Risk Management in Defence
The Defence Risk Management Policy documents the framework for the management of risk in Defence. More importantly, the Policy assigns responsibility for the management of risk to all Defence personnel to “provide assurance to Government and the Parliament that Defence has a formal, systematic and pro-active approach to the identification, management and monitoring of risk”. More information about the Enterprise Risk Management framework in Defence can be found at the Directorate of Enterprise Risk Management webpage.
Risk Management in the DMO
The DMO’s Risk Management Plan (RMP) accords with the Defence Risk Management Policy, and details how the DMO will identify and manage its risks at all levels within the organisation. This Manual aligns with the DMO’s RMP to ensure that DMO Business Rule RM-01 will be satisfied.
Risk management in the DMO is aligned with organisational levels. The Chief Executive Officer (CEO) DMO, through the DMO Executive, is responsible for the management of DMO’s corporate risks – those risks that could impact across the organisation as a whole and affect the achievement of DMO’s corporate objectives. Additionally, the CEO DMO is jointly responsible (with Chief Capability Development Group (CDG) and DepSec CS) for management of the Defence enterprise risk relating to the delivery of the Major Capital Investment Program.
The Division Heads are responsible for managing their own strategic risks – those risks that could impact across the division and affect the achievement of the division’s objectives. Risk-management responsibilities continue to cascade down through the various branches, System Program Offices (SPOs), business units and projects to ensure that risk-management responsibilities are allocated appropriately.
This top-down approach is supplemented by the escalation of select risks to higher management levels to ensure that higher management is aware of the risk exposure and that risks are being managed at the most appropriate level in the organisation and by the party best able to manage the risk.
DMO must ensure that the equipment provided to its customers is fit for purpose, and is provided within cost and schedule constraints, which is unlikely to be achieved without sound risk-management practices. Experience has shown that inadequate understanding and management of risks in projects can result in serious consequences, such as:
a. loss of life;
b. delivery of capability that does not meet the warfighters’ or end-users’ requirements;
c. significant financial loss;
d. late delivery;
Replaced/Superseded by document(s)
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The effective management of risk is an essential element of DMO’s vision to be Australia’s premier program management, logistics and engineering services organisation. It is also an essential part of fulfilling our purpose to equipping and sustaining Australia’s Defence Force.
As the Business Process Owner for Acquisition and Sustainment in the DMO, I am committed to ensuring that all DMO project staff not only manage risk effectively, but also understand the importance and value of effective risk management. Risk management is not simply about following a process – it is about identifying, assessing and actively managing those things that could have an impact on the outcome of a project. The management of risk is an integral part of project management and regardless of the size or complexity of a project; I expect all staff to manage the risks in their project as an everyday activity. Sound risk management practices are fundamental to ensuring good project outcomes.
The Project Risk Management Manual is written for all project staff, and I expect project managers to follow and apply the business rules within this manual. I also expect project managers to use their intelligence and common sense and to make logical and justifiable decisions based on the guidance provided in this manual.
This version of the Project Risk Management Manual is an update on the previous version and was completed in order to keep pace with changes in areas such as international standards and peak bodies such as Risk Management Institute of Australasia, Project Management Institute and Australian Institute of Project Management.
The Project Risk Management Manual is supported by other documents that are being progressively developed to provide further details of DMO risk management policy and guidance. Accordingly, I encourage readers to provide comments and ideas for improvement to the manual.