.

Managing Internal Risk

Internal risk management is the Bid or Proposal Manager’s strategy for managing or constraining the risks inherent in preparing an offer. All proposal development processes involve some risk, which may impact the delivery of the offer document.

Introduction

Creating every offer entails risk. Best practice is to identify how internal concerns or gaps will be managed in the proposal management plan.

Not dealing with potential risks in the proposal development phase will inevitably affect cost and schedule. It’s the Bid or Proposal Manager’s responsibility to understand what degree of risk is acceptable to his or her organization and to prepare mitigation strategies accordingly.

Best Practices

1. Recognize all aspects of internal risk.

Internal risk is the risk associated with producing an offer in response to the bid request requirements.

Recognizing risk involves evaluating the organization and the proposal team’s abilities to deliver the offer to the necessary quality standards on time and within budget. Common areas to consider are as follows:

  • People. Do you have enough of the right people available at the right times?
  • Resources and Tools. Do you have all the technology and facilities that you need to deliver the offer?
  • Lessons Learned. What went right and what went wrong in the process of developing previous offers of this kind? Are you applying those lessons learned to this proposal development?

2. Develop a mitigation strategy to address internal risk.

Developing a risk management strategy is a key part of overall proposal strategy development. Develop alternative, backup, or parallel procedures to monitor whether your risk mitigation strategy is to accept, mitigate, transfer, or avoid risk. Situations in which each mitigation strategy might be adopted are described in the following section.

Mitigation Strategies

Accept a risk if:

  • Its risk of occurrence is low
  • The consequences of the risk are relatively insignificant
  • You cannot mitigate it and are forced to accept it

Mitigate a risk if you are able to limit its impact (now or later) by:

  • Changing the way you planned to develop the offer
  • Putting effort toward reducing the likelihood of the risk occurring
  • Investing in measures that reduce the risk

Transfer a risk to another party (inside or outside of your organization) to manage to reduce its impact. Risk can typically be transferred to:

  • Teaming partners, with their full knowledge and agreement
  • Suppliers, with their full knowledge and agreement
  • Another part of your organization

Avoid a risk by removing the threat, typically through:

  • Changing the way you planned to develop the offer
  • Putting effort toward eliminating the likelihood of the risk occurring
  • Investing in measures that remove the risk

Identify the areas of greatest risk to the proposal development process and then record your risk management approach in the proposal management plan. An example of a risk management table is shown in Figure 1.

Serial no. Risk title Probability of occurrence Impact Indicators and/or measures Action or mitigation Owner Status

Figure 1. Place a Risk Management Matrix in the Proposal Management Plan. Include a matrix that summarizes the major risks and assesses the risk both with and without your mitigation approach.

Identify and define all relevant risks with an explanation of how the risk will be managed, including designating an owner. Cite clear decision points tied to your proposed approach, as well as alternative, backup, or parallel approaches.

Common Pitfalls and Misconceptions

Reluctance to address internal risks

Not dealing with potential risks in the proposal development phase will inevitably impact cost and schedule. It’s the Bid or Proposal Manager’s responsibility to understand what degree of risk is acceptable to his or her organization and to prepare mitigation strategies accordingly.

Summary

  • Recognize all aspects of internal risk.
  • Develop a risk mitigation strategy to address internal risk.
  • Address risk management in your Proposal Management Plan.

Terms to Know

See Also

image_pdfimage_print