Project risk management in an IT risk management Harvard Case Solution & Analysis

Project risk management in an IT risk management Case Solution

Overall Risk Management Process/ Problem Statement:

The PCNet project is based on the merger of RBD Incorporation by Metal Resources Co. The merger includes the whole IT infrastructure, which includes telecom lines, routers, etc. This project's main objective was to complete the merger without any hassle and just because of that, the integration management committee was set up and the whole project was monitored by the higher management. During this merger, there was a setback in the migration of files which went missing in the new operating system. This setback led to the backing out of plant managers as it was risky to migrate 900 seats and the SriLankan government also took extra precautionary measures to ensure that the migration process is safe. This merger could not afford any setback as the economy had already gone through a huge 9/11 crisis and it would be costly for them to recover the lost migrated files or they may lose huge clients which would result in negative NPV even when the companies merged. To overcome these threats, risk management process is conducted which consists of:

Risk Identification:

Risk identification is very important part forth "Risk Management Process." It is based on identifying the problems or risks associated with the particular project. It also helps the company to counter back in worst situations, and by this forecaster risk, the company can prepare itself with the precautionary measures, and solutions so that the situation can be handled by prompt responses.

The Main risks which were identified are as following:

  • Operations Acceptance:

Due to restricted buy in of operations, the whole organization's IT system and shared networks could be affected such as ERP software and desktops. This risk can affect the company significantly as it can incur cost ofaround $15 to 50 million.

  • Slow Project Progress:

Unrealistic targets could hinder achieving goals of the project, and the progress can be slow. New risk identifications can also have an impact on the competing threats. Thus, this can lead towards the delay in the realization of synergy.

  • Security Environment:

The post-transition breach has led to the exposure to the security of the data hence, there is a high risk on the physical assets. The intellectual capital will get affected, and the business can be exposed to losses.

  • Business Conditions:

The less budget for IT products has led towards fewer recovery options and realization of synergy due to the economic conditions through which the demand for metal commodities has decreased.

The lower risk identification consists of HR and personal retention risk.

Risk Assessment and Prioritization:

After the risks have been identified, their impact should be estimated in order to prioritize them. For the large IT merger projects from around $10 million, Max Schmeling built on the identified risk factors, and their possible values to develop a probabilistic distribution of the project outcome. This was done with a business plan with respect to the ultimate success measure, which was the NPV of savings with only 10% probability, as the company would fail to deliver savings of at least $90million with 50% probability, the company will not reach $135 million and with 90 percent probability, the company will not be able to deliver as much as $18 million in this project. The scenarios, regarding-the value-distribution curve, were called P10, P50, and P90 (a method and terminology that came from mining and oil engineering).

Based on the impact assessment, risks are usually prioritized in order to allow the project team to focus on the most important ones.Typically, this prioritization is based on an "expected impact" of the risk, that is, the size of the impact, if possible in monetary terms, multiplied bythe probability of occurrence. However, the risk may have a moderate impact because it has a low probability; but at the same time, it may have serious damage if it occurs. It could be advisable to pay keen attention to take preventive or mitigating actions against such a risk...................

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