ADVANCE PROJECT RISK MANAGEMENT,

HUMAN CAPITAL AND AUTHENTIC

LEADERSHIP

MODULE 3
19-20-21 AUGUST 2016 (CLASS OF 2016)
MUMBAI, INDIA

REPORT BY

JAI PRAKASH DWIVEDI, GENERAL MANAGER(MINING)

SOUTH EASTERN COALFIELDS LIMITED

UNIT-1

1. Project Management
It is the application of processes, methods,
knowledge, skills and experience to achieve
the project objectives. It is about initiating,
planning, executing, controlling, and closing
the work of a team to achieve specific goals
and meet specific success criteria. But every
project has got inherent risks.

1.1 Project Risk Management

It is the process of identifying, analyzing and responding to risk factors throughout the life of a
project. Projects are undertaken to build future which is uncertain hence inherently risky. The
overall aim is to mitigate the impact of an adverse risk.
Risk may be defined as the combination of the probability of an event and its consequences, with
risk management being concerned with both positive and negative aspects of risk.
There is a level of uncertainty that is present in all projects:
risks could be negative (threats)
risks could be known
risks could be unknown Real information is the key.

The relationship between uncertainty and information is inverse. Decision making is often under
uncertainty. Common issues to decision making are:

 Set of decisions or strategies unavailable to decision makers

The set of possible outcomes associated with probabilities and
A value model that prescribes monetary values for various decision-outcome combinations.

1.2 Decision Making

Decision making is considered tough as the decision must be made before uncertainty is resolved, a
good decision might have unlucky consequences. However decision makers should not be criticized
for unlucky outcomes. They should be criticized only if their analysis made at the time of the
decision is faulty.
Risk Management is a full project life cycle responsibility. It is an integral part of the Project
Planning Process.
1.3 RISK DEFINITIONS
Risk Management
Risk management is the act or practice of dealing with project risk. It includes planning for risk,
assessing risk, developing risk response strategies, and monitoring risks to determine how risk changes
during the project life.
Risk
Project risk is an uncertain event or condition that, has a positive or negative effect on at least one of the
project objectives (scope, schedule, budget, quality).
Threat
A project risk that has a negative effect is referred to as a threat. A project manager will proactively
manage threats to the project and look for ways to reduce the probability or impact of the threat or
eliminate the threat all together.
Opportunity
A project risk that has a positive effect is referred to as an opportunity. A project manager will
proactively manage opportunities to the project and look for ways to exploit, enhance, or share the
opportunity.

Risk Trigger
A risk trigger is an identified measure or indicator that signals to the project that the risk event may
occur.
1.4 Risk Categorisation
It can be done in following broad ways:

Some are driven by external factors like competition, customer demand, internal rates etc and some
are driven by internal factors like R&D, cash flow etc. Some risks have both external and internal
drivers like employees, supply chain, products & services etc.
Levels Of Enterprise Risk
Catastrophic loss
Critical or major loss
Lesser loss
1.5 Project Risk
The below diagram highlights the different dimensions of project risks:

The major risks include:

Stakeholders
Planning & Scope
Time
1.6 Types of risks
Business Risk
These are the normal risks of doing business that carries opportunities for both gains and losses
Pure or insurable risk
These presents an opportunity for loss only.
Known risk
Risks that are identified
Unknown risk
Risks that are not identified.
Risk should not be taken under following circumstances
When there are large number of acceptable alternatives.
Risk does not achieve the project objectives.
Data is unorganised without structure or pattern.
There is not enough data to understand the results.
A contingency plan is not in place

1.7 Benefits of Risk Management

Minimizes management by crisis
Minimizes surprises and problems
Gain competitive advantage
Decrease overall project variances
Increase probability of project success
Increase profitability.

1.8 Responsibilities in Risk management

Project Manager
Initiates and lead the Risk Management process. He integrates the risk management process into all
other project management processes. Further, provides direction to the project team on the risk
management process and tools.
Project Team
Performs the risk management process. Execute risk management strategies. Report status on the
risk management process.
Components of RISK = EVENT, PROBABLITY & IMPACT
1.9 Organization level of maturity classification
Level 1 The Naive risk organization is unaware of need for management of risk.
Level 2 The Novice risk organization has begun to experiment with risk management.
Level 3 Normalized risk organization, management of risk is built into routine business practice.
Level 4 The Natural risk organization has a risk-aware culture, with a proactive approach to risk
management in all aspects of business.

UNIT- 2
2. Risk Identification
It determines which risks might affect the project and documents the characteristics of the risk
event. It is an iterative process because additional risks may become apparent as the project
progresses through its life cycle.
Inputs for identification of risks
The various inputs for identification are like WBS, Contractual requirements, cost and schedule
estimates, Staffing plan, Lessons learned files, Scope statement, Product or Deliverables.
2.1 Risk Identification Techniques
There can be number of risk identification techniques like:
Brainstorming
It is used for risk information gathering to obtain a comprehensible list of project risks. Here, the
project team identify the risk events and the trigger for the risk event.
Delphi Technique
This technique is used to estimate the likelihood & outcome of future events. Here, a group of
experts exchange views & each individually gives estimates & assumptions to a facilitator who
reviews the data and issues a summary report.
Interviewing
Interviewing of experienced project team members, stakeholders, and subject matter experts
(SMEs) can help in identify risks.
Root Cause Identification
Discovering the causes that led to it & developing preventive action is very useful technique in risk
identification. Asking why after each response can help in the root cause analysis.
SWOT Analysis
Strengths, weaknesses, opportunities, and threats (SWOT) technique ensures examination of the
project from each of the SWOT perspectives. This increases the breadth of considered risks.

Assumption Analysis
Every project is developed based on a set of hypotheses, scenarios, or assumptions. Analyzing and
exploring the validity of the assumptions can help identify risks due to inaccuracy, inconsistency, or
incompleteness.

2.2 Risk Register

The outputs from risk identification can be entered into a document called a risk register. It could
include the following aspects:
Status
Whether a risk is an active risk, a dormant risk, or a retired risk.
ID#
The identification for the risk
Date Identified & Project Phase
When a risk was identified and what project phase (preconstruction or construction) the risk was
identified in.
Functional Assignment
The capital delivery functions (planning, design, ROW, environmental, construction, etc.) which are
impacted by the risk.
Risk Event
What the risk event is to the project with detailed description using the SMART technique (Specific,
Measurable, Achievable, Realistic, and Time sensitive)
Risk Trigger
Warning signs that indicate the risk is likely to occur or imminent. Used to determine when
response strategies will be implemented.
Once the risk has been identified, the project team can conduct further analysis (qualitative and
quantitative) on the risk event.

UNIT-3
3. Risk Quantification
It involves evaluating risks and risk interactions to assess the range of possible project outcomes
and developing the data that will be needed for making decisions as to what should be done about
them.

3.1 Guidelines for Risk analysis

Work down the complete list of risk events.
Assign risk analysis tasks to appropriate team members
Quantify each risk identified for probability and impact
Identify worst, best, and most likely outcomes for risk events with higher uncertainty
Review risk analysis results with team members
Do not prioritize risk initially.
3.2 Techniques
Probability analysis
It is to understand the likelihood of the occurrence of a risk event. Probability data which can be
used are Theoretical distributions, Subjective judgements, Simulations, and Historical data.
Impact Analysis
It is to understand how the project is affected if risk event occurs i.e. on project cost and schedule.
Important impact data can be Historical data, Estimates, Subject Judgement, Simulations. Impact
assessment is basically an estimation process.
Financial Analysis
Decision Tree, Return on sales (ROS), Return on assets (ROA), Economic value added (EVA), Net
present value (NPV), Internal rate of return (IRR) are important tools in Risk Quantification.
FAILURE MODES AND EFFECT ANALYSIS (FMEA)
Failure Mode
It is the way in which the component, subassembly, product, input, or process could fail to perform
its intended function.

Failure Effect
It is immediate consequences of a failure on operation, function or functionality, or status of some
item.
Types of FMEA analysis are
Functional FMEA
Detailed Design/Hardware FMEA
Process FMEA
In FMEA, a team approach is essential involving important stake holders.

3.3 Risk Priority Number

Risk Priority Number is the product of Severity, Occurrence, and detection scores.
a) Severity (impact) Importance of the effect on customer requirements. (1= Not Severe, 10 =
Very Severe.
b) Occurrence (Probability) Frequency with which a given cause occurs and creates failure
modes. (1= Not Likely, 10 = Very Likely)
c) Detection - The ability of the current control scheme to detect or prevent a given cause. (1 =
Easy to detect, 10 = Very difficult to detect.)

UNIT-4
4. Risk Response Development
It involves defining enhancement steps for opportunities and responses to threats. These generally
fall into three categories:
a) Avoidance
Eliminating a specific threat, usually by eliminating the cause
b) Mitigation
Reducing the expected monetary value of a risk event by reducing the probability of occurrence,
reduce the risk event value, or both.
c) Acceptance
Accepting the consequences.
Risk Evaluation is used to make decisions about the significance of risks to the organization and
whether each specific risk should be accepted or treated. Risk evaluation takes place against various
criteria including costs and benefits, legal requirements, and wider social and environmental factors.
Risk Treatment is the process of selecting and implementing measures to modify the risk. This may
include risk mitigation, risk avoidance, risk transfer, risk financing (e.g. hedging, insurance), etc.
Risk treatment is also called Risk Response, involves decisions as to whether particular risk should
be avoided, transferred or accepted. It is the process of selecting and implementing measures to
modify the risk.
Reserves: Reserve is a provision in the project budget or plan to mitigate cost and/or schedule risk.
Management Reserves: Management Reserve is a separately planned quantity used to allow for
future situations that are impossible to predict.
Contingency Reserves: Contingency Reserve is a separately planned quantity used to allow for
future situations that may be planned for only in part.
Factors that determine the reserves are Life cycle position, Estimating approach, Type of contract,
Threat exposure, Opportunity leverage, Risk tolerance levels, Risk accepted, Consequences of
overruns.

4.1 Key Learning's were

Risk response must be developed for each significant risk

 There are three basic threat responses: accept, avoid, mitigate

There three basic opportunity responses: ignore, enhance, and pursue
One risk response strategy may affect another risk response strategy
Reserves should be used to mitigate cost and/or schedule risk
Risk response strategies need to be integrated into the risk management plan and/or the
project plan.

UNIT-5

5. Risk Response Control

It is executing the Risk Management Plan (RMP) to respond to risks during the course of the
project. It is integrated with Key Project Management Processes. Various terms used are Problem,
Windfall, Workaround, Corrective action.
5.1 Risk Response Control Guidelines
For the Risk response control to work, project management must:
Closely monitor project progress
Timely execute risk responses when problems or windfall occurs
Thoroughly evaluate effectiveness of risk responses
Continuously follow up

5.2 Risk Documentation (Risk Register)

Risk documentation is the physical manifestation of the risk management. The documentation
should be current, accurate, simple and disseminated. It should include risk events, risk analysis,
risk response, corrective action taken, and net actual project impact. It should also include the
unknown events that occurred.
5.3 Risk documentation is beneficial as
a) It records the project teams thought processes in developing the risk approach
b) Provides the rationale for the project teams actions to those not involved in the project or the
project details
c) Facilitates communication of both known and unknown risk events
Risk documentation is a process and should be developed that defines how and when
documentation will be created and maintained. The process should identify who is responsible for
specific activities related to risk documentation. It should be continuously produced throughout the
project life cycle.
5.4 Key Learning's were
Risk reassessment should be continuously performed throughout the project life cycle
Documentation is required to reduce variances over time

 The project team must be trained to track and perform each risk response and contingency plan
during the project life cycle
Should unknown risks occur during the project, use workarounds to control variances

UNIT-6
6. Close Out
Failing to develop a culture in an organisation where employees highlighting warning signs are
punished can lead to project failures. So one had to develop a culture were risks are shared with
employees and mitigated.

6.1 Some of the broad issues in project risk can be categorised as under:
6.1.1Transparency
a) Poor communication
A culture where warning signs of both internal and external risks are not shared.
b) Unclear tolerance
A culture where the leadership does not communicate a clear risk appetite or fails to present a
coherent approach or strategy.
c) Lack of insight
A culture where the organization fails to understand the risks it is running or believes that such an
understanding is the preserve of risk specialists.

6.1.2 Acknowledgement
a) Overconfidence
A culture where people believes that their organization is insulated or even immune from risk
because of its superior position or people.
b) No Challenge
A culture where individuals do not challenge each others attitude, ideas, and actions.
c) Fear of Bad News
A culture where management and employees feel inhibited about passing on bad news or learning
from past mistakes.

6.1.3 Responsiveness

a) Indifference
A culture which discourages responding to situation or foster apathy about the outcome, either due
to bad faith or incompetence.
b) Slow response
A culture where the organization perceives external changes but reacts too slowly or is in denial
about innovation or the likely impact of change.

6.1.4 Respect
a) Beat the system
A culture where the risk appetites are misaligned with the organizations risk profile, leaving room
for the conception and implementation of inappropriate activities.
b) Gaming
A culture where individual units takes risks or embrace projects which could benefit the unit, but
are out of line with the organizations risk appetite.

Human Capital And Leadership

7. Human Capital
All organizations require human capital to function and accomplish their goals. It is the sum total of
a person's knowledge and skills that the company can use to further its goals. In the context of Coal
India which is labour intensive success of our organisation depends directly upon the quality of
human capital.

7.1 Leader:
A Leader is a person:
who is able to influence others
inspire them to pursue common goals

who understands the situation

Leader brings people together around a shared purpose and empowers followers to take lead in
order to create value for all stakeholders. They are motivated by their inner self.
Self
Awaren
ess

Self
Regulati
on
Impact

Self
Renewa

7.2 Emotional Intelligence (EI)

Self
Expressi
on

It is the ability to understand one's own emotions, others emotions and use them constructively to
achieve the goals. One is able to control and regulate his emotions in his own favour is said to be
emotionally intelligent person.

Emotional Intelligence (EI) Domains

Others

SOCIAL
AWARENESS

RELATIONSHI
P
MANAGEMEN
T

Self

SELF
AWARENESS

SELF
MANAGEMEN
T

Awareness

Management

Self-regulatory characteristics are:

Internalized regulation
Balanced processing
Authentic behaviour
Relational transparency
Self-awareness and values are the key to leadership.
7.3 Challenges Of Being True To Yourself
Generating awareness about self is important task of leader.

8. Practical Application In Our Organization

Risk assessment is practised in our company. They can be assessed at different levels:
Mine designs
Operations
Projects
Changed conditions
8.1 Risk assessment methodology include
Sensitising employees towards variety of risks
Collection of information about the mine operations by the management.
Identification of all the major hazards of the mine.
Risk rating of each of the hazard calculated on the basis of consequence, exposure and
probability.
Hazards prioritized by ranking of Risk.
Operation wise exercise on hazard identification, risk rating, control mechanism action and
fixing up responsibility.
Program for risk level reduction plan and setting level of responsibility and accountability.
Formulation of action plan for monitoring risks.
Evaluation and correction.
Risk assessment and management is carried out for various activities/ mining operations.

9. Recommendations
a) Awareness towards project risk management can be developed at all the levels of management in
the organisation.
b) Proper communication about risks can help in timely mitigation.
c) Risks comes with opportunities for improvement and innovations. This can help the organisation
to achieve higher learning path.
d) Many projects are started without considering the risks. Lack of mitigation efforts many times
result in unforeseen events. For example, delay in land acquisition because of local level politics,
environmental clearances etc. This results in time and cost overrun.
e) Risk management is also essential for scheduled maintenance of the machinery and equipments
which if not followed may lead to major breakdowns creating obstruction in meeting the
production targets.
f) Geo-technical risk management can be done in the field of slope stability where slope movement
is detected by using various equipment and efforts can be made to control these slope movement.
g) Training programmes can be arranged for enhancing project risk management skills in the project
officials.
h) Make the maturity level of organization to level 4 i.e. Natural Risk Organization.
Risk management is necessary in each and every activity and it is a continuous process. In the
mining field risk management is not only necessary in the areas where safety is of prime importance
but it is also required as the time and cost management is necessary to keep the project or activity
within its schedule. Negligence in the risk awareness directly make impact on the delay of the
activity as a lot of time is spent in overcoming the hazards taking place which could have been
avoided if risk management was properly done and implemented.
Risk Management is always forgotten when managing
projects but the irony is that all projects have risk. Risk management cannot be just blaming session
to uncover flaws in a particular project. This perception has to be abolished. Understanding that

Risk Management is the one of the few practical way to manage uncertainties and doubts towards a
particular project can help our organisation immensely. So, effort has to be there to continuously
implement improvements in project risk management.