A project management plan is futile if it isn’t backed by a well-etched risk management plan. It serves as the actual guide for project execution to prevent unfavourable outcomes of the practices used. Individuals possessing PMP Certification are empowered to plan a risk management process.
What Is A Risk Management Plan?
Risk management is not just about preventing the occurrence of unfortunate incidents in project management. It is more of a learning process where professionals can study those threats that have positive impacts on task execution. A plan comprises multiple processes which are as follows:
- Risk management planning
- Identification and categorization of risks into negative and positive
- Quantitative risk analysis
- Qualitative risk assessment
- Planning of risk responses
- Risk control and monitoring
As listed above, the “plan risk management process” is the first among them. These processes together determine the nature of a project’s life cycle.
What Is The Objective Of A Risk Management Plan?
Planning a risk management process is essential for enabling risk-handling measures in the course of a project. Unattended threats are fatal in terms of diverting the project from its end objectives. Mitigating risks is cost-effective in comparison to finding solutions to mishaps. A risk management plan is the prerequisite for project initiation, development, and execution. Every individual desiring a PMP Certification must be knowledgeable in the formulation of the risk management plan.
What Should Be Present In A Risk Management Plan?
A complete risk management plan is one that comprises the components discussed below:
- Clearly defined approaches and tools for performing the risk management operations.
- A chart, formally known as a Risk register, provides documented information on the risks identified in a project.
- The hierarchy of project risks, as is depicted in the form of a risk breakdown chart.
- An assessment matrix based on the impact of risks and their corresponding attention priorities.
- A document containing the explanation of risk prevention strategies to be deployed.
- Descriptions of the risk owners’ individual responsibilities. Risk owners are a project’s team members who are in charge of monitoring risk responses.
- A section of the plan must mention the funds allocated to respective risk management tasks.
- The activity schedule must also be elaborated in the risk management plan.
Inputs Of Plan Risk Management Process
The execution of the aforementioned risk management processes is defined by the plan risk management process inputs. These are namely:
- A statement of the project scope clearly defines the impact and type of risks to be faced.
- Next is the plan of cost management including detailed information on spending management, stage payments, and budget.
- A planned schedule of risk management activities along with their timings with respect to external and internal constraints.
- Plan of communications management that encompasses stakeholders’ details, especially their individual concerns for certain risks. Means of handling communication with them are included in it.
- Factors related to the enterprise environments such as compliance with industry laws and regulative principles regarding risk mitigation.
- Risk identification templates derived from past project experiences as well as the lessons learned serve as vital inputs.
Tools And Techniques Of Plan Risk Management Process
The ‘plan risk management process’ tools and techniques can be categorized as follows:
Consultation with SMEs is the foremost tool for identifying the possible risks and their consequences. Knowledge of experienced individuals in project risk management is invaluable for adopting appropriate approaches to varying risk patterns. A lot can be learned from their ways of tackling project threats to prevent them beforehand.
This technique involves the evaluation of a stakeholder’s level of enduring a risk or the damage caused by it. Risks that demand immediate attention can be figured from this information about a project’s stakeholders.
Adequate meetings with key stakeholders, project team members, and the risk management members of an enterprise are crucial. These play a significant role in deciding on the activities to be performed for keeping a project free of threats.
Outcome Of Plan Risk Management Process
The risk management plan is the product of the plan risk management process. This plan lays the foundation for conducting the remaining procedures of project risk management. All the practices involved in the plan help in eradicating risks in the following ways:
- To totally avoid the plan that can cause a threat to a project.
- Transferring a portion of the risk by outsourcing it to an agency.
- Going through different options, and additional testing for minimizing the concerned risk’s impact.
- Assuming the expenses involved in combating the negative impacts of a certain action is also an excellent way of identifying risks.
An assessment of the risk threshold takes one a long way in creating a risk management plan. It must be treated as a continual phenomenon till a project reaches its completion. Risks indicate the progress of a project while their eradication implies a project’s success.