pros and cons of using a risk management software

RISK MANAGEMENT SOFTWARE

According to Schwalbe (2009), project risk management is the act and science of of identifying , analyzing and responding to risk throughout the duration of a project with the aim of meeting the project objectives.

Schwalbe identifies a clear difference between risk management and crisis management, while risk management could remain oblivious during a project, with crisis management, there is a visible or imminent danger which in turn receives the attention from the entire project team.

it is quite difficult to measure the benefits of risk management: successful risk management may prevent some problems from occurring and very few organizations have good enough measurement systems or data points to show the impact of risk management. (J Kontio, 2001)

Risk management provides an avenue to make discretional decision with the aim of meeting project objectives; even then, a successful risk management practice might not even reduce the damage that occurs within a project if such improved practice simply allows the organizations/project managers to take bigger risks that yield higher profits.

Risk is defined as a possibility of loss, the loss itself, or any characteristic, object, or action that is associated with that possibility.  By this definition, we are primarily concerned with the negative consequences of potential future events. Risk management On one hand it has been used to refer to the discipline that that studies how to identify, address, and eliminate risks (Boehm 1989), on the other hand it has been referred to as the activity or process that attempts to identify what could go wrong in a project and taking steps to avoid such problems in advance (Charette 1989; Dorofee et al. 1996; Hall 1998).  Risk management could then be described as a processes involved in identifying, analyzing and controlling potential or unforeseen events during the course of a project with a mind of achieving the project objectives at all cost.

Eddy Touma on his blog “Risk Management Software: Advantages & Disadvantages” identifies that Risk management software can be divided into two main categories: integrated software and standalones. integrated software are tools that were built in order to integrate with existing project management software. For example Monte Carlo simulation technique “with Microsoft Project as an add-on tool. Other examples are  RISK for Project from Palisade Corporation (www.palisade.com), RiskyProject from Intaver Institute (www.intaver.com), Pertmaster software from Pertmaster Limited (www.pertmaster.com), Risk+ from S/C Solutions Inc. (www.cs-solutions.com)

As a stand alone we have Acertus^™, Securac’s Enterprise Risk Management (ERM) ,Agena risk, risk radar etc

According to Intaver (Nd.) Software tools will help you find answer on the questions such as:

- What is the chance of your project being completed on schedule and within budget?

- What is the chance that the particular task will be on the critical path?

- What tasks affect the project duration at most?

- What is the project success rate?

Advantages

Risk management software have been known to provide alerts regarding specific risk that might have surpassed laid down thresholds according to Eddy Touma (2008)

According to Schwalbe 2009, the software is used to create, update and distribute information in a risk register but can be a part of a sophisticated database even when the register is just a simple MS word or excel file. It can help in tracking and quantifying risks, charts and graphs can be developed and analysis can be performed. It can also be used to create a decision tree and estimated expected monetary value.

Intaver (n.d) states that all of these risk management software allow the project manager or user to assign different statistical distribution including custom distribution to project inputs (task duration and cost) perform simulation and deliver output reports in different formats. E.g. the use of cumulative probability charts or histograms to see the chance that the project will be completed within a given period. Sensitive analysis can also be performed using the risk management software. The output is a graph that shows how certain outputs would respond to uncertainties of the project input.

Specifically, certain features are peculiar to individual risk management software. The RMplanner by the ABS Group Inc is a window-based program for risk management planning compliance. It has a unique feature in that it helps plan compliance activities and implements compliance efforts. The Acertus, Secarus Enterprise Risk Management is a solution that helps organizations assess risk, security and regulatory compliance.

Disadvantages

Carrieanne Larmore, an eHow Contributor in her write up on the disadvantages of risk management software stated the three to be cost, training and motivation.

Risk management software is a means of additional cost to any project but risk management should not be regarded as a non essential cost to be cut during a project lifecycle. Some software interfaces tend to be very complex and users might need some form of additional training to use them. For a user that have been used to the normal excel and its add-ons which might have provided some level of results as per Risk management, it might be difficult to convince them to use a complex risk management programs.

References

Boehm, B. W. & Ross R 1989, "Theory W Software Project Management: Principles and Examples", IEEE Transactions on Software Engineering no. July, pp. 902-916.

Charette, R. N. 1989, Software Engineering Risk Analysis and Management, McGraw-Hill, New York

Dorofee, A. J., Walker, J. A., Alberts, C. J., Higuera, R. P., Murray, T. J., & Williams, R. C. 1996,

Continuous Risk Management Guidebook, Software Engineering Institute, Pittsburgh, PA.

Hall, E. M. 1998, Managing Risk: Methods for Software Systems Development, Addison-Wesley Pub Co., Reading.

J Kontio, 2001 “Software Engineering Risk Management: A Method, Improvement Framework, and Empirical Evaluation” available online from: http://lib.tkk.fi/Diss/2001/isbn951225655X/isbn951225655X.pdf

Intaver (n.d) “Quantitative Risk Analysis with Microsoft Project “ available online from http://www.intaver.com/Articles/Article_MSProjectRiskAnalysis.pdf

http://www.riskworld.com/SOFTWARE/SW5SW001.HTM http://www.ehow.co.uk/list_6889854_disadvantages-risk-management-software.html#ixzz1IUdcstbg