Risk Management

Risk Management Mechanism:

Risks are always in the future. Risk is an uncertain event or condition that, if it occurs, has an effect on at least one project objective. Objectives can include scope, schedule, quality, and cost.

Project risk has its origins in the uncertainty present in all projects. Known risks those that has been identified and analyzed, making it possible to plan response of those risks. Specific unknown risks cannot be managed proactively, which suggest that project team should create a contingency plan. A project risk that has occurred can also be considered as issue. 

The objective of Risk Management is described below: 

1.   Identify Risk Mechanism

Risk identification process determines which risk may affect project and documenting their characteristics at planning phase. These would be documented in the Risk Register.

The identification would be done using several mechanisms, a selected few of which are listed below:

1.   Document Review: Structured review will be performed of project documentation, including plan, assumptions, previous project file, and other information.

2.   You could use Brainstorming, Delphi, and interviewing technique to collect data for risk identification.

3.   Checklist Analysis: Risk identification checklist is based on historical data that has been accumulated from previous projects.

4.   Project and its identified risk is conceived and developed based on hypotheses, scenarios, and assumptions. Assumption analysis explores the validity of assumptions as applied on project.  

5.   Expert Judgment: Project Manager will involve other PM’s and experts with relevant experience of similar projects. Moreover client will also involve in risk identification during planning phase.

Outcome of risk identification is listed in risk register with majors like – list of identified risk and list of potential response.

2.   Risk Analysis Mechanism  

You could use two foremost risk analysis techniques – qualitative and quantitative risk analysis – to priorities risks and their effects in risk register. 

·         Qualitative risk analysis is to prioritizing risks for further analysis by assessing and combining their probability of occurrence and impacts.  

·         Perform quantitative risk analysis to numerically analyzing effect of identified risks on overall project objective.

3.   Risk Response Mechanism

Risk response is the process of developing options and actions to reduce threat on project objectives. Risk response addresses the risks by their priorities. In addition to that assign the risk response owner of each risk in risk register.

Risk Mitigation: Risk mitigation implies a reduction in the probability and/or impact of an adverse risk event to be within acceptable threshold limits. You could consider early action to reduce the probability and/or impact of the risk occurring on project is often more effective than trying to mend damage after the risk has occurred.

Contingency Response Strategy: Prepare some response beforehand for use only certain events occurs. In some risk it is appropriate for you to make a response plan that will only be executed under predefined conditions.

Fallback Response Strategy: Prepare fallback plan for use as a reaction to a risk that has occurred and primary response proven to be inadequate.

 

4.   Risk Monitor and Control Mechanism

Risk monitor and control process of implementing risk response, tracking identified risks, monitor residual risks, identify new risks and evaluating risk process effectiveness throughout the project. Risk monitor and control process determines project assumptions are still valid, analysis shows as assessed risk has changed or can be retired, risk management policies and procedures are being followed, and contingency reserve for cost and schedule should be modified.

Once a risk would be identified, it would be tracked or monitored during the course of the project in order to content the potential damage due to that risk. Following techniques are being used by PM to control and monitor risks:

Risk Reassessment: Risk control and monitor often results identification of new risk, reassessment of current risks, and closed the risk that has outdated.

Risk Audit: Risk audit examine and document the effectiveness of risk responses in dealing with identified risk and their root causes. Risk Register will reviewed by team in every project meeting.

Technical Performance Measurement: PM and team will compare technical accomplishments during project execution to the project management plan’s schedule of technical achievement.

The Project team would monitor the risk exposure across different weeks and whenever the risk exposure of a particular risk would appear to increase, the mitigation plan would be initiated. The top three risks for every week would be prioritized and acted upon until the risk exposure would decrease. The top three risks along with their mitigation strategies would be reported by the project to the Senior Management / Project Manager in order to initiate action at the appropriate levels of management.

Strive to AVOID the Risk during planning by changing the project plan before you start so you can take the risk off the risk register, or mitigate the risk by changing the project plan before you start so you can reduce the risk budget. 

Once the exposure for a particular risk reduces due to implementation of the mitigation plan, that risk would be retained on the list of risks in order to monitor it for future occurrence.