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Pages: 17
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Date Submitted: 04/19/2012 06:17 AM
RISK INTERRELATION MANAGEMENT - CONTROLLING THE SNOWBALL EFFECT
Olli Kuismanen
EC Project Solutions Ltd., Finland
olli.kuismanen@ecprojectsolutions.fi
Tuomo Saari
EC Project Solutions Ltd., Finland
tuomo.saari@ecprojectsolutions.fi
Jussi Vähäkylä
EC Project Solutions Ltd., Finland
Jussi.vahakyla@ecprojectsolutions.fi
Introduction
We all know the story, ”everything was going just fine until the project hit one problem. This problem
accumulated other problems that accumulated other problems and soon the whole project was a
mess.”
During the years project risk management practice has evolved primarily around the assumption that
risks are independent entities that do not affect each other. Numerous tools and techniques have
been developed around this assumption. For some risks these tools and techniques work effectively
but in some cases they are trying to manage the wrong thing. In reality the risk environment is in
many cases a series of consequences, a risk network as Turner [1998] and Chapman & Ward [1997]
already have documented. In a risk network the risks affect each other giving more momentum or in
some cases negating each others’ effects. Managing these interrelations gives us the chance to
control the transfer of the risks in the network that really affect the project outcome. This paper
introduces Risk Interrelation Management (RIM) as a way for using risk modelling in controlling the
risk accumulation.
Risk Interrelation Management consists of identifying the causes behind the risks, finding the
interrelations between the causes and effects and the way they accumulate, defining an accurate
enough risk network and then finding a countermeasure for each of those interrelations. This way we
can really control the snowball effect; prevent one problem from becoming many problems.
This study is based on customer cases where the need for more thorough understanding of the risk
environment and the need for managing this “snowball...