The resources boom has also led to a spate of risk management uptake in the mining sector to manage both threats and opportunities, Jones says.
“The mining sector is faced with enormous opportunity in Australia with our resources in high demand. However, there are several major [negative] risks facing mine projects which have been well publicised, such as water table contamination risk with coal seam gas projects, sovereign or political risks with new mining taxes and increased royalty payments.”
At the early stages it’s normal that much of the risk management comes from regulation rather than an organisation-led initiative, but Jones says vigilance pays off in the long run.
“The junior miners, in particular, need to establish their risk management credentials not only to ensure that the mandatory corporate governance requirements of ASX Principle 7 are met but to be able to attract investors and to give their stakeholders peace of mind,” he says.
Jones expects risk management to become more commonplace within five years via tertiary education, with engineering courses following business and insurance courses in including project risk management as an integral part of the curriculum.
But he says the pull has already begun with the market’s quest for rigour and certainty. “Companies already want the same certainty for major projects to ensure their project objectives are met, whether it be a new IT system, a new business venture, a new mining project, a new manufacturing facility, property development or new government infrastructure project.”
Risk advice for project managers
- Don’t overdo it. The fear of not identifying a major risk—which later results in a project stalling or failing to meet its objectives—can often drive project managers to ensure every conceivable risk is identified, analysed and treated. This can result in risk overload; we end up with a risk register you couldn’t jump over and risk management fatigue before we even start the project.
- Start a risk library. Spend some time to streamline the project risk library into a relevant and manageable list. Allow participants to add to the risk library as appropriate.
- Work from the foundation. Start with a sensible base and the rest of the risk management process—risk analysis, evaluation, treatment and monitoring—will naturally flow and will be well received.
John Jones will present a masterclass on risk in four capital cities throughout Australia over 21–30 November 2011, see details and dates.