#Risk Management Process How To Perform Each#

Risk Management Process How To Perform Each

Refer to the risk management procedure for details on how to perform each step in the process. While the processes support risk management, the risk mitigation plans, which focus on risk reduction for individual risks (i.e., the output of the processes), are significantly more. The PM may document the risk management process in more detail in a Program Risk Process (PRP), formerly known as Risk Management Plan (RMP) - a best practice.

Risk assessment includes both the identification of potential risk and the evaluation of the potential impact of the risk. Describe the processes for mitigating risk.Managing risks on projects is a process that includes risk assessment and a mitigation strategy for those risks. Describe the processes for evaluating risk. Describe the processes for identifying project risk. Identify the major elements in managing project risk. Describe how.1.4 Introduction to the Project Management Knowledge AreasRisk management is the decision-making process involving considerations of political, social, economic and engineering factors with relevant risk assessments relating to a potential hazard so as to develop, analyze and compare regulatory options and to select the optimal regulatory response for safety from that hazard.As per ISO 31000 (Risk Management - Principles and Guidelines on Implementation), risk management process consists of the following steps and sub-steps: Establishing the Context Identification Assessment2.3 Complex Systems and the Darnall-Preston Complexity Index2.4 Darnall-Preston Complexity Index Structure2.5 Using the Darnall-Preston Complexity Index to Measure Organizational Complexity4 Understanding and Meeting Client Expectations4.2 Understanding Values and Expectations9.3 Identifying the Need for Procuring Services10.2 Development of Quality as a Competitive Advantage10.3 Relevance of Quality Programs to Project Quality10.4 Planning and Controlling Project Quality11.4 Project Risk and the Project Complexity ProfileProject Management for Instructional Designers

Risk IdentificationA more disciplined process involves using checklists of potential risks and evaluating the likelihood that those events might happen on the project. All ideas are welcome at this stage with the evaluation of the ideas coming later. The creative process includes brainstorming sessions where the team is asked to create a list of everything that could go wrong. Identifying risk is both a creative and a disciplined process.

Risk EvaluationAfter the potential risks have been identified, the project team then evaluates the risk based on the probability that the risk event will occur and the potential loss associated with the event. HillsonвЂ™s approach helps the project team identify known risks, but can be restrictive and less creative in identifying unknown risks and risks not easily found inside the work breakdown structure. A risk breakdown structure organizes the risks that have been identified into categories using a table with increasing levels of detail to the right.The result is a clearer understanding of where risks are most concentrated. David Hillson 1 uses the same framework as the work breakdown structure (WBS) for developing a risk breakdown structure (RBS).

These become the critical few. Risk evaluation is about developing an understanding of which potential risks have the greatest possibility of occurring and can have the greatest negative impact on the project. These are the critical few potential risk events that the project management team should focus on when developing a project risk mitigation or management plan. Only a few potential risk events met these criteria. For example, suppose high-impact risks are those that could increase the project costs by 5% of the conceptual budget or 2% of the detailed budget. Evaluating the risk for probability of occurrence and the severity or the potential loss to the project is the next step in the risk management process.Having criteria to determine high impact risks can help narrow the focus on a few critical risks that require mitigation.

This risk event (the identified equipment arriving late) was rated as high likelihood with a high impact. The vendor was good and often took on more work than it could deliver on time. One of the vendors, who was selected to deliver an important piece of equipment, had a history of being late on other projects. The team identified three pieces of equipment that were critical to the project and would significantly increase the costs of the project if they were late in arriving.

Other managers are reactive and are more confident in their ability to handle unexpected events when they occur. Some project managers are more proactive and will develop elaborate risk management programs for their projects. Additionally, the project managerвЂ™s personality and management style play into risk preparation levels. The lack of formal risk management tools was also seen as a barrier to implementing a risk management program. One reason, as found by David Parker and Alison Mobey 2 in their phenomenological study of project managers, was a low understanding of the tools and benefits of a structured analysis of project risks.

One example of the statistical model used on projects is the Monte Carlo simulation, which simulates a possible range of outcomes by trying many different combinations of risks based on their likelihood. On highly complex projects, an outside expert may be included in the risk assessment process, and the risk assessment plan may take a more prominent place in the project execution plan.On complex projects, statistical models are sometimes used to evaluate risk because there are too many different possible combinations of risks to calculate them one at a time. On projects with greater complexity, the process for evaluating risk is more formal with a risk assessment meeting or series of meetings during the life of the project to assess risks at different phases of the project. On more complex projects, the project management team may develop a list of items perceived to be higher risk and track them during project reviews.