Risk management includes the process of conducting risk management planning, identification, analysis, response planning, response implementation, and monitoring the risk of the project. The main goal of a project risk magnet is to increase the chances of positive risk on the project and decrease the probability of negative risk. This will allow for the project to reach its objectives by handling challenges in a proper fashion. Each of the processes helps risk management to be more efficient and effective in its role in the project management system.

Key Concept for project risk management #

All the projects have risks attached to them. Since all of them are trying to reach their objective without any failures stopping the flow of the project. Every organization has its own way to deal with the project risk but a more controlled and international manner is the best way to handle the risk behind a project. This method will be very optimal, balancing risk and reward.  Risk management handles the identification and management of risk that is left out of the other project management process. A detailed look at the risks of the project is the sole job of the risk management system.

The risk should always be managed to decrease the chances of putting the project in server jeopardy. Unmanaged risk will make the project deviate from the original planned route to different ways to achieve project objectives. The effectiveness of risk management is directly related to the success of the project. In a project environment, risk management does play a crucial role in making sure everything runs in the right order by identifying the risk of the process, activities, and other elements related to the project.

Project risk management addresses risks by dividing them into two levels. One is known as Individual project risk and the other is Overall project risk.

Individual project risk – #

Uncertain events or conditions have a positive or negative effect on project objectives.

Overall Project Risk- #

When the uncertainty influences the entire project.

Risk is one of the factors that will continue to emerge during the entirety of the project. Risk should not only be addressed at the planning stage of the project creation but also should be monitored throughout the project for a better assessment at the end. The data from the project will help out another project that shares the same field. So the risk on the other project will have a lower chance of influencing the direction of the future project. This is why it is very crucial for project management to track the risk element of every activity within the project.

Trends and Emerging Practices used in project risk management #

Project risk management ensures all types of risk gets considered that might take place in the project timeline. Every risk should be analyzed and understood in a wider context. So, nothing will slip past the monitoring process.

Non-event risk #

The risk that may or may not occur in the project life span is considered a non-event risk. Uncertainty about some characteristics of planned events or activities or decisions for the project. Or uncertainty that might happen somewhere in the future.

Project Resilience #

If the emergent risk is becoming clear, then project resilience will help detect these threats or risks before they can have any effect on the project as a whole. Emergent risk can be solved by effective project resilience.

Integrated risk management #

Risk exists in each programming level, that is the reason why risks get handled or managed at an appropriate level. Some risks will carry a high level which will be delegated to the project team for management. At the same time, there will be risks that might escalate to higher levels if they are arranged outside the project.

Plan Risk Management #

It handles the degree, type, and visibility of risk management. It gets performed once at a predefined point in the project. Overall, it lays out a plan to conduct risk management activities in the project. Plan risk management begins when the project is conceived and it gets finished in the early stages of the project. It could become necessary to make changes to the plan from newer information or data. Revisiting the plan risk management can happen later in the future based on the demand of the project.

If the scope of the project gets changed significantly, then it will be necessary to revisit the risk management process. These are some of the ways risk management gets processed in the project. It is important for this process to exist in the risk magnet as it lays out a method or route for the entire project to follow at a perfect pace with no issue.

Tools and Techniques #

Expert Judgement – #

Qualified people with the knowledge that covers various elements of the project risk management will have a side impact in creating the plan and layout a better direction for the project to follow at a smoother pace. Employees or team members should have familiarity with the organization’s approach to managing risk, tailoring risk management to specific needs, and knowing the type of risk that may get encountered on a project in the same area.

Data Analysis #

This process handles stakeholder analysis that helps determine the risk appetite of project stakeholders.

Meetings #

Specific planning meetings should be held that may include project magner, selected project team members, key stakeholders, and the members who are involved in the risk management process on the project. Others who carry responsibility for the project might get involved in the meeting to carry out a perfect plan for risk management activities and other discussions related to the project.

Identify Risks #

The best way to deal with a problem is by knowing if the problem exists in the structure or not. This will require the organization to focus on identifying the threat. Identifying the project risk will solve most of the problem that is hovering over the overall project risk. The existence of identifying risk helps with finding out the individual project risk and sources of overall project risk. It also helps with bringing the information for the project team to respond appropriately to each of the risk findings.

Identify risk considers both sides of risks, that includes individual risks and source of overall project risk. The members will include the project manager, project team members, project risk specialists, customers, subject matter experts from the project team, end-users, project managers, operation managers, stakeholders, and risk management experts. While all of them have their own unique role to play in the risk management process, it’s the job of stakeholders to identify individual project risks.

A consistent format for the risk statement should be used to ensure each risk is examined properly and understood with a clear form. This will result in an effective risk statement in a clear unambiguous order to lay out proper planning. Identifying risk is seen as an iterative process. As the project goes through various stages the chances of individual project risk appearing is high. The overall project risk will also change due to the progression of the project. Each identification cycle will not share similarities, they will vary from one another.

Perform qualitative risk analysis #

This step prioritizes the individual project risk for a better analysis as it goes high priority to the task that is considered as most valuable to the project. Just any other process, performing qualitative risk analysis will get performed throughout the project lifespan. Its main goal is to give priority to individual project risk by using their probability of occurrence, project objectives, and other factors. Effective assessment requires explicit identification and management of risk attitudes of key participants in performing this task.

One of the facilitator’s roles is to find bias in the risk analysis process. Risk perception includes bias in the assessment of identifying risks. The bias needs to become effective planning. Perform qualitative risk analysis also establishes priorities of individual risk for plan risk responses. The identification goes a bit deeper, as performing qualitative risk analysis identifies the owner for each risk and their responsibility for planning appropriate responses to handle the risk and ensuring the planned process gets implemented.

It also lays out the foundation for performing qualitative risk analysis. During the project lifecycle, the analysis process gets briefed almost regularly throughout the project. The risk management plan will always have its porches to run on a regular basis for effective results.

Perform quantitative risk analysis #

This process analyzes the combined effect of identified individual project risk and other sources of uncertainty on overall project objectives. It also provides additional quantitative risk information to support risk response planning. Although only a handful of projects require performing a quantitative risk analysis, if a project does come and happens to use this process, then it will have to continue using it throughout the project. The key benefit of this process as it quantifies the project risk exposure and provides information.

It is certainly not required that all project robust analysis requires the availability of high-quality info about individual project risk and other sources of uncertainty. Quantitative risk analysis requires specialized risk software and expertise in the development of risk models. That will consume additional time and cost for the company. The project risk management plan will cover the quantitative risk analysis used for the project. If the project happens to be large and covers more elements, then it might consider using quantitative risk analysis.

Perform quantitative risk analysis is related to qualitative risk analysis. Quantitative analysis will use the information on individual project risks that have been assessed by the qualitative risk analysis process. The final result from the quantitative analysis will be used as an input to the plan risk response process.

Plan Risk Responses #

This is the process of developing options, selecting strategies, and actions to address overall project risk exposure. Plan risk responses will help the company identify the appropriate ways to address overall project risk and individual project risks. This process also adds activities and resources to project documents and management plans to be more effective. As necessary as this process is for the project development, plan risk response will be performed throughout the project.

Risk Responses will minimize the threat level in a project and it will maximize the individual opportunities. Unsuitable risk responses will have a converse effect. When the risk is identified, analyzed, and prioritized. Then a plan should be developed by the risk owner to address every individual project risk that is deemed as important. Everything falls down to the object manager to decide the response for the risk. Plenty of major critical things should get considered in developing a proper risk response.

Risk response also should be appropriate for the risk, cost-effective and realistic within the context of the project. All parties involved with the project must agree with the risk response plan. Structured decision-making techniques may get used to choosing the most appropriate response for the risk response. If the project is larger in nature, then robust economic analysis and the use of mathematical optimization models may get used to creating well-defined risk response strategies.

There is also the addition of primary and backup strategies in place. A fallback plan also gets developed if the primary strategy turns out not to be fully effective in dealing with the problem or risk. Secondary risk also needs to be identified as a direct result of implementing the risk response. These are some of the planning that goes on in the plan risk response process. It is all about preventing the risk in the best way possible. Sometimes implementing a plan does not have a full-on positive effect, in these times the establishment of a secondary plan and contingency plan does a good service in handling the secondary risk.

Implement Risk Responses #

This is where the implementation of an agreed-upon risk response plan happens. all the steps in the plan must get executed in a planned order as it is written in the plan. Proper execution of the plan will address overall project risk exposure, and minimize individual project threats, and at the same time, it will maximize the individual project opportunities. The need for this process is critical for all the other functions, so the process gets performed throughout the project.

The execution of the agreed-upon plan is necessary, and the order attached to the plan must be executed as it is written in the response plan. If the action is not taken to manage the risk then everything that went into identifying and analyzing risk, developing risk responses, risk response agreed upon are documented in the risk register, and reporting all will be meaningless.

Tools and techniques such as expert judgment, interpersonal and team skills, and project management information systems come in handy when it comes to implementing the risk response plan. As many of the data related to the risk response plan have schedule, resource, and cost software attached to them. It is better to have an individual or a group with specialized knowledge to validate and notify risk responses if the citation demands it. It is up to them to decide how to implement the plan in a proper fashion without making things worse.

Monitor Risk #

While creating and implementing the risk response plan is necessary, the only way to know if the plan is effective upon implementation is by doing proper analysis. Monitoring risk helps with monitoring the implementation of agreed-upon risk response plans by tracking identified old risks, new risks and evaluating risk processes and their effect on the project as a whole. Monitor risk also helps with project decisions as they are going to be based on current available information about the project risk exposure and individual project risk.

Monitoring new, changing, outdated individual project risk and changes in overall project risk will be very helpful in spreading awareness to the project team and key stakeholders in the project. If the changes need to happen in the plan, then monitoring risk will make the data and information available to everyone working with the project. This direct flow of information of all the activities associated with the risk response plan is what makes motoring risk one of the most critical aspects of project development. The Tools and techniques help make the work even more efficient and helpful in bringing out information to the surface.

Conclusion #

Risk will come with every project, it is important for the organization to take all the right steps at a proper time to reduce the impact of risk and prevent it in the foreseeable future. Effective planning to stop the spread of risk within a project requires data and information to develop a plan for execution. A risk management plan consists of everything that can potentially turn into risk within the project and hinder the project flow. The risk management plan provides a direction for the project team to create a plan that factors in everything that can go wrong with the project.