Applications of Technology and Risk Management

Article excerpt

Introduction: Change, Technology, and Risk Management

One of the inherent difficulties with production and operations management, operations research, and program management and control is that nothing ever remains the same -- everything seems to be changing on a continuing basis. There are many reasons for this, but they all boil down to the four basic programmatic variables of scope, schedule, resources, and cost. When viewed in the present, it is widely recognized that a change in any one of these variables (and they are variables) will have a corresponding effort on the other three. The entire concept of production and operations management through program management and control is essentially directed at the identification, tracking, understanding, and mastery of these variables and their interactions as they occur.

However, there is another, common element underlying each of these variables that must also be recognized and handled effectively if a program is to have any chance of success: the internal technological base on which a program is based or the external technologies that may affect it. It is these technologies upon which a program is either explicitly or implicitly based or susceptible, and which are so often the root cause of change in today's program management and control environment. Accordingly, it is crucial that they be specifically recognized and fully integrated into the program management and control milieu. More specifically, it is necessary to look into future time frames to determine possible effects derived from current operations. A brief taxonomy of the major factors that one might consider in terms of technology and risk is presented in Exhibit 1. A fuller discussion of the actual processes of technology forecasting, however, is a separate subject and left to another time.

For purposes of program management and control, emphasis must be placed on the outcome of the forecasting process -- the effective integration of projected technologies, internal and external, into the program. Further, since technology forms a base for other program variables, it is useful to consider it as a springboard for a discussion of risk management. The latter is the ultimate focus of this paper as it explicitly lays the groundwork for successful production and operations management.

Survey of Literature

Concern over the interrelated elements of technology, change, and risk is hardly a new topic in the arenas of production and operations management, operations research, and program management and control. These elements have been discussed extensively over the years and in a wide variety of disciplines. The problem is inevitably one of anticipation.

Writers such as Willis (1970) and Chambers, et al. (1971) long ago recognized this challenge in their observations that a forecast of virtually any type is highly dependent upon its context, the relevance and availability of historical data, the time period to be forecast, the cost/benefit of the forecast, and the time available to analyze the forecast and its results. Stated succinctly, change is difficult to forecast with authority.

Recognition of and concern over this problem continues to exist in current times as witnessed by the ongoing efforts to determine better tools to improve the forecasting process for competitive intelligence (Lemos & Porto, 1998). The tendency to thrash around in search of data that might shed some light (and level of confidence) on changing conditions has also led several writers to observe that we are virtually drowning in data, but lack meaningful information upon which to make informed decisions (Van Der Vegt, 1998). This generalized concern has correspondingly been addressed by Peter Drucker (1998) in his argument that change and innovation have become so pervasive and crucial that a disciplined and useful approach is required for decision making and organizational survival. …