Risk Management Credit Risk Modeling

Question: Describe about the Risk Management for Credit Risk Modeling. Answer: Introduction Hubicki (2014) depicts that a Risk management plan is useful as it reduces the unexpected projects risks and an effective risk plan can reduce the probability of the risk for that organization up to 80-90%. In this assessment, an effective formulation of the risk management plan will be discussed along with some evidence. Pritchard and PMP (2014) defines that a proper balance risk management plan comprises of six steps- risk identification risk register, risk analysis methods, identification of the risk triggers, risk resolution ideas, risk resolution action plan and responsibility and accountability. Finally, the assessment will be wrapped up with an overall conclusion for the entire discussion. Discussion Risk identification risk register Kendrick (2015) depicts that risk identification can be made by evaluating the previous financial reports and going through various project documents and departments. Taken for example, in the US the trend of food requirement is changing from time to time. Thus, in Domino's, if the managing authority will not focus on the changing requirement of the evolved risk the organization will not be able to attain enough profit. Ryu et al. (2016) states that all the probability of the risk and the previous experience should be maintained in a log called Risk log or Risk register. Risk analysis methods Risk can be analyzed through the PI matrix shown in the image below. Image 1: PI matrix (Source: Bluhm et al., 2016) Bluhm et al. (2016) defines that in this way, the probability and impactof the risk can be analyzed so that the organization can assess the risks of the cost, time and resource factors accurately. Identification of the risk triggers In this context the risk management planning teamis divided into teams and each team is responsible for handling for small modules of the system. In this way, the major reason for the risk can be easily identified and effective measure can be taken. Risk resolution ideas The team identifies and document preventive actions for the evolved risks and their next is to enhance actions for the opportunities such as financial Risk reports, IT Risk Reports and HR Risk Reports. Risk resolution action plan Pritchard and PMP (2014) mentions that based on the ideas of the risk management teams, project manager implements risk resolution. In this scenario, these manager works mostly on the risk that has high P-I value at the onset of a project. In this way, the time, cost and resources can be saved from future adversity. Responsibility and accountability A master list is prepared in this context, and an owner is assigned to each risk on the master list. This can be accomplished through the Responsibility Assignment Matrix is shown in the figure below and one example for such Responsibility Assignment Matrix is illustrated in Appendix, Figure 1. Image 2: Responsibility Assignment Matrix (Source: Kerzner, 2013) Kerzner (2013) depicts that at last project manager is solely accountable to the sponsor of the projects and it is the liability of the manager to deliver a risk-free project to their clients. Conclusion Thus, it can be concluded that an effective risk management system comprises of six steps and on assessing these six steps efficiently risk can be diminished from projects. One of the major steps in evaluating the risk is to divide the risk management team and then evaluate small modules per team at a time. In this way, the time will be easy to assess the risk and the project managers can suggest an effective solution before the delivery of the final project to the client. Reference list Bluhm, C., Overbeck, L., Wagner, C. (2016).Introduction to credit risk modeling. Crc Press. Hubicki, M. (2014). Risk Management Plan. Kendrick, T. (2015).Identifying and managing project risk: essential tools for failure-proofing your project. AMACOM Div American Mgmt Assn. Kerzner, H. R. (2013).Project management: a systems approach to planning, scheduling, and controlling. John Wiley Sons. Pritchard, C. L., PMP, P. R. (2014).Risk management: concepts and guidance. CRC Press. Ryu, C., Lim, S. Y., Suh, M. (2016). Project Risk Management in RD Organizations: A Survey on Risk Register from Korean companies.The Journal of Modern Project Management,4(2).