subject: How To Plan Risk Management For The Projects? [print this page] Risk Management is the process of carrying out risk management planning, identifying the risk, analyzing them, planning the responses and monitoring and controlling them throughout the project lifetime.
In planning the risk management, you will make plan that how you will identify the risks, how you will analyze the risks, how to select proper response strategy and how to control and monitor them till the project ends.
Purpose of Risk Management: Following are the two purposes for which the risk management activities are performed on the project.
First purpose of risk management is to minimize the impact of negative risks, and
Second purpose of risk management is to increase the probability of opportunities.
Identifying the risks: Once, you complete the risk management plan, next step is to identify the project risks. Here, project risks are identified by the project team. The project manager will bring all concerned stakeholders in various workshops and brainstorming sessions to collect the maximum number of risks. Project manager will also conduct the project document review and goes through the old similar project documents and lesson learned to identify more risks. Once, this process is completed, the project manager will list all identified risks in the risk register.
Analyzing the risks: Identification of risks is completed. Now, you have to analyze them. Analyzing the risks requires experience and expert judgment. You have to be very careful while analyzing the risks because risk management is a people oriented process and you have to interview many people asking their opinion to classify and ranking the risks. Sometimes, expert too can give biased opinion; therefore, you have to filter those biased from their opinions.
After collecting all these data you will categorize the risks as per their group and rank them on the risk register. This ranking will be done by the multiplying the probability to the impact. Higher the value means high-ranking of the risk.
Planning the risk responses strategies: After analyzing and ranking the risks, you have to make plan tackle them. You will plan strategies for two types of risks; e.g. threats and opportunities.
Following are the most common strategies for dealing the risks and opportunities:
Accept
Transfer
Mitigate
Share
Enhance
Accept: Here, you simply accept the risk. No action will be taken from your side. You plan to deal it if this risk occurs on the spot.
Transfer: Here, you decide not to manage this risk by yourself and transfer the risk to any third-party. Insurance is an example of this strategy.
Mitigate: In this strategy, you make a plan to minimize the effect of negative risk.
Share: This strategy is used for opportunities. When the opportunity is big and you are not capable of realizing it alone, you share this opportunity with someone to realize is fully.
Enhance: This is also a strategy to deal with the opportunities. This is the opposite of the mitigation strategies for the threats. In enhance strategy; you will increase the probability of happening to opportunity to realize it.
Implementation and continuation of risk management: All above procedure should be completed before the execution of project starts. In execution phase, you will implement the response plan for the risk, if any of your identified risk occurs and note down the result on the risk register.
If any unidentified risk occurs then you will deal it with a workaround. Also you have to continuously monitor the situation and measure the efficiency of your risk management plan.
Risk management is an iterative process; therefore, you have to look for the risk throughout the entire time project runs. Once you identify any new risk, you have to analyze the risk as discussed in above processes.
