough risk disposal technology, but also a negative risk disposal method. There are several common ways to avoid risks: first, through strict bidding procedures, select suitable contractors to reduce technical risks; Second, strictly control subcontracting to prevent subcontracting to inferior contractors; Third, site planning and demolition should be carried out according to the actual situation, and areas with complex construction geological conditions and difficult demolition should be avoided as far as possible while meeting the engineering design requirements.
3. Risk transfer
Risk transfer is a way to consciously transfer the risk of a project to another party with common economic interests. The commonly used risk transfer methods in water conservancy project construction mainly include: providing performance guarantee for the performance of the project contract; Set protective clauses; Insure against all risks of construction projects.
4. Risk retention
When the cost of other risk avoidance methods exceeds the amount of losses caused by risk events, risk retention can usually be adopted. Risk retention, also known as taking risks, means that the project team bears the losses caused by risk accidents. It includes active and passive. Active risk retention means that the project manager compares various risks and weighs the pros and cons on the basis of identifying and measuring risks, thus indirectly keeping the risks inside. The main measures are to include losses in operating costs and establish loss-making funds. Passive risk retention refers to the project manager's lack of understanding of the existence and severity of risks due to subjective or objective reasons, and his failure to handle risks properly, and finally the project team will bear the risk losses by itself.