Risk treatment for renewable energy developers - Revision history

ErlendSehube at 13:20, 19 March 2022

2022-03-19T13:20:03Z

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			''Developed by Erlend Thabiso Rømyhr Sehube''

	Risk treatment is the process of selecting and implementing measures to modify risk. This article will describe risk treatment in the energy sector and analyze the benefits and challenges that it may present. The risk treatment measure includes retaining risk, avoiding risk as well as optimizing risk. Risk management is an important and crucial part of project, program and portfolio management. There are currently a lot of changes and innovation in the energy sector, and several companies push for sustainable energy. This will include a lot of risks, and how they manage these risks could be of a great importance for the feasibility of the green transition. This article will focus on the treatment of risks for renewable energy projects. Firstly, risk treatment and its role in a risk management process is explained, thereafter the article focuses on aspects and characteristics that may be unique for projects in the renewable energy sector.		Risk treatment is the process of selecting and implementing measures to modify risk. This article will describe risk treatment in the energy sector and analyze the benefits and challenges that it may present. The risk treatment measure includes retaining risk, avoiding risk as well as optimizing risk. Risk management is an important and crucial part of project, program and portfolio management. There are currently a lot of changes and innovation in the energy sector, and several companies push for sustainable energy. This will include a lot of risks, and how they manage these risks could be of a great importance for the feasibility of the green transition. This article will focus on the treatment of risks for renewable energy projects. Firstly, risk treatment and its role in a risk management process is explained, thereafter the article focuses on aspects and characteristics that may be unique for projects in the renewable energy sector.

ErlendSehube: /* Political */

2022-03-19T13:12:34Z

Political

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	* Political risk insurances (PRI), which is instruments that cover a wide range of political risks. These insurances are often used in infrastructure.		* Political risk insurances (PRI), which is instruments that cover a wide range of political risks. These insurances are often used in infrastructure.
	* Partnership/joint ventures are also used. These are used to share risk. This can be through partnering with local government to receive more support and mitigate risk that it could elsewhere exist.		* Partnership/joint ventures are also used. These are used to share risk. This can be through partnering with local government to receive more support and mitigate risk that could elsewhere exist.
	* Country Credit default swap (CDS). This is a contract where the buyer makes several payments to the seller. The buyer will then receive a payoff if a loan defaults.		* Country Credit default swap (CDS). This is a contract where the buyer makes several payments to the seller. The buyer will then receive a payoff if a loan defaults.


	=== '''Social''' ===		=== '''Social''' ===

ErlendSehube: /* Risk Treatment in Energy Projects */

2022-03-19T13:05:11Z

Risk Treatment in Energy Projects

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	== '''Risk Treatment in Energy Projects''' ==		== '''Risk Treatment in Energy Projects''' ==

	~~What categorizes risks in energy projects and how could risk treatment improve mitigating risks and benefit the opportunities it may present~~


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	* Environmental and social impact assessment. In order to improve the project planning, the environmental and social risks are evaluated and analyzed. Life cycle assessments (LCA) are a common method to analyze the environmental impacts.		* Environmental and social impact assessment. In order to improve the project planning, the environmental and social risks are evaluated and analyzed. Life cycle assessments (LCA) are a common method to analyze the environmental impacts.
	* Public consultation and participation. Engaging both local and international society could strengthen the sustainability of project. This is by getting as much information from as many stakeholders as possible, and eventually ending up with the best possible practice.		* Public consultation and participation. Engaging both local and international society could strengthen the sustainability of project. This is by getting as much information from as many stakeholders as possible, and eventually ending up with the best possible practice.
	* Compensation. There are often local areas and towns that could be affected by energy projects and in order to receive an acceptance of the project, areas and towns would be compensated.		* Compensation. There are often local areas and towns that could be affected by energy projects and in order to receive an acceptance of the project, areas and towns would be compensated.

	== '''Applicability to renewable energy projects''' ==		== '''Applicability to renewable energy projects''' ==

ErlendSehube: /* Acceptance */

2022-03-19T12:58:53Z

Acceptance

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	=== '''Acceptance''' ===		=== '''Acceptance''' ===

	Risk acceptance is a passive risk strategy. The strategy is to intentionally retain an identified risk where the management considers that the project could handle the potential outcomes effectively. The risk is not to be forgotten and the choice to accept the risk might alter throughout the project life-cycle. These types of risks usually are small risks that the management considers not to be worth spending time and resources resolving it. It could also be risks where the consequences are so huge that insuring against it would not be feasible due to the costs it may present. <ref name="IEARisk">IEA - Renewable Energy Technology Deployment (2011), Risk Quantification and Risk Management in Renewable Energy Projects.</ref> <ref>ENISA, European Union Agency for Cybersecurity. Threat and risk management, Risk Acceptance. Retrieved from: https://www.enisa.europa.eu/topics/threat-risk-management/risk-management/current-risk/risk-management-inventory/rm-process/risk-acceptance</ref>		Risk acceptance is a passive risk strategy. The strategy is to intentionally retain an identified risk where the management considers that the project could handle the potential outcomes effectively. The risk is not to be forgotten and the choice to accept the risk might alter throughout the project life-cycle. These types of risks usually are small risks that the management considers not to be worth spending time and resources resolving. It could also be risks where the consequences are so huge that insuring against it would not be feasible due to the costs it may present. <ref name="IEARisk">IEA - Renewable Energy Technology Deployment (2011), Risk Quantification and Risk Management in Renewable Energy Projects.</ref> <ref>ENISA, European Union Agency for Cybersecurity. Threat and risk management, Risk Acceptance. Retrieved from: https://www.enisa.europa.eu/topics/threat-risk-management/risk-management/current-risk/risk-management-inventory/rm-process/risk-acceptance</ref>

	== '''Risk Treatment in Energy Projects''' ==		== '''Risk Treatment in Energy Projects''' ==

ErlendSehube: /* Avoid */

2022-03-19T12:54:50Z

Avoid

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	=== '''Avoid''' ===		=== '''Avoid''' ===

	The strategy of eliminating activities that can harm or influence the project in a negative matter, is called risk avoidance. Although complete elimination is almost impossible, the strategy aims to deflect or reduce as many threats as possible. When performing a risk avoidance, the strategy is an intentional tactic, therefore not the same as ignoring the risk or failing to ~~identifying~~ the risk. Even though this strategy may be the most desirable risk treatment strategy, it is important to analyze the strategy with the cost-benefit analysis, and how it may affect the entire project. An example in energy projects is to use well known materials in the construction, instead of new materials that only has performed at specific conditions. The cost risk of the untested material will usually outweigh the benefits it may present. This strategy has several advantages, such as the strategy could eliminate the risk completely. The strategy could also generate higher confidence from the organization that the project will continue to operate due to the risk being avoided, and therefore do not have to plan for the negative consequences the risk might present. The disadvantage with this strategy is that it could slow the project down, as employees and other stakeholders must follow the rules of what the risk avoidance strategy may present. It could also limit opportunities for positive outcomes of risks, and stop innovation for future projects. <ref name=ISO31000>Lark, J.(2015) ISO 31000, Risk management</ref> <ref name="IEARisk">IEA - Renewable Energy Technology Deployment (2011), Risk Quantification and Risk Management in Renewable Energy Projects</ref> <ref> Pratt Mary. Tech Target 2022, Risk Avoidance, Retrieved from: https://www.searchcompliance.techtarget.com/definition/risk-avoidance</ref>		The strategy of eliminating activities that can harm or influence the project in a negative matter, is called risk avoidance. Although complete elimination is almost impossible, the strategy aims to deflect or reduce as many threats as possible. When performing a risk avoidance, the strategy is an intentional tactic, therefore not the same as ignoring the risk or failing to identify the risk. Even though this strategy may be the most desirable risk treatment strategy, it is important to analyze the strategy with the cost-benefit analysis, and how it may affect the entire project. An example in energy projects is to use well known materials in the construction, instead of new materials that only has performed at specific conditions. The cost risk of the untested material will usually outweigh the benefits it may present. This strategy has several advantages, such as the strategy could eliminate the risk completely. The strategy could also generate higher confidence from the organization that the project will continue to operate due to the risk being avoided, and therefore do not have to plan for the negative consequences the risk might present. The disadvantage with this strategy is that it could slow the project down, as employees and other stakeholders must follow the rules of what the risk avoidance strategy may present. It could also limit opportunities for positive outcomes of risks, and stop innovation for future projects. <ref name=ISO31000>Lark, J.(2015) ISO 31000, Risk management</ref> <ref name="IEARisk">IEA - Renewable Energy Technology Deployment (2011), Risk Quantification and Risk Management in Renewable Energy Projects</ref> <ref> Pratt Mary. Tech Target 2022, Risk Avoidance, Retrieved from: https://www.searchcompliance.techtarget.com/definition/risk-avoidance</ref>



	=== '''Mitigate''' ===		=== '''Mitigate''' ===

ErlendSehube: /* Risk Treatment in Risk Management Process */

2022-03-19T12:47:05Z

Risk Treatment in Risk Management Process

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	# '''Step 5 - Treat risks'''		# '''Step 5 - Treat risks'''

	Risks and risk management will vary a lot in projects due to every project being unique. Both risks and projects varies a lot in importance and threat throughout the project life cycle. Therefore, standardization of risk treatment is almost impossible. This article will mainly focus on the treatment of risks, and highlight some of the characteristics that renewable energy developers might face in renewable energy projects. Even though risks vary ~~form~~ project to project, the process of identifying, assessing, and controlling risks is standard for almost every project. Risk treatment is the final step in risk management, and therefore a vital step for the project manager in order to efficiently handle risks that are identified.		Risks and risk management will vary a lot in projects due to every project being unique. Both risks and projects varies a lot in importance and threat throughout the project life cycle. Therefore, standardization of risk treatment is almost impossible. This article will mainly focus on the treatment of risks, and highlight some of the characteristics that renewable energy developers might face in renewable energy projects. Even though risks vary from project to project, the process of identifying, assessing, and controlling risks is standard for almost every project. Risk treatment is the final step in risk management, and therefore a vital step for the project manager in order to efficiently handle risks that are identified.
	<ref name="multiple">Project Management Institute, Inc.(PMI) (2019), Standard for Risk Management in Portfolios, Programs, and Projects</ref>		<ref name="multiple">Project Management Institute, Inc.(PMI) (2019), Standard for Risk Management in Portfolios, Programs, and Projects</ref>

ErlendSehube: /* Risk Treatment and Control */

2022-03-19T12:41:11Z

Risk Treatment and Control

← Older revision		Revision as of 12:41, 19 March 2022
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	Risk treatment can be defined as the process of selecting and implementing measures to modify risk. When analyzing the risks and measures to modify them, every risk should be measured and considered based on a cost-benefit analysis. The cost-benefit analysis is done during the first steps of the ~~RPM~~. If this analysis is done thoroughly and every direct or indirect costs whether substantial or theoretical, and estimated either monetary or other terms, the risk treatment will be done better and more efficiently. Risks can have both negative and positive outcomes, by identifying the potential outcome of each risks, the treatment of these risks are handled similarly, although interpreted differently. Risks that have potential positive outcomes are likely to get the management to start or continuing an activity that is likely to create or maintain this positive outcome. Management would like to avoid risks with possible negative outcomes by stopping or reducing activities that can cause this risk. <ref> ENISA, European Union Agency for Cybersecurity. Threat and risk management, Risk Treatment. https://www.enisa.europa.eu/topics/threat-risk-management/risk-management/current-risk/risk-management-inventory/rm-process/risk-treatment</ref>		Risk treatment can be defined as the process of selecting and implementing measures to modify risk. When analyzing the risks and measures to modify them, every risk should be measured and considered based on a cost-benefit analysis. The cost-benefit analysis is done during the first steps of the RMP. If this analysis is done thoroughly and every direct or indirect costs whether substantial or theoretical, and estimated either monetary or other terms, the risk treatment will be done better and more efficiently. Risks can have both negative and positive outcomes, by identifying the potential outcome of each risks, the treatment of these risks are handled similarly, although interpreted differently. Risks that have potential positive outcomes are likely to get the management to start or continuing an activity that is likely to create or maintain this positive outcome. Management would like to avoid risks with possible negative outcomes by stopping or reducing activities that can cause this risk. <ref> ENISA, European Union Agency for Cybersecurity. Threat and risk management, Risk Treatment. https://www.enisa.europa.eu/topics/threat-risk-management/risk-management/current-risk/risk-management-inventory/rm-process/risk-treatment</ref>


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	Risk acceptance is a passive risk strategy. The strategy is to intentionally retain an identified risk where the management considers that the project could handle the potential outcomes effectively. The risk is not to be forgotten and the choice to accept the risk might alter throughout the project life-cycle. These types of risks usually are small risks that the management considers not to be worth spending time and resources resolving it. It could also be risks where the consequences are so huge that insuring against it would not be feasible due to the costs it may present. <ref name="IEARisk">IEA - Renewable Energy Technology Deployment (2011), Risk Quantification and Risk Management in Renewable Energy Projects.</ref> <ref>ENISA, European Union Agency for Cybersecurity. Threat and risk management, Risk Acceptance. Retrieved from: https://www.enisa.europa.eu/topics/threat-risk-management/risk-management/current-risk/risk-management-inventory/rm-process/risk-acceptance</ref>		Risk acceptance is a passive risk strategy. The strategy is to intentionally retain an identified risk where the management considers that the project could handle the potential outcomes effectively. The risk is not to be forgotten and the choice to accept the risk might alter throughout the project life-cycle. These types of risks usually are small risks that the management considers not to be worth spending time and resources resolving it. It could also be risks where the consequences are so huge that insuring against it would not be feasible due to the costs it may present. <ref name="IEARisk">IEA - Renewable Energy Technology Deployment (2011), Risk Quantification and Risk Management in Renewable Energy Projects.</ref> <ref>ENISA, European Union Agency for Cybersecurity. Threat and risk management, Risk Acceptance. Retrieved from: https://www.enisa.europa.eu/topics/threat-risk-management/risk-management/current-risk/risk-management-inventory/rm-process/risk-acceptance</ref>


	== '''Risk Treatment in Energy Projects''' ==		== '''Risk Treatment in Energy Projects''' ==

ErlendSehube: /* Risk Treatment in Risk Management Process */

2022-03-19T12:40:52Z

Risk Treatment in Risk Management Process

← Older revision		Revision as of 12:40, 19 March 2022
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	Risk is defined as an uncertain event or condition that, if it occurs has a positive or negative effect on a project's objectives. In every project the Risk management process (RMP) is essential to keep control, reduce cost, and using resources as efficient as possible. An important task for the project management is to try to mitigate the negative effects and benefit from the positive outcomes. ~~RPM~~ consists of 5 steps that are used throughout the project life cycle. The 5 steps are as follows: <ref name="multiple">Project Management Institute, Inc.(PMI) (2019), Standard for Risk Management in Portfolios, Programs, and Projects</ref> <ref name=ISO31000>Lark, J.(2015) ISO 31000, Risk management</ref>		Risk is defined as an uncertain event or condition that, if it occurs has a positive or negative effect on a project's objectives. In every project the Risk management process (RMP) is essential to keep control, reduce cost, and using resources as efficient as possible. An important task for the project management is to try to mitigate the negative effects and benefit from the positive outcomes. RMP consists of 5 steps that are used throughout the project life cycle. The 5 steps are as follows: <ref name="multiple">Project Management Institute, Inc.(PMI) (2019), Standard for Risk Management in Portfolios, Programs, and Projects</ref> <ref name=ISO31000>Lark, J.(2015) ISO 31000, Risk management</ref>
	# Step 1 - Establish context		# Step 1 - Establish context
	# Step 2 - Identify risks		# Step 2 - Identify risks
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	Risks and risk management will vary a lot in projects due to every project being unique. Both risks and projects varies a lot in importance and threat throughout the project life cycle. Therefore, standardization of risk treatment is almost impossible. This article will mainly focus on the treatment of risks, and highlight some of the characteristics that renewable energy developers might face in renewable energy projects. Even though risks vary form project to project, the process of identifying, assessing, and controlling risks is standard for almost every project. Risk treatment is the final step in risk management, and therefore a vital step for the project manager in order to efficiently handle risks that are identified.		Risks and risk management will vary a lot in projects due to every project being unique. Both risks and projects varies a lot in importance and threat throughout the project life cycle. Therefore, standardization of risk treatment is almost impossible. This article will mainly focus on the treatment of risks, and highlight some of the characteristics that renewable energy developers might face in renewable energy projects. Even though risks vary form project to project, the process of identifying, assessing, and controlling risks is standard for almost every project. Risk treatment is the final step in risk management, and therefore a vital step for the project manager in order to efficiently handle risks that are identified.
	<ref name="multiple">Project Management Institute, Inc.(PMI) (2019), Standard for Risk Management in Portfolios, Programs, and Projects</ref>		<ref name="multiple">Project Management Institute, Inc.(PMI) (2019), Standard for Risk Management in Portfolios, Programs, and Projects</ref>




	== '''Risk Treatment and Control''' ==		== '''Risk Treatment and Control''' ==

ErlendSehube at 12:40, 19 March 2022

2022-03-19T12:40:17Z

← Older revision		Revision as of 12:40, 19 March 2022
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	Risk is defined as an uncertain event or condition that, if it occurs has a positive or negative effect on a project's objectives. In every project the Risk ~~Management Process~~ (~~RPM~~) is essential to keep control, reduce cost, and using resources as efficient as possible. An important task for the project management is to try to mitigate the negative effects and benefit from the positive outcomes. RPM consists of 5 steps that are used throughout the project life cycle. The 5 steps are as follows: <ref name="multiple">Project Management Institute, Inc.(PMI) (2019), Standard for Risk Management in Portfolios, Programs, and Projects</ref> <ref name=ISO31000>Lark, J.(2015) ISO 31000, Risk management</ref>		Risk is defined as an uncertain event or condition that, if it occurs has a positive or negative effect on a project's objectives. In every project the Risk management process (RMP) is essential to keep control, reduce cost, and using resources as efficient as possible. An important task for the project management is to try to mitigate the negative effects and benefit from the positive outcomes. RPM consists of 5 steps that are used throughout the project life cycle. The 5 steps are as follows: <ref name="multiple">Project Management Institute, Inc.(PMI) (2019), Standard for Risk Management in Portfolios, Programs, and Projects</ref> <ref name=ISO31000>Lark, J.(2015) ISO 31000, Risk management</ref>
	# Step 1 - Establish context		# Step 1 - Establish context
	# Step 2 - Identify risks		# Step 2 - Identify risks

ErlendSehube at 14:48, 12 March 2022

2022-03-12T14:48:44Z

← Older revision		Revision as of 14:48, 12 March 2022
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	Risk treatment is the process of selecting and implementing measures to modify risk. This article will describe risk treatment in the energy sector and analyze the benefits and challenges that it may present. The risk treatment measure includes retaining risk, avoiding risk as well as optimizing risk. Risk management is an important and crucial part of project, program and portfolio management. There are currently a lot of changes and innovation in the energy sector ~~now~~, and several companies push for sustainable energy. This will include a lot of risks, and how they manage these risks could be of a great importance for the feasibility of the green transition. This article will focus on the treatment of risks for renewable energy projects. Firstly, risk treatment and its role in a risk management process is explained, thereafter the article focuses on aspects and characteristics that may be unique for projects in the renewable energy sector.		Risk treatment is the process of selecting and implementing measures to modify risk. This article will describe risk treatment in the energy sector and analyze the benefits and challenges that it may present. The risk treatment measure includes retaining risk, avoiding risk as well as optimizing risk. Risk management is an important and crucial part of project, program and portfolio management. There are currently a lot of changes and innovation in the energy sector, and several companies push for sustainable energy. This will include a lot of risks, and how they manage these risks could be of a great importance for the feasibility of the green transition. This article will focus on the treatment of risks for renewable energy projects. Firstly, risk treatment and its role in a risk management process is explained, thereafter the article focuses on aspects and characteristics that may be unique for projects in the renewable energy sector.