Risk and Reward Management:

Analysing and Managing Risks and Opportunities

A common problem in projects and programmes is that they often exceed budget and time limits. A major research project in Norway identified poor risk analyses and management as akey reason for this. It was found that participatory processes that include all relevant stakeholders are better at identifying potential pitfalls and also finding upside potential. The challenge is to identify positive and negative opportunities, see which actor is best situated to address the risk or take advantage of the upside potential, agree on a risk/reward strategy, and then agree on roles and contracts based on this.

Scanteam has, in partnership with Norwegian specialist milieus, adapted these tools to the development context. Such risk analyses hold great potential for improved planning and implementation of complex activities such as sector programs, aid co-ordination, and large-scale investment projects.

Aid Coordination and Risk

Traditional risk studies often look at particular activities or projects. In the development context, the many joint activities based on alignment, harmonisation and local ownership pose a series of risks as well as opportunities to the different actors involved. Some of these are process risks that derive from different information levels, divergent assessments of the situation, different procedures and policy priorities, and varying levels of risk tolerance.

An increasing share of aid and government officials' time is spent just on aid coordinating. A more structured Risk and Opportunities study could uncover what the key challenges are, and how to address them better: Alignment and Harmonisation can in themselves be treated as specific projects or programmes.