subject: Project Risk Management [print this page] All of us manage risk in our day to day life by buying insurance cover for our life, house, car etc, so why not do Risk management for the project. Risk Management is a key responsibility of the project manager.
Risk management is one of the project management disciplines which have a direct impact on the project success or failure. A better risk management ensures that you are prepared for the unforeseen circumstances and when they actually happen, you can handle it well. Some Project managers show helplessness in case of some external disturbances like workers strike. But good managers do not. They do plan for such risk and have a ready work around.
However, all real projects carry risk through uncertainty. The most obvious examples of sources of project risk comes from:
* dependencies (internal or external)
* assumptions made by project team members (about any aspect of the project).
In this stage, we identify and name the risks. There are different sorts of risks and we need to decide on a project basis. Business risks are ongoing risks that are best handled by the business. Generic risks are risks to all projects.
2. Risk Quantification
Risk need to be quantified in 2 dimensions. The impact of the risk needs to be assessed. The probability of the risk occurring needs to be assessed. If probability is high, and impact is low, it is a Medium risk. On the other hand if impact is high, and probability low, it is High priority.
3. Risk Response
A risk response plan should include the strategy and action items to address the strategy. The actions should include what needs to be done, who is doing it, and when it should be completed.
4. Risk Monitoring and Control
The final step is to continually monitor risks to identify any change in the status, or if they turn into an issue.
At the start of a project, the potential impact of risk is almost unlimited. The simple choice is to either dedicate proper and timely attention to understanding and managing risk, or suffer its consequences. On large projects, there are few areas where a Project manager can have a greater impact on a project than the area of risk.
