Question

In large multi-division corporations, the constituent businesses are often competing for corporate funding and presenting ideas for new products, additional plant and equipment, acquisitions, etc. to the corporate officers. One of the problems that the corporate officers have in assessing these proposals from various business entities is that the business entities know way more about their business prospects than the corporate officers due. Often, this devolves into a discussion of “risks” – the risk of something happening which would make the project a failure. What are some of the areas of risk which are likely to be discussed?

Answer 1

Below are some of the areas of risks that are likely to be discussed

1) Risk of running smooth operations

The management would discuss the risks involved in implementing this project so that it does not affect the day to day operations and should not impact the core activities that generate revenue.

2) Risk to quality

The new reforms should not affect the quality of the product or service that business is providing and hence would like to address this risk and seek mitigation plan.

Quality is of utmost importance and is a matter of reputation of the business

3) Financial risk

The risk associated with the overall Project from initiation to finalization in terms of money will be discussed and budget constraints will be considered and also risk associated with allocating the budget to this project will be analyzed.

4) The risk associated with rules and regulation or the legal risks

The new project should be well within the rules and regulations and the management would like to address the risks that the organization will be putting into before providing corporate funding for the project.

5) Risk of longevity or the risk of obsolescence

The risk involved with the longevity of the project as if it becomes obsolete after a very small period it will lead to corporate loss and the corporate will end up pouring more money to get the alternatives and hence these risks will be discussed.

6) Risk of managing implementation team and post-implementation activities

Often after the initial implementation of a project, key team members leave, and hence the project doesn't become as functional as it was expected and hence the risk involved with retaining key resources is also important and will be discussed.

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