Risk Management in International Development Projects
Risk management is an inherent part of project management and has aspects of monitoring and review, reporting and communication. These are common activities regardless of the type of project.
All projects go through a planning phase, which is more or less complex depending upon the scope and complexity of the project. Project plans are based on certain assumptions; for example, lead time for procurement or projected number of patients in need of specific treatment. Any uncertainty related to those assumptions is a source of risk. If these uncertainties are examined and efforts are put forward into managing them during project planning, their effects can be ‘controlled’, or minimized (in case of threats) or enhanced (in case of opportunities), in order to support reaching project objectives. Project managers most often do this by making sure project plans consider the likelihood and impact of a risk, or preparing contingency plans.
Compared to projects in other areas, international development projects have greater exposure to risk. This is because the operating environments for such projects are difficult and usually with inadequate resources. In addition, most of these projects are funded by donors, who come with their own requirements that may require additional resources. For example:
- International development projects are usually implemented in environments with high contextual risk (weak infrastructure, unstable political environment, ongoing or recent armed conflict, high poverty rates, weak legal environment and banking system, lack of adequately qualified human resources, etc.). This affects projects’ ability to attract qualified human resources and build effective partnerships. It presents a threat to staff and equipment safety, and poses limitations in terms of available infrastructure such as transport and internet.
- Development projects are funded through public finance/donors. This often means different reporting requirements, creating a high reporting burden and elaborate processes for approving changes to project plans, which can seriously affect the ability to respond to risks.
- Development projects’ objectives are often centred on human welfare and as such any unplanned adverse effect of project implementation may carry a high ethical burden and substantially compromise the reputation of everyone involved.