Assessing the Client's Risk Management Performance in Construction Procurement and Contracting: Case Studies

Randal Elder, Yan Zhang, Jian Zhou, and Nan Zhou (2009) study auditors' strategies to manage client risk resulting from internal control weaknesses in the first year of The Sarbanes-Oxley Act (SOX) 404 implementation. They first examine the relation between internal control weaknesses and audit fees, modified opinions, and auditor resignations, respectively, and establish that these are viable strategies to manage control risk on a stand-alone basis. They also document that that a pecking order exists among auditors' client control risk management strategies—as control risk increases, auditors are likely to respond in the order of audit fee adjustments, modified opinions, and auditor resignations. The authors' idea to look at a portfolio of decisions is an important step in the research in this area, and this approach can be generalized to similar studies. However, certain aspects of the hypothesis development and research design limit the authors' ability to adequately address their primary research objective.

This study investigates the integration of sustainability practices and risk management in Indonesian social enterprises, emphasizing the role of innovation as a mediator and operational type as a moderator. Social enterprises face unique challenges in balancing economic sustainability with social impact, especially in emerging markets like Indonesia. A structured survey was conducted with 118 social enterprises to assess their sustainable practices, risk management procedures, innovation scores, and operational models (permanent vs. project-based). Using Structural Equation Modeling (SEM) and Partial Least Squares (PLS) analysis, the results show that sustainability practices positively influence innovation, while both innovation and risk management significantly improve sustainable performance. Additionally, innovation mediates the relationship between sustainability practices, risk management, and performance. The operational type moderates the link between risk management and sustainable performance but does not influence the connection between sustainability practices and performance. These findings suggest that innovation is crucial for improving the sustainability of social enterprises and that risk management strategies should be tailored to the operational model. Social enterprises in Indonesia should prioritize innovative approaches and effective risk management to enhance their long-term sustainability and social impact.

Public procurement in many countries is one of the most important factors in governance and is a priority target of reform. In many humanitarian situations however, service delivery cannot wait for procurement reform. The needs of many of the Millennium Development Goals are immediate, while procurement reform may take years to institutionalize. Under these circumstances, international organisations such as the United Nations have both implementation and capacity-building roles, often placing them in high-risk situations. This has led to the development of procurement risk assessment and management tools, designed to provide objectivity in country procurement risk monitoring and review, as well as assist capacity building. The procurement risk assessment methodology that follows uses established risk modeling to provide procurement risk ratings in 60 HIV/AIDS, Tuberculosis and Malaria programs in 26 countries, and is successfully promoting procurement strengthening within high-risk country offices.

Construction is a critical sector of any economy in terms of value production, labor, and contributing to the gross national product. Managing risk is a relatively young area in Yemen’s construction sector, but it is gaining traction as building activity and competition rise. Construction firms mitigate risk by using a variety of risk management methods. Therefore, there is a need to assess these procedures in order to detect shortcomings. This research aims to establish the existing risk management strategies used in Yemeni building projects. Survey questionnaires were used to collect data. Respondents were drawn from Yemeni construction businesses. Risk management is not executed systematically, intentionally, or continuously, and most firms’ risk management procedures are reactive, semipermanent, informal, and unstructured, with no or few dedicated resources to address risks. This strategy is inconsistent with generally accepted risk management principles. Nonetheless, the findings suggest a general understanding of risk management and a willingness to learn from previous errors. The study of the findings suggests that risk identification approaches such as judgment and historical data are employed for risk analysis, and that the industry typically attempts to avoid or transfer risks in Yemeni building projects. The results shed light on the shortcomings of Yemen’s project management practices. To guarantee that construction projects obtain maximum value for money, project managers of big construction businesses in Yemen need a strong understanding of and training in globally accepted systematic risk management procedures. Finally, this study can help future stakeholders determine how to work together to manage risk.

Economic Capital for Market Risk

ABSTRACTWe analyze a petroleum refinery's procurement strategy, explaining how risk management affects optimal sourcing from long‐term, spot, and swap contracts. We use time series analysis to model the interaction between petroleum prices, transportation costs, and gross product worth. These models are then used to generate the scenarios incorporated in the stochastic program applied to compute the conditional value‐at‐risk. We prove the necessary and sufficient conditions for the optimal procurement and risk management strategies, and show that risk aversion can be better represented by the weighted average between expected profit and conditional value‐at‐risk, deriving the respective ISO curves. We estimate that an increase in the degree of risk aversion decreases the use of swap contracts. Our model is applied to the analysis of a refinery based in Singapore. Using regression analysis, we show we cannot reject the hypothesis of a statistically significant relationship between the way Saudi Arabia prices the long‐term contracts and the shape of the forward curve. We then study how risk aversion influences the procurement strategies, profitability, and risk exposure of the refinery. Finally, we analyze the pricing of long‐term (forward) contracts by Saudi Arabia, and study how the country could benefit from a different pricing policy.

This paper analyzes whether the Inter-American Development Bank (IDB, or Bank) has fully and effectively implemented the IDB-9 requirements related to risk and financial management. IDB-9 included four requirements in this area: (i) adopt a rule-based Income Management Model (IMM); (ii) implement the recently introduced risk-based Capital Adequacy Policy; (iii) execute a set of agreed actions to enhance the short-term sustainability of the Fund for Special Operations (FSO); and (iv) continue strengthening the Banks Risk Management Framework. The Bank has fully implemented the IDB-9 financial and risk management actions. The highly detailed and prescriptive nature of the requirements aided implementation. In terms of effectiveness, the IMM imposes financial discipline and enhances financial selfsustainability by linking Bank expenses directly to income through loan charges. The CAP supports prudent risk management and the Banks AAA rating. The actions taken for the FSO will not be sufficient to ensure the Funds sustainability until 2020, as mandated in IDB-9, and Management is preparing to propose additional measures for the Board¿s approval. A few issues with the IMM and CAP merit further review going forward. First, the IMM is very strict, with a high administrative expense coverage rule and its inclusion of nonoperational expenses. Second, it is not clear that the reserve ratios for sovereignguaranteed (SG) and non-sovereign-guaranteed (NSG) exposure adequately reflect their relative levels of risk or lead to the most effective leveraging of scarce Bank capital. Third, the Bank¿s unused borrowing capacity rule¿though perhaps reassuring to potential investors¿is outdated and is not relevant to the maintenance of the Bank¿s AAA rating, while a criterion that rating agencies do consider relevant¿country portfolio concentration¿is not factored into the Bank¿s rules. Finally, the IDB-9 architecture is inward-looking and does not promote a focus on the Bank¿s financial competitiveness. In light of these findings, OVE suggests that the Bank (i) consider introducing greater flexibility in the IMM by setting an administrative coverage band and perhaps excluding certain nonoperational expenses; (ii) review the capital accumulation rule and the reserve ratios for SG and NSG exposures; (iii) update the Bank¿s financial rules by phasing out the borrowing authority limit; and (iv) use the financial and risk management architecture as input to strategic decision-making on the projected size of the Bank, the blend of SG and NSG lending, expected countercyclical support, the role of the FSO, and the Bank¿s approach to future capitalization.

Risk management is an integral part of the project management process, and project failure is an area of concern in many organizations. This chapter explains and discusses a new maturity model for assessing and managing project risk in the automotive industry. The research design was two-fold. First, a case study analysis in a major German automotive company was undertaken to develop the maturity model. The approach was qualitative and inductive, using data provided by in-depth interviews. Second, this model was applied in two major projects currently underway in the company – one involving implementing a cloud-based ERP system and the other the program management function responsible for product development and launch. The model adds to existing risk management maturity models and is unique to the automotive industry. It can be used by risk and project managers and can be adapted to other industry sectors.

Risk management is an essential component of effective campus recreational sport programming. However, research on risk management policies, procedures, and practices within recreational sports is both limited and outdated. As such, this study provides an overview of current risk management policies, procedures, and practices across North American collegiate recreational sports departments. Specifically, the results emphasize current training practices for both part-time and full-time staff, practices in establishing and updating emergency action plans, and contents covered in emergency action plans. The results suggest that while the vast majority of recreational sport programs have established risk management procedures and engage in risk management training, they diverge in best practices related to emergency action plans and in terms of contents covered in such plans. Applications of these results for practitioners and institutions are emphasized, including discussions around best practices in risk management.

This paper proposes a risk management approach for university-affiliated, small satellite programs. These small programs have a unique set of risks because of a typically inexperienced workforce, limited corporate knowledge, occasional distributed tasking among universities, and a high student turnover rate. Only those risks unique to small, student-run satellite programs are presented. Additionally, several risk management strategies are explored, and the advantages and disadvantages of these risk-related tools and techniques are examined. To aid the process of risk identification in these particular programs, a Master Logic Diagram (MLD) for small satellites was created to help identify potential initiating events that could lead to failures during the mission. To validate the MLD, a case study is presented and analyzed. This Master Logic Diagram approach is shown to provide an effective method that can be easily adapted for risk identification in small, student-run satellite programs. OVERVIEW OF RISK MANAGEMENT A risk is “a factor, thing, element, or course involving uncertain danger; a hazard.” Risk management is the process of identifying issues that may be potential pitfalls to the success of a program and then creating and implementing a plan to mitigate those risks. A risk management plan first requires understanding and identifying risks. Then, it is necessary to analyze the probability, impact, severity, and urgency of the failure modes. Next, a mitigation strategy is developed to reduce risks, and decision points are identified to test whether failures have been eradicated. All risks, including ones that have been mitigated, are then monitored and updated throughout a project’s lifecycle. Why Use Risk Management? Risk management procedures are used to help programs focus on mission success and safety. Keeping the program’s objectives in mind, this process can help identify what might affect the outcome of the project in a negative manner. By identifying potential problems early, design changes can be made to prevent them, or resources can be allocated to them. Without keeping track of and mitigating the effects of risks that threaten the mission, there is little hope of maintaining both a schedule and a budget; a management plan helps allocate both in the risk reduction process. To reduce the negative effects of risks, the risk management plan should be started at the beginning of the design. A risk plan brings together all levels of engineers with the project management team. Making all personnel aware of failure modes throughout the program (and not just the dangers within their own work) can help to ensure the success of the mission as a whole. In addition, continually monitoring risks and updating the team members on the status of the risks can help to keep the project on track. Student projects are mainly tools for teaching various types of engineering, and risk management is an important aspect of all engineering jobs. Since these projects are valuable learning experiences that help prepare students to work in the industry, the team members should learn risk management practices. In addition, the students can also learn to resolve technical and managerial problems that they may face while working on a project. PROGRAMMATIC DIFFERENCES In general, the fundamental elements of commercial businesses or government programs are similar to those found at universities. The biggest differences lie in the fact that universities normally have “less” of all major resources, which leads to many risks for small satellite programs. In student-run programs, the monetary consequences of failure are lower; therefore, risk is perceived differently. While the student engineers working on a project are motivated by a desire to see the program succeed, the loss of the satellite is not as large of a financial burden as it would be for a satellite produced in industry. However, losing a satellite could be detrimental to the long-term success of a school’s

Risk management is playing a vital role to the financial ability of the company. Risk management is ultimately about creating a culture that would facilitate risk discussion when performing business activities or making any strategic, investment project the meticulously data analysis has been done with important formulas of risk management this project is develop on the basis of Software Company in relation with software industry In recent years all sectors of the economy have focused on management of risk as the key to making organisations successful in delivering their objectives whilst protecting the interests of their stakeholders. It also emphasis on both inward bustle for instability management and brooding of the organisation’s instability management interaction to the broad environment Risk management is a conception which turns very popular in a number of businesses. Many companies generally organize a risk management procedure in their projects for boosting up the performance and increase the surplus or profits. Projects undertaken in the establishment sector are universally complicated and have often notable budgets, and thus minimizing risks related should be important for each project manager. This master thesis describes an application of risk management in the prior stage of a project life cycle of an establishment project. In order to check how risk and risk management process is sensed a case study of a school project was selected. Additionally, deploy on the organised interviews, the research works present how risks reform during project life duration. All investigation is relay on a theoretical scenario regarding risk, risk management.

One of the reasons for the failure of software projects is the absence of risk management procedures or its improper application. The adoption of Scrum in software projects is increasing. However, such approach does not specify risk management activities. This paper presents the results of a survey conducted using a qualitative approach to analyze how risk management is carried out in Scrum software projects. Consequently, we present risk management practices that achieved greater and lesser agreement among respondents and the literature, respectively. We found that risk management must be applied continuously in a feedback loop. Furthermore, Scrum projects must not have a high formal planning level, even for high‐risk ones. The research verified that risk management in Scrum is performed differently from its application in traditional approaches. The framework has native resources, but classic processes of risk management would be incorporated and adapted.

Being the starting point of the production and operational activities of the enterprise, procurement costs and risks have a very important impact on the production and operational activities of the enterprise. Thus, strengthening internal control over the procurement management of the enterprise is important for the production and operation of the enterprise. Currently, the implementation of internal procurement management control of an enterprise, provided that it is carried out at key points and links in procurement risk management, can effectively reduce the risks of enterprise procurement management to a certain extent. Based on the current situation with internal control of procurement management, this article analyzes the shortcomings of existing internal control, and combines the relationship between blockchain technology and internal control of procurement management to give specific application ideas.

Task. Issues devoted to the delimitation of methods and procedures of related scientific areas: risk management, economic security, management and risk management are studied and researched by many authors. This gives rise to thoughts about a single basic basis for the listed scientific movements. So, the author, in order to avoid constant repetition of listing the scientific directions under consideration in the article, calls them directions, economic categories, etc., but the problem raised by the author of the article is the differentiation of the main elements, in particular methods, procedures, goals, objectives, principles between the studied categories, namely risk management, economic security, management and risk management. The purpose of the article is to systematize the listed elements and consider their duplication in the scientific areas under consideration. Model. The author systematizes, on the basis of those reviewed by modern economists and analysts, as well as classic scientific works, the basic elements of risk management, economic security, management and risk management. An attempt was made to find an answer to the question «are there specific developed methods and techniques for risk management of an organization that would distinguish it from the risk management system and other scientific areas?» Conclusions. Economic categories: risk management, economic security, management and risk management are considered as a single process in economic research, and therefore economists do not have a clear opinion and understanding of the differences between these categories. Practical significance. A comparative analysis of the essence of the main elements of risk management, economic security, management and risk management allows us to determine the most appropriate methods and procedures for the practical application of risk management in organizations. Allows you to develop an understanding of the implementation of risk management principles in organizations to achieve their goals. Originality. The list of goals, objectives, procedures and principles of risk management, economic security, management and risk management has been clarified, expanded and systematized.

Risk assessment and management for supply chain networks: A case study