Page 15 - Risk Management Bulletin Jan- Mar 2022

RMAI BULLETIN JANUARY - MARCH 2022

Environmental Risk: The risk caused by an SLA credit may be reversed and serves
environmental disaster like floods, storms, as a positive incentive for the supplier to
pandemic, or epidemic that forces the vendor correct the underlying root cause for the
to restrict or stop the usual activities default.
pertaining to project.
Continuous improvement clause- the
Political Risk: The risk that leads to clause must factor the actual
impediments corporations may face owing to performance during the previous year
political decisions or any political change which and must be subject to upper limit.
changes the expected value and outcome of a
Excused events clause – accounts for
particular economic action, through change in
factors where the supplier shall not be
the probability of attaining the business
responsible for an SLA failure if the failure
objectives. Political risk can also be defined as
was caused by conditions such as outages
the risk of financial, strategic, or personnel loss
during scheduled maintenance window
for a firm due to such non-market factors as
etcetera.
the macro-economic and social policies
SLA risk management at implementation
pertaining to labor, or events related to the
phase- few steps to consider mitigating risks
political instability (riots, terrorism, civil war,
during a project or program phase can be
coups, and insurrection) that may cause
communicating and informing all stakeholders
hurdles in daily functioning of vendor.
about the SLA risk queue on time, escalation
on time for any risks observed during
Effective Operational Risk
production environment drop phase, planning
Management in IT Outsourcing: and prioritizing with the help of seniors,
integrated toolsets, and real time or near real
a) Service Level Agreement (SLA):
time dashboards that provides the delivery
SLA Risk Management at Proposal Phase –
team a visual statistic about the SLA
SLA risks is managed at various stages of
performance and likely SLA breach.
lifecycle, such as, during proposal submission,
during negotiation and contract signing, b) Risk Assessment:
during transition of services and during Each risk outlined above is process, system,
ongoing steady state service execution. people, or external environment related and
Following are the ways to mitigate the risks thus requires assessment in different
that may originate at any of the above stages: categories to identify risk at a stage that
Only agreeing for justifiable client/vendor enables effective intervention.
needs Processes: all process associated with
outsourcing support processes,
Reducing the “at risk impact” – the
requirement processes, administrative
relative weight of At-Risk amount
processes etcetera.
distribution must align with the priorities
of the engagement. Systems: All hardware and software
system
Defining SLA targets right- different
targets during peak and off-peak hours People: All people involved in
must be defined and must be realistic engagement lifecycle such as Architects,
within the context of the engagement and Product Owners Product Managers,
not pure aspiration. Scrum Masters, Software engineers,
Quality Analysts and Business Analyst.
Baseline exercise- validation of proposed
SLA targets based on past performance External Factors: Local labor laws,
data analysis. During the baseline period, International labor laws, Market, and
the performance against agreed set of regulatory changes.
SLAs is measured, tracked, and reported.
c) Outsourcing Readiness Assessment:
Earn back clause- the clause specifies how

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