Commodity trading risk management (CTRM) software selection: Mitigating some of the common Risks
Commodity trading risk management (CTRM) software selection requires involvement from a range of stakeholders across an organisation. Failure to involve the right stakeholders can lead to an inadequate solution that does not meet the needs of the business.
The Risks of Lack of Stakeholder Involvement
- Lack of Buy-In: If stakeholders are not involved in the software selection process, they may not feel invested in the outcome. Without buy-in from key stakeholders, implementing the new software may be met with resistance and reluctance to adopt the solution. This can lead to a lack of utilisation and ultimately, a wasted investment.
- Incomplete Requirements: Inadequate stakeholder involvement can lead to incomplete requirements gathering. Without proper input from all relevant stakeholders, requirements may be missed, leading to an inadequate solution that does not meet the needs of the business.
- Missed Opportunities: Without involvement from all relevant stakeholders, opportunities to improve processes and workflows may be missed. This can lead to a solution that is merely a replacement for existing systems, rather than a true enhancement of the business’s capabilities.
- Unrealistic Expectations: Lack of stakeholder involvement can lead to unrealistic expectations of what the new solution can achieve. This can lead to disappointment when the solution is implemented and does not meet the business’s needs or solve all of its problems.
Mitigating the Risks of Lack of Stakeholder Involvement
- Develop a Comprehensive Stakeholder Engagement Plan: A comprehensive stakeholder engagement plan should be developed at the outset of the software selection process. This plan should outline which stakeholders need to be involved and how they will be engaged throughout the process.
- Involve All Relevant Stakeholders: All relevant stakeholders should be involved in the software selection process, including end-users, IT, risk management, and compliance. This will ensure that all requirements are identified, and potential issues are addressed early in the process.
- Set Clear Expectations: Setting clear expectations with stakeholders at the outset of the process can help to manage expectations and ensure that all parties are aligned on the goals and objectives of the project.
- Provide Opportunities for Feedback: Providing opportunities for feedback throughout the process can help to ensure that stakeholders feel heard and their concerns are addressed. This can help to build buy-in and ensure that the solution meets the needs of the business.
- Assign a Dedicated Stakeholder Liaison: Assigning a dedicated stakeholder liaison can help to ensure that all stakeholders are involved and engaged throughout the process. This individual can be responsible for managing stakeholder communication, soliciting feedback, and ensuring that all stakeholders are aligned on the goals and objectives of the project. A recommendation is that a Business SME assigned to the project should take on this role.
Inadequate project management is one of the most significant risks associated with commodity trading risk management (CTRM) software selection and implementation. Failure to manage the project effectively can lead to missed deadlines, cost overruns, and a solution that does not meet the needs of the business.
The Risks of Inadequate Project Management
- Missed Deadlines: One of the most significant risks associated with inadequate project management is missed deadlines. Without proper project management, tasks may be delayed, and deadlines may be missed, leading to delays in the selection & implementation of the new software.
- Cost Overruns: Inadequate project management can also lead to cost overruns. Without proper planning and oversight, unexpected costs may arise, leading to budget overruns that can impact the success of the project.
- Incomplete Scope: Inadequate project management can lead to an incomplete scope, where requirements are not fully defined or documented, leading to an inadequate solution that does not meet the needs of the business.
- Lack of Accountability: Without proper project management, it can be challenging to hold team members accountable for their tasks, leading to a lack of ownership and responsibility that can impact the success of the project.
Mitigating the Risks of Inadequate Project Management
- Develop a Comprehensive Project Plan: A comprehensive project plan should be developed at the outset of the software selection process. This plan should outline the project scope, timelines, milestones, and deliverables. It should also identify project stakeholders, their roles and responsibilities, and how they will be involved in the project.
- Assign a Dedicated Project Manager: Assigning a dedicated project manager can help to ensure that the project is managed effectively. This individual should be responsible for overseeing the project, managing the project plan, and ensuring that all team members are meeting their responsibilities.
- Establish Communication Channels: Communication is critical in any project, and establishing clear communication channels can help to ensure that all team members are informed and aligned. Regular project meetings, status updates, and progress reports should be established to keep all stakeholders informed of the project’s progress.
- Set Realistic Expectations: Setting realistic expectations at the outset of the project can help to manage stakeholder expectations and ensure that all parties are aligned on the project’s goals and objectives. This can help to mitigate the risk of unrealistic expectations and disappointment when the project is completed.
- Monitor Project Progress: Monitoring project progress is critical to ensuring that the project is on track and that any issues are identified and addressed early. Project managers should regularly review the project plan and identify any risks or issues that may impact the project’s success.
Inadequate requirements gathering is a significant risk in commodity trading risk management (CTRM) software selection and implementation. Failure to gather requirements effectively can result in a solution that does not meet the needs of the business, leading to lost time, money, and effort.
The Risks of Inadequate Requirements Gathering
- Incomplete Requirements: One of the most significant risks associated with inadequate requirements gathering is incomplete requirements. Without properly identifying and documenting all requirements, the solution may not meet the needs of the business, leading to additional costs and delays in implementation.
- Misaligned Requirements: Inadequate requirements gathering can also lead to misaligned requirements, where stakeholders have different expectations and interpretations of the requirements. This can result in a solution that does not meet the needs of all stakeholders, leading to dissatisfaction and lost productivity.
- Unnecessary Complexity: Inadequate requirements gathering can result in unnecessary complexity in the solution. When requirements are not fully defined, it may be challenging to determine the appropriate level of functionality needed. This can result in an overly complex solution that is challenging to implement and maintain.
- Inadequate Testing: Inadequate requirements gathering can also lead to inadequate testing. Without a clear understanding of the requirements, it may be challenging to develop test cases that adequately cover all scenarios, leading to insufficient testing and increased risk.
Mitigating the Risks of Inadequate Requirements Gathering
- Identify Stakeholders and Their Needs: The first step in effective requirements gathering is to identify all stakeholders and their needs. This includes business users, IT, risk management, compliance, and other stakeholders. Once identified, stakeholders should be engaged in the requirements gathering process to ensure that all needs are identified and documented.
- Develop a Comprehensive Requirements Document: A comprehensive requirements document should be developed that includes all functional and non-functional requirements. The document should be clear, concise, and unambiguous, outlining all the features and functionality needed in the solution.
- Conduct Reviews and Walkthroughs: Requirements documents should be reviewed and walked through with stakeholders to ensure that all requirements are understood and documented accurately. This can help to identify any misaligned requirements and ensure that all stakeholders have a clear understanding of the solution’s scope.
- Prioritise Requirements: Once all requirements are identified, they should be prioritised based on their importance to the business. This can help to ensure that the solution addresses the most critical needs of the business first, reducing the risk of an incomplete solution.
- Develop Test Cases: Test cases should be developed based on the requirements document to ensure that all scenarios are adequately tested. This can help to identify any issues or gaps in the solution and reduce the risk of insufficient testing.