Qualitative Risk Management

At Sperovia, we recognize that risk management is much more than running Monte Carlo simulations. While quantitative risk management (QCRA and QSRA) can be useful if used in the right way and in the right place, the key to an effective risk management program is a robust qualitative risk management process.

Ensuring that feedback is collected from various stakeholders on the project to populate the risk register (while being careful not to create a data dump wish list) and assigning owners to mitigation measures with deadlines and following up with the risk owners is an important starting point. Mapping the risk register to value engineering initiatives, insurance terms, and contractual Heads of Terms (as three main tools for risk management on a major project) is where many projects fall short.

We have extensive experience in managing effective risk management processes on major projects in North America. We believe that risk management is an area that many projects can improve on, and instead of going through the motions and running simulations that nobody uses, have risk management at the forefront of their decision-making, as should be the case.

There are many comparable major projects in North America with similar if not identical risks. Further, these projects have good and bad experiences with mitigation measures that each have implemented to address common risks that materialized on different projects. However, there is a significant gap in projects learning from each other and unfortunately, overlooking risks that a sister project identified, implementing the same ineffective mitigating measures that a sister project implemented and learned the hard way, or missing out on implementing the effective mitigation measures that a comparable project put in place are all common in our industry. This is for the simple reason that there is no central repository of lessons learned in North America for comparable projects and lessons learned is done on ad-hoc basis. We do not claim to own this repository, but with our extensive network and experience of our people on several major projects, we can assist our clients in identifying risks, and what works and what doesn’t. 

Quantitative Risk Management

At Sperovia, we have significant experience in developing both QCRA and QSRA simulations and reports and connecting P-values to forecasting and contingency management.

In our experience, many projects in North America sacrifice qualitative risk management and solely focus on quantitative reports, which in our view is a missed opportunity. Quantitative risk management can and does work, if done at the right time and in the right way, and in conjunction with qualitative processes.