Risk Management Planning Introduction

In business context, risks are unforeseen events that have an impact on the ability of a
business organization to achieve its goals. Sources of risk to a business include suppliers,
employees, political environment, and weather (Watt, 2014). When they occur, risk events
can result in the business losing money, goodwill, and other business assets. Thus, it is
important for businesses to minimize risks or reduce their impact to the business when they
occur. These goals can be achieved through having a robust risk management plan in place
(Watt, 2014). The risk management plan should be regularly modified to ensure it effectively
addresses any emerging issues. This paper examines a risk modification plan for a project in
which anticipated risks include the prototype’s late delivery from the vendor and lack of
technical depth from the vendor. The modification of the plan is meant to not only address
these risks but also look out for opportunities in the plan.

Part 1: Risk Management Plan Addendum

There are many benefits for revising risks that are associated with vendors. They
include lowering costs, helping to achieve early delivery of the project, and improving the
quality of the project.
Lowering costs
The project’s costs can be lowered though renegotiating the terms of the business-
vendor relationship. In the renegotiated relationship, the vendor will reduce the cost of
delivering the prototype and other materials that the business may need. On its part, the
business will commit to increasing the number or quantity of materials that it gets from the
vendor.

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Ensuring earlier delivery
To ensure early delivery, the business may request a change in the mode of
transporting the materials from the vendor to the business. For instance, the business may
request that the vendor uses air transport. Using air transport may help achieve early delivery
because it is the fastest mode of transport.
Ensuring higher quality
In regard to quality improvement, the business may specify the quality of components
that the vendor uses to make the prototypes and other materials that it supplies to the
business. The higher the quality of the components or raw materials, the higher the quality of
the final product. The quality can also be improved by closely integrating the production
systems of the supplier and those of the business (Volani & Herbert-Hansen, 2017). Such
integration ensures that the business receives products of the desired quality.
Other positive impacts
Another aspect of the business-vendor relationship that can be improved is
commitment of the vendor. The commitment can be improved by increasing the volume of
supplies from the vendor. When a vendor is requested to increase the amount of supplies to
the client, it shows that the client has trust in them (Volani & Herbert-Hansen, 2017). The
vendor is likely to repay the trust by improving quality of supplies, reducing delivery time,
and reducing cost of the supplies as well.

Part 2: Answers to Questions
What can you change in your plans to create an opportunity?
Making changes to the plan can help the project manager to complete the project on
time and within the limits of the set budget. While the changes are primarily meant to help

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the manager to avoid or minimize risks, they also create opportunities for the project manager
to develop better relationship with the project’s stakeholders, including the project’s vendor
(Volani & Herbert-Hansen, 2017). In the scenario under discussion, one of the changes that
can be made to create an opportunity is to increase the vendor’s late delivery penalty.
Another change to the plans that can create an opportunity is changing the method of delivery
of the prototype. For instance, the plan could be changed so that the project is delivered by air
to increase speed of delivery.
What would that opportunity be?
The proposed changes to the plans reduce some of the risks that the project faces,
such as late delivery of prototype. Granted, the change in plans reduce the project’s risks.
However, they can also be used to create opportunities for the project. For instance, the
project manager may give the vendor additional responsibility of supplying more materials
for the project as long as the delivery is done on time. The opportunity in this change in plans
will be improvement in the relationship between the vendor and the business/client.
What is the probability that this opportunity could occur? What is the impact?
There is high probability that the opportunity of improving relations with the vendor
while reducing the risk of late delivery will occur. If the vendor knows that if they deliver
materials on time, they will be given the opportunity to deliver more materials and, therefore,
make more money, they are likely to be motivated to deliver the materials on time. Thus, the
probability of the opportunity occurring is high because the potential benefits of adhering to
the changed plan will motivate the vendor to act in a way that makes the opportunity a reality.
The impact of the opportunity will include improving vendor-client relations and increasing
speed at which the vendor delivers products.
What are the risks (adverse effect) that are introduced by this change in plans?

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Even though the plan creates the opportunity of improving relations between the
vendor and the business while simultaneously ensuring that the vendor delivers materials on
time, there is a risk of things going horribly wrong. Since the plan increases penalty for late
delivery, if the vendor, for whatever reason, makes a late delivery, they are likely to be
embittered by the increased penalties that they will be subjected to. Seeing that the business is
too risky to deal with, they may decide not to make supplies to the company in future thus
forcing the business to start looking for another vendor.
How will you communicate this change to the vendor?
All communications to the vendor will be done in writing in a clear and precise
manner. Having the communications done in writing ensures that the vendor understands
what exactly is expected of them and what the business is willing to do in return if the vendor
meets the expectations of the plans.

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References

Volani, N., & Herbert-Hansen, Z. N. L. (2017). Structuring vendor-client relationships–a
combinatorial approach. In EURAM 2017.
Watt, A. (2014). Risk Management Planning. A. Watt, Project Management, 150-158.