In my last blog we discussed the importance of sustainability reporting to reduce business risk and included a discussion of the three fundamental risk varieties: known risks, unknown risks, and unknown unknown risks. As recommended in the last blog, this blog continues the risk theme by introducing the risk register. The Project Management Institute describes a risk register:
A risk register is part of a project management plan containing the results of a qualitative risk analysis, quantitative risk analysis, and risk response planning. The register lists, describes, and categorizes risks, identifies their root cause and probability of occurring, and their impact on the overall project.
For simplicity, we’ll look at the first risk type: known risks. This risk type is the easiest of the three varieties to identify and describe. Borrowing from my former blog on Construction Material Life Cycle Life Cycle Assessment and Environmental Impacts, the third sequential stage of the life cycle represents delivery and transportation of materials and provides a convenient relationship to identifying risks, which we will use in the following discussion.
In this hypothetical example, an architect has written specifications to use only wood harvested from a Forest Stewardship Council certified forest for the construction of a Green Building. The journey from the certified forest to the job site contains many sequential steps each with its own set of risks.
Risk is always in the future and represents an uncertain event or condition that, should it occur, would have an impact on at least one project objective. In our example, the certified forest may be located hundreds – or even thousands of miles – from the job site and would require several modes of transportation and delivery such as logging trucks, rail cars, warehousing vehicles, delivery vehicles, etc. Potential risks could occur anywhere along this journey. For example, logging trucks may break down resulting in minor delays. Going up the seriousness scale, labor strikes could also impact delivery schedules. At the most serious level, a forest fire could eliminate the supply. A risk register would identify these risks, evaluate them qualitatively and quantitatively, and provide planned responses. Qualitative evaluations involve describing and prioritizing the risk, and estimating the probability of occurrence. Quantitative evaluations involve assigning numerical probabilities of occurrence to the risk.
The occurance of risks without proper response planning could have varying effects on the success of a project. In our hypothetical green building example, if one of the potential risks occured, the certified wood might not make it to the site. Not having the certified wood on the job site may:
- Jeopardize the building’s green certification
- Delay the building’s opening
- Increase costs from a delayed opening
- Increase costs for substituting the certified wood
- Harm the architect's reputation
Utilizing a risk register in the planning stages would help to mitigate the effects of potential risks. However, depending on the project, completing an accurate risk register could be a daunting task. Following a robust and thorough identification of all possible risks, planned responses would be crafted to identify options for reducing each given risk. Ultimately, a series of matrices would be developed incorporating qualitative risk analysis, quantitative risk analysis, and risk response plans. All of that information and data is then compiled to create a final risk register. Because ccompleting these risk assessments can be extremely tedious and easy to miscalculate, environmental consultants, such as FirstCarbon, are often utilized to ensure a thorough and accurate analysis.
Environmental compliance includes a myriad of risks. To find out how FirstCarbon Solutions can identify risks and provide planned responses for your project, simply click the link below: