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Risk Management in Enterprise Risk Management Projects

Risk is uncertainty and potential loss. As Kanti Prakash Brahma explains, these two are considered “risk factors” in an Enterprise Risk Management (ERP) project. These risks can stem from anywhere, but generally are caused by a lack of planned objectives, an overspent budget, and failure to meet user expectations. These lead to process failures: Process failures are characterised by budget extension, time extension, and project stop. Low fitting with strategic goals, poor financial performances etc. are specific symptoms of correspondence failure. Effects like poor business performance, inadequate system reliability and stability, low user friendliness could be associated to expectation, interaction or correspondence failure. Many times organizations fail to associate the effects to the causal risk factor. Understanding of the possible effects of ERP risk factors is crucial for risk management in ERP projects. The author then goes on to list critical risk factors in ERP projects, including:

  • Lack of top management commitment
  • Ineffective strategic thinking and planning
  • Ineffective communication system
  • Poor leadership
  • Lack of process-streamlining
  • Inadequate BPR
  • Lack of internal expert with business/tech knowledge
  • Poor project team skill
  • Poor project management techniques
  • Ineffective consulting services
  • Failure to convince key users
  • Inadequate training and instruction
  • Complex architecture and large number of implementation modules
  • Poor legacy system, IT system, and supplier stability

The post then goes on to propose manners in which risks associated with ERP projects can be lessened or mitigated. The final message that Kanti Prakash Brama leaves us with is this: risk brings reward, and risk in inevitable when implementing and enterprise risk management project. However, each organization may have a different set of critical risks, and in knowing those risks, organizations will be better able to prepare for them.

About Matthew Kabik

Matthew Kabik is the former Editor of Computer Aid's Accelerating IT Success. He worked at Computer Aid, Inc. from 2008 to 2014 in the Harrisburg offices, where he was a copywriter, swordsman, social media consultant, and trainer before moving into editorial.

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