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Capturing Uncertainty Through Integrated Risk Modeling

All projects experience unexpected events that can impact their objectives in the form of loss or gain, and the extent of uncertainties and risks vary according to the size and complexity of projects. Uncertainty, however, is an abstract concept and many project managers lack the suitable tool to accurately define uncertainty for effective analysis.

Risk and Uncertainty
Successfully capturing risk and uncertainty is where many project teams struggle and get lost, and often lack confidence in their assessments. But for project intensive organizations, it is vital to apprehend and assess risk in order to stay on schedule, to meet budget requirements, and satisfy the expectations of project shareholders.

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For example, the project manager of a construction site must identify risks at all levels—from mechanical delays to possible injury on-site. Integrated risk modeling involves capturing the risk, or uncertainty, at all project levels. It enables project managers to protect their organization against potential losses. Risk and uncertainty must be evaluated regularly, sometimes on a daily basis. This allows project management to predict direct and indirect losses caused by both internal and external factors.

Internal vs. External Risks
Internal risks involve personnel issues, human error, or the availability of equipment and support. While external risks are often where uncertainty arises, and can be more difficult to control. External risks involve natural disasters, civil disruptions, environmental disasters—all of which are external to the project and the project manager.

“For project intensive organizations like ours…we need to know how long activities are going to take,” said Jamie Marzonie, Senior Risk Specialist at EMAS AMC. “If the vessels are idle, if we’re losing money, or if they overlap each other… It’s very fluid and dynamic… We need to have all these assets work together and network to be able to deliver our projects to our promised budget to our shareholders,” Marzonie said.

Integrated risk modeling isn’t about taking risks to complete a project; it’s about planning for risks that could jeopardize the whole project. In our next post, we will hear more from Jamie Marzonie and how Integrated Risk Modeling is vital to successfully managing risk and uncertainty. For more information about Safran Risk or integrated risk modeling, please visit www.safran.com/risk.

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