Management Essay: Risk Management Plan for Pepsi Refresh Project

Risk Management Plan for Pepsi Refresh Project
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Risk Management Plan for Pepsi Refresh Project
Project Risk Management Purpose
Purpose of the Project Risk Management Plan
Project risks are associated with every project, regardless of how efficient the planning is done. Project risk is determined as the occurrence of any unplanned event that can influence the project’s outcome (Muriana & Vizzini, 2017). The impact can be both either positive or negative. Therefore, project risk is determined to be managed so that the positive outcomes can be enhanced and negative ones can be controlled. In response, a risk management plan adapted to identify the present risks throughout the different projects (Vijayan & Sharma, 2020).
In correspondence, the current project risk management plan will lay out some of the significant categories of risk in the Pepsi Refresh Project pilot program. The presented risk management plan will be considered the foundation of risk management integrated with corporate and division policies. These policies are sufficient to manage the risk within the context of a project schedule, budget, and scope. Specifically, the purpose of the present risk management plan is to identify, execute, and monitor the project risk in the pilot program of the Pepsi Refresh Project.
Components of Risk Management Plan
With a description of the purpose of the project risk management plan, it is essential to denote the components of risk management. These components are significant as it allows the risk managers to steer the risk management process is a patterned manner (Tupa et al., 2017). Thus, the following components are described;
Plan Risk Management
At first, the conduction of various risk management strategies is defined. According to Yilmaz and Flouris (2017), the planning of risk management denotes the process of identifying the risk and categorizing it. Additionally, identified risks are ranked at these stages. With the case of the Pepsi Refresh Project, different categories of risks will be set at the beginning of the risk management plan. Later on, the vulnerability of specific risks will be highlighted. Further, the identified risks will be categorized and ranked as per their consequence.
Identify Risk
Another essential component of the risk management plan is to identify the risks. According to Brick et al. (2018), risk identification is the technique to highlight the present risks in a project. In this regard, document review, information gathering, and interviews are primary risk identification techniques. Among these, the present risk management plan will employ document review and information gathering to identify risks. The reason to employ stated risk identification techniques is to back each finding with sufficient information.
Analyze Risk
Once the risks are identified, the next step is to analyze its consequences. Risk analysis denotes the probability and impact of each risk that has been identified (Bialaszewski, 2018). There are two kinds of risk analysis, namely, qualitative and quantitative. At the beginning of the risk analysis process, the qualitative analysis is carried out by most project managers. Later on, the quantitative analysis is also performed for complex and large projects. Concerning the present case, both qualitative and quantitative risk analysis has been performed.
Plan the Resources
With the identification of risk, it is essential to draw the risk response. As every risk is being outlined to control its impact on the deliverables of the project, it is essential to denote the response. For denoting a response to each identified and analyzed risk, the usability of different resources has been described in this plan. In simple words, a risk owner is assigned to each risk probability to monitor and control it. As defined above, the consequences of each risk would be either positive or negative. Thus, risk responses are also categorized accordingly. For instance, negative risk responses include strategies such as mitigation, avoidance, transference, escalation, and acceptance (Chernov & Sornette, 2020). On the other hand, positive risk response strategies are composed of enhancement, exploitation, share, escalation, and acceptance.
Monitor and Control the Risk
The risk management plan is designed before the execution of the project. Thus, every risk is identified, planned, and analyzed hypothetically. However, during the project implementation, the execution of the risk management plan is also activated. As a result, it is the responsibility of the project risk manager to control each identified risk and record it in the risk register (Scholz & Smith, 2016). This component is essential as it analyzes the efficiency of the risk management plan so that lessons for future risk events can be recorded.
Project Risk Management Approach and Process
The current risk management plan is centric to the risks associated with the pilot program of the Pepsi Refresh Project. The pilot program is targeted to redesign the Pepsi Refresh Project, focusing on both the traditional market vehicle and social media. The purpose of risk management for the pilot program of Pepsi is to set a threshold to identify, manage, monitor, and design response strategies for the project. Thus, the following steps and approaches to risk management are outlined.
Steps of Project Risk Management for Pepsi Refresh Project
Risk Identification
At first, risk identification will be carried out through document review and information gathering techniques. In detail, specified scenarios will be reviewed, and information regarding the present situation will be listed. Risk related spectrums from both the past and the present aspects of the project will be highlighted. Eventually, the coinciding risks spectrums will be identified and analyzed in the next step.
Risk Analysis
Secondly, the identified risks will be analyzed through qualitative as well as quantitative techniques. At the beginning of the analysis, a detailed textual description of the project will be carried out. After qualitative analysis, the EMV method will be employed to analyze the risk based on its probability and impact on the pilot project of Pepsi Refresh.
Risk Evaluation
Once the identified risks are analyzed, the next step is to evaluate it. In simple words, the identified risks will be categorized and ranked as per its probability and impact on the project. The risk with high probability and broader impact will be ranked as crucial. Accordingly, response strategies for such risks will be made at priority.
Risk Treatment
Lastly, the analyzed and evaluated risks will be treated with response strategies in the current risk management plan. Practically, each risk will be managed based on its impact (positive or negative) on the project.
Approach for Pepsi Refresh Project
The risk management approach for this project will be composed of four components. At first, the integrated risk management process will be practised for identifying, analyzing, evaluating, and treating each risk. Secondly, the risk management approach will be carried out through risk management tools such as document review, information gathering, EMV method, and risk register. The use of tools ensures accuracy in planning and executing the risk management plan. Thirdly, the stated risk management approach will be carried out through resource allocation. In simple words, each risk will be entitled to an owner. Fourthly, the team will be integrated to cater to each risk. For example, Pepsi’s current risk environment comprises a high degree of risk acceptance for marketing programs, return on investment, and high tolerance towards critical partners. Thus, the current risk management approach will be countered with key partners and teams to respond to each risk effectively.
Project Risk Identification
Process for Identifying the Risk for Pepsi Refresh Project
As defined above, the process to identify the risk for Pepsi Refresh Project includes document review and information gathering. In this regard, the past risks of the Refresh Project are outlined. Pepsi initiated the Refresh Project intending to assist its surroundings. For this, the Refresh Project campaign collected ideas of individuals each centric towards the betterment of the environment. In response, the ideas were voted by the community members, and the idea with the most votes would receive grants ranging from $5,000 to $250,000. The campaign was carried out with refreshing ideas related to health and fitness, art and culture, food and shelter, the planet, neighbourhoods and education. The overall process of the Refresh Project was practised through a three-step process, namely, submit, promote, and vote (Pepsi, 2010). Subsequently, the brand got increased recognition in the market that lasted for a year.
Contrastingly, the brand encountered five crucial challenges that result in the slumping of sales volume. First, the participation of non –profit organizations in the voting program made it impossible for Pepsi to vet all organizations, which resulted in fraud allegations. Secondly, pressure on non-profit organizations to support votes resulted in a resources drain. Third, the direct product tie with the campaign was missing, which leads to slumping sales. Fourth, the reach of the campaign was also not defined. Consequently, the company figured out scattered results and unplanned concentration on a specific issue (Brick et al., 2018). Fifth, the brand was alleged with no definite cause being associated with the campaign. Based on these crises, Pepsi encountered crucial pressure from its consumers. The highlighted consequences serve as the foundation of the risk identification spectrum for the current pilot program.
Types of Risk
Operational
According to Massa and Testa (2016), operational risk is associated with the overall processes of the project. In association, three crucial risks are identified as an operational risk for the current pilot program of Pepsi. These risks include the hacking risk of social media platforms, internal or external frauds, and failure to adhere to the purpose of the pilot program. For example, the Refresh Project overlooked the direct association of Pepsi into the campaign.
Technical
The technical risk denotes crises in the infrastructure of the project (Kim et al., 2019). On this account, the technical risks identified in the present pilot program of Pepsi include the description in direction of planned campaign and product and change in consumers’ perception regarding the product.
Regulatory
The regulatory risks are critically influential as they redirect the organization as per the market obligations. As defined by Care (2019), regulatory risks are referred to as the change in the regulations and laws related to the business; the change is to be addressed effectively. About the present scenario, the regulatory risks would involve risk related to the geographical description of the campaign and new regulations on the social media accounts of users.
Sources of Project Risk for Pepsi Refresh Project
In association with the sources of risk, these are areas of a project that are vulnerable to risk. According to Andersen et al. (2017), sources of risks indicate the scope of risk present in a specific function of a project. With this, the identified risks of the pilot program of Pepsi Refresh Project are sourced through technology, scope, vendor, quality, and customer. Briefly, each risk has been backed up by the past challenge encountered by Pepsi. Therefore, the problematic core sources are highlighted for the identified risks.
Relating to the operational risk, the key sources are technology and scope. The reason for outlining technology and scope as the critical sources for operational risk is dependent on the impact of each risk. For example, hacking of social media platforms is sourced through the technological infrastructure of the pilot project. As the pilot program is focused on both the traditional marketing vehicle and social media, technology is to be considered. Previously, the project encountered criticality due to its lack of direct association with the product. Therefore, the scope of each objective in the program must be managed.
Heading to the technical and regulatory risks, the key sources are technology, vendor, quality, and customer. These sources are outlined based on several reasons. For example, the risk of change in customer perception regarding the product is sourced by targeted customer segments, namely; millennials, generation X, and baby boomers. Similarly, the risk of change in geographical regulations of the targeted regions is backed up by the vendors and the quality of the program.
Project Risk Assessment (Qualitative)-300
Development of Risk Measurement Scale
Table 1: Risk Measurement Scale (Impact)
Impact

Description

Severe
5

High
4

Moderate
3

Low
2

Inconsequential
1

Financial

Change in operating revenue

>$20M

>$10-20M

>$5-9.9M

>$1-4.9M

>$1M

Legal

Change in regulatory policies

Cessation of designed program by a regulatory authority

Operations are to be monitored by an external regulatory body

Legal penalties for actions

Low legal penalties

Minor legal penalties

Operational

Compromised operational efficiency

The inability of the project to adequately cater to all the objectives

Sustained operational interruptions

Multiple operational inefficiencies

Escalation of resources can be controlled

Insignificant operational inefficiency

Strategic

Lack of coercion between operations and strategic goals