Risk perception and risk management: the eFinLit European project case
1. Risk perception and risk management: the
eFinLit European project case
Anabela Mesquita
Polytechnic of Porto / ISCAP- CICE and
Algoritmi RC
sarmento@iscap.ipp.pt
2. Agenda
• Introduction
• Background
• The project
• Measures to assess and prevent risk
▫ Before and during project development
• Results about risk perception and management
• Conclusion
3. Introduction
• Main concerns (EACEA) - quality and risk management of projects
▫ Funding a project implies some risk (perceived or real)
▫ Try to minimise risk by evaluating the quality of the proposal
(might reflect the quality of the project management, outcomes and final
products)
• Form to be filled in
▫ Need to explain how quality will be assured and how risk will be
controlled and mitigated.
▫ Description of each partner
• Purpose of any project manager - the project goes smooth,
without problems and facing no risks till the end of it.
4. • Developing a project
▫ Risk management is of critical concern to project manager as
unmanaged or unmitigated risks are one of the primary causes of
project failure
• Identification of the risks of a project before and during the
development of the project contribute to prevent them
before they happen.
• The focus of this presentation to understand how partners
perceive risk and how this can have impact in the final
outcomes of the project.
5. Background
• Part of the risk is perception and thus subjective.
▫ Related with how people evaluate their environment and judge it.
• Theories to explain the dangerousness of risk
▫ Psychology (risk perception is influenced by the emotional state of
the perceiver)
▫ Anthropology / sociology (perceptions are socially constructed by
institutions, cultural values and ways of life)
▫ Interdisciplinary (it combines different areas and outlines how
communications of risk events pass from the sender to a receiver and
in the process the filters amplify or attenuate risk perception)
6. • Risk is envisaged as something people assess in a rational
manner, weighing information before making a decision
▫ Providing people with more information will alter their
perceptions of risk.
▫ BUT providing more information alone will not eliminate
people’s irrational fears and sometimes outlandish ideas about
what is truly risky
▫ When people rate a risk they are filtering the image of that
potential risk by their social and cultural factors as well as by
their previous experience.
7. Efinlit – Development of financial literacy
competencies in EU citizens using digital tools
www.efinlit.eu
8. Project and partnership of eFinLit
• 2014 – 2016
• Main aim
▫ Identify and address specific needs of EU citizens in financial literacy while using ICT
tools and digital literacy
• Expected results
▫ 1) state of the Art and gap analysis concerning financial literacy in Europe; 2)
Develop an online curriculum composed of 7 modules: Digital Literacy and Access to
Financial Information; Basic Math; Budgeting; Savings; Indebtedness; Credit and Loans;
Consumer Rights and Investment and Entrepreneurship. Part of the partners of this
project have already worked together before, which may be relevant and important for
risk analysis and management; 3) Develop an eFinLit online platform and mobile
application and 4) Development of an adaptation toolkit.
• 8 partners from 7 different EU countries coming from a wide range of backgrounds
including training centers, family care centers, research and development centers,
and SMEs (see the website efinlit.eu for more details about partners).
www.efinlit.eu
9. Measures to assess and prevent risk
•Before project started
▫ Writing the proposal
The coordinator assumed the overall responsibility for risk
assessment and risk management.
And some measures were foreseen in order to prevent risk and solve it in case
a problem arose during the development of the project.
10. • Formal elements to risk management:
▫ (1) Letters of Mandate - Contractual agreement with the European
Commission on behalf of the consortium and all its member organisations.
▫ (2) Partner Agreements - Partner Agreements that outlined the
contractual obligations of all partners to the project and to the other
individual consortium members.
▫ (3) Steering Committee - Main decision making body for the
consortium and would assess evaluation findings and ensure that any
changes required to enhance the work of the consortium was implemented.
▫ (4) Internal Reporting - ISCAP required each partner to produce an
initial expenditure and activity report in M6 to ensure that documents
and records are sufficient to satisfy reporting requirements.
11. • (5) Risk Assessment - Prior to meetings there would be a risk assessment evaluate risks within the
project framework. Each of the following potential risks would be assessed under 2 distinct: (1) the
likelihood that this potential risk might present a problem (2) the impact that this potential
risk might have on the project:
▫ A) Different styles of work
▫ B) Different working time
▫ C) Excessive bureaucracy or in contrast neglect for formal requirements and documenting obligations
▫ D) Ignorance as regards the customs of a different country
▫ E) Improper distance in official relationships
▫ F) Misconceptions about mutual expectations of the partners at the commencement stage of the project
▫ G) Distrustfulness of the partners resulting in unwillingness to share know-how with others
▫ H) Withdrawal of a transnational partner in the course of project implementation
▫ I) Failure to safeguard the principle of mutual benefits for all partners in the consortium
▫ J) Unequal division of work among the transnational partners
▫ K) Dominant position of one partner in the project
▫ L) Difficulties in communication between the partners
▫ M) Different understandings of the same concepts
▫ N) Default of a partner on their obligations, including failure to perform tasks or untimely performance of tasks
▫ O) Lack of partner's personnel commitment to project implementation
▫ P) The risk of remuneration-related conflict
▫ Q) Understated or overstated budget of one of the partners
• Risk assessment procedure would be completed and documented before each partner team
meeting to ensure that the project coordinator could raise issues of concern with individual partners,
with the consortium as a whole or with the Project Management Committee.
12. ▫ During project development
• Risk assessment
▫ Before meeting - administer the questionnaire asking about which risks
they thought would likelihood happen at that stage of the project and what
would be the impact in the project, if that risk really arose.
▫ Questionnaire available online a few days before each face-to-face meeting,
the coordinator sent a message to all members asking them to fill it in.
▫ Results were always presented and discussed in the meeting.
▫ After the 3rd meeting (more or less at the end of the development of the
modules and start of the pilot) 3 open questions were asked to each
partner:
1) In your opinion what have been / or still are the risks in the efinlit project?
Please try to refer them all since the beginning of the project. How have they
evolved?
2) Did you (person / partner) adopt any strategy to deal with those risks? And
3) Can you please list at least 3 enablers and 3 constrainers of those risk?
13. • Till 7th october 2017 - 3 face-to-face meetings
▫ one at the start of the project,
▫ another one about six months later and
▫ another one again six months later after the previous one.
• A final meeting will take place at the end of the project, in October
2016) and so far 3 questionnaires were administered.
17. ▫ Open questions
• Although there is a perception of the existence of some risk, in
particular, the risk of delay in the development /
conclusion of some materials with some consequences in the
final quality of the project, partners recognize that there are
some enablers and constrainers of those risks (or some
preventers and promoters of the risk).
18. Preventers identified:
• 1) The role of the coordinator / leader – in the management of the
discussions and willingness to find a consensus between partners;
2) Project development, in particular the adoption of the group
work methodology;
• 3) Partners – the attitude of some partners and in particular the
attitude of one partner, pushing the others;
• 4) Project management – in particular the meetings, the
discussions during the meetings, the clarification of doubts,
concepts, ideas, time available for the discussions and the general
good atmosphere that partners feel.
19. Enablers of potential risk
• External
▫ Target group – some lack of interest of the target group to participate in the actions of the project
which implies some risk for the development and quality of the final version of the products.
• Internal
▫ Partners – partners do not work at the same speed implying some delays in the production;
lack of commitment entailing some default on obligations; lack of experience which can cause some
failure to perform tasks; work attitudes and style of work
▫ Management – lack of uniformisation of some materials / products which might also constitute a
risk for the project. Partners might interpret guidelines in a different way and apply them
differently. This might be due to other reasons (e.g. lack of experience or knowledge about the topic
or about the way the product should be developed); estimated time to perform a task - it is difficult
at the moment to write the proposal to think about all the aspects of the project and the
development of a product. This implies that a certain number of hours was estimated to conclude a
product and that actually that product needs more time.
▫ Communication – the lack of communication, quality in communication or different
interpretation of the same concept.
20. Conclusions
• Risks before being real, are perceived
• Perception depends on several factors such as psychology,
anthropology and sociology, the information available or the
combination of all factors of the environment.
• Project managers just wish to develop the project and reach the end
with a product with quality, and without problems or facing no risks.
• One strategy to prevent or control risk can encompass
▫ activities before the project is developed (prevention, meaning the
identification of possible risks and their prevention or the design of a plan
to deal with the risk) and
▫ during the project development as a way to assess risk every 6 months
(for instance) and the attempt to prevent or minimize the risk as it arises.
21. • Results show that risks changes as the project is developed and
as partners start to work together and acknowledging their
differences (time, speed, style of work, etc.).
• We identified some enablers and preventers of risk
• The identification of potential risk and the design of a plan to
prevent and deal with them seem to be a good approach.
• Future work - suggest that other cases are done in order to know all the
factors that might be involved in risk identification and prevention so
as some guidelines and advises might be given to project managers to
deal with such situations.
One of the main concerns of the Executive Agency (EACEA) regarding project development is related with quality and risk management. In fact, when the EACEA decides to fund a project, their decision implies some risk (perceived or real) and they try to minimise that risk by evaluating the quality of the proposal, which might reflect the quality of the project management, outcomes and final products. In any form there is always a section where the applicant needs to explain how quality will be assured and how risk will be controlled and mitigated. Even in the description of each partner, some information about the quality system the partner uses is requested. By its turn, the purpose of any project manager is that the project goes smooth, without problems and facing no risks till the end of it.
When developing a project, risk management is of critical concern to project manager as unmanaged or unmitigated risks are one of the primary causes of project failure [1]. The identification of the risks of a project before and during the development of the project might contribute to prevent them before they happen. The focus of this study is to understand how partners perceive risk and how this can have impact in the final outcomes of the project.
This article is structured as follows: after a brief review of literature, we describe the project and its antecedents and then the way risk is being managed. Results show that risk evolves and it is perceived in a different way by all partners.
Graph 1 presents the evolution of the perception of risk as the project was being developed. At the beginning of the project (green column) the most important risk for partners were misconception about mutual expectations, different understanding of the same concepts, unequal division of work among partners and distrustfulness of the partners resulting in unwillingness to share know-how with others. It is curious to note that the concerns were related with misconceptions of concepts and division of work. This is not surprising since it is legitimate to think that there might be different perspectives on the same concepts across Europe and that a common understanding about the project and their key words were necessary. Being aware of this, at the kick-off meeting the coordinator allocated some time to the partners to discuss their visions about the concepts involved and eliminating doubts.
In the second meeting, the concerns were more about the neglect for formal requirements, lack of partners’ personal commitment, burocracy, the existence of different styles of work, difficulties in communication, and default on a partner of their obligations. Finally, at the 3rd meeting, concerns were about styles of work, neglect for formal requirements and different working time.
As partners started to work together and developing the products, the perception of risk changed. And the concerns at the beginning of the project were replaced by others, more related with the project and the outcomes themselves. Partners discovered that they do not had all the same rhythm of work, the same style, the same commitment. Or at least they were worried about this. These results were important to the project manager since he had to deal with them and solve them. Or at least anticipate the possibility of their existence and try to minimize them.
Graph 2 presents the perception that partners have regarding the impact that risk may have for the project. The most important concerns that may really have impact in the project, before the 1st meeting were: withdrawal of a partner, neglect for formal requirement, misconceptions about mutual expectations, difficulties in communication, different understanding of the same concepts. In the 2nd meeting, concerns of risk with potential impact for the project were: neglect of formal requirements, difficulties in communication and lack of partner’s personnel commitment. Finally, in the 3rd meeting, partners mentioned that the risk with higher impact in the project would be the different styles of work, neglect for formal requirements and different understanding of the same concepts.
The perception of risk evolved during the 18 months of project development. As some authors say, risks are caused by a lack of certainty [1] and that uncertainty is especially prevalent in the early project phases. Since not all factors can be predicted at the onset of a project, yet decisions still have to be made, there is a risk that the outcome of these decisions is something other than what is expected [1]. With these results, one can see that although the uncertainty is more evident at the beginning of the project (more risks are mentioned), not all risks are perceived at the same time. Meaning this, that with the development of a project and as partners start to interact, work with each other and the development of outputs depend on each other, the perception changes.