A project risk management knowledge area is the driver that keeps it going despite the emergence of uncertainties. Risks can originate from the different vulnerabilities of a project. These include constraints in timelines, funding sources, and other aspects. This knowledge area best serves in identifying, communicating, and controlling risks. The outputs of risk management are decisive in the project’s course at any or every stage of its life cycle. Practices, strategies, and policies regarding a project are reviewed as and when necessary. This comprises risk management.
What Are The Seven Processes In Risk Management Knowledge Area?
Given below is a clear idea of how these seven processes function and the results they produce.
Plan risk management
Risk management planning involves the ideation of ways for handling and also preventing risks. This is the foremost of the seven procedures within this knowledge area. Documented management plans concerning communication, cost, and schedule are the prerequisites of risk management planning.
Besides, the statement of the project scope is an important input in this process. Risk tolerance is also taken into account. The result is the formation of a plan comprising risk categories, and responsibilities of the project’s team members. Knowledge of risk impact and probability is present in the plan along with risk reporting formats.
The second process focuses on risk identification alongside documentation of risk characteristics. This process appears more than once in the course of a project. Members may come across risks even at their daily meetings. So, there is no end to identifying risks to keep them at bay.
Stakeholder register, activity duration estimates, cost estimates, scope baseline, and risk management plan are the significant inputs. Project documents like performance reports and assumptions log also prove to be of great help. Expert judgment, SWOT analysis, and brainstorming are the techniques used. This process produces a document named risk register. It is the listing of potential risks and their corresponding responses.
Qualitative risk analysis
The impact of the risks identified is assessed during the third risk management process in project management. This procedure updates the risk register based on the priority categorization of risks. The project scope statement, risk register, and risk management plan are the inputs in this process.
This process ultimately creates a ranking of risks based on their severity. It also provides a watch-list containing threats with low priority for resolution. Risk categorization, expert judgment, and probability rating matrix are the tools needed. Impact and occurrence of risk are taken into account to decide on the priority rankings.
Quantitative risk assessment
Numerical values are used in this process to quantify the identified and listed risks. Apart from the risk register, schedule, cost, and risk management plans are used in the 4th risk management process. Expert judgment and analysis of expected monetary value are the concerned techniques for conducting this process.
The risk register again gets updated on the completion of this task but this time, it shows a list of quantified risks. Quantitative assessment refers to ranking risk in terms of its effect on the project’s budget and schedule. This estimation is based on the previously accomplished qualitative analysis.
Risk response planning
This process is a sort of warning to the project members that keeps them alert about possible threats. Based on their magnitude, the major risks are brought together to plan the operation. Risks are categorized into threats and opportunities. This process concentrates on eradicating the threats and expanding the opportunities.
Outputs of this process helps in controlling risk triggers at the earliest. The risk register gets updated with secondary and residual risks including contingency amount. Risk-related contracts and updated project plans too, are available at the end of this process. Risk register and management plan are vital inputs. Strategies for negative and positive risks are considered the techniques for planning risk responses other than expert judgment.
Risk response implementation
The tool needed in risk response implementation is the PMIS (Project Management Information System). Leadership and interpersonal communication skills are the techniques involved in it. The risk management plan, register containing the lessons learned, and risk register are process inputs. OPAs (organizational process assets) are included, as well.
Updated issue log, register of learned lessons, and risk register are the outcomes of this process. This activity goes hand in hand with project execution. Risk responses become active even at the faintest hint of any threat throughout the project life cycle.
Status meetings and risk audits are the most important techniques and tools for monitoring risks. The updated documents are the same as that in the previous process outputs. Requested changes add to the list of products generated from the last process in the project risk management knowledge area.
The 7th PMBOK edition renders the risk management knowledge area more accurate. It focuses on identifying appropriate risk responses taking stakeholders’ acceptance into account. Risk appetite adds to the efficiency of previous risk management practices. It helps project team members make effective decisions on risk responses after acquiring information on the risk tolerance capacity of stakeholders.
All the aforementioned processes culminate into a common objective that is risk control. A vast knowledge has been segregated to form streamlined tasks that can be easily executed.