One of the most important and useful components of an oversight plan is a risk analysis. A risk analysis is a structured process
of identifying areas of potential risk within a particular project. A comprehensive risk analysis covers a number of factors,
including financial management and compliance, management of physical assets, project complexity, staff capacity,
prior monitoring history, program performance, and client satisfaction. Using risk analysis as part of the oversight strategy
has multiple benefits for the grantee. First, conducting a risk analysis gives the grantee a data-driven framework
for assessing which sponsors are more likely to face challenges with their project. Second, the results of the risk analysis can help the grantee
develop a reasonable schedule for conducting site visits. More frequent monitoring can be planned for projects
that are identified as being more likely to face challenges. Third, the information gathered in the risk analysis
makes it easier for the grantee to identify specific issues that may be problematic for the project sponsor.
This assists the grantee in knowing which items to focus on with the project sponsor, in order to intervene and better support the sponsor.
Fourth, using a risk analysis to distinguish higher and lower risk projects assists the grantee in focusing limited oversight resources
where they are most likely to be needed. The grantee can allocate more time or plan more frequent monitoring activities for projects
that are likely to need more oversight and assistance. To equip grantees to conduct a risk analysis, this course provides
a Risk Analysis Tool that can be downloaded from this slide and adapted to suit their oversight needs.