Value of risk management

Abstract

The overall aim of this study was to discuss the validity of the hypothesis that risk management contributes with added value to projects and the enterprise holding the projects, and consequently to the enterprise’s stakeholders. To examine this hypothesis, a case study of three projects taken from the same portfolio at Statoil was selected. The projects were said to have an active risk management. Data was collected from the project’s documentation as well as interviews. The interviews were qualitative and conducted with four respondents: the project managers of the projects, the project control manager of the portfolio and the portfolio manager. The findings of this study support the hypothesis that active risk management in projects does add value to the projects, the enterprise holding the projects and their stakeholders. The dimensions of value referred to here are monetary values (reflecting material worth) and non-monetary values (reflecting intrinsic worth), and benefits of risk management (describing the risk management’s usefulness or usability). It was found in the study that main contributions to added value came from risk management serving as an aid to manage the project, as well as its impact on managing threats, seizing opportunities and Health, Safety and Environment. The findings of the present study may have implications for future practice and work. They indicate that the ability to adapt a holistic view and see the “big picture” at all levels in the enterprise is another factor that might add value to the enterprise. However, this was seen as an area of potential improvement. And finally, increasing the competence and experience of the participants in the projects and those involved in the risk management process, might enhance the overall value of risk management.