Delivering projects on time and within budget while meeting the needs of the customer. Projects are king in project-driven organizations. They are the company’s lifeblood, and all revenue is derived from their success. Schedules, resources, and funding are all factors that influence project performance. But one factor stands out above all others in determining success or failure – risk.
Every one of us takes risks on a daily basis. Getting out of bed in the morning is dangerous. You could stub your toe in the dark while looking for the light switch, or you could trip over the dog and break a leg. These occurrences are unusual, but they are possible. The same can be said for your project. Risk exists in all projects, and the likelihood of a specific risk occurring depends on the nature of the risk. Risk, like the majority of the other elements of the planning process, changes as the project progresses and should be monitored throughout. As you get closer to a risk event, reassess your original assumptions about the risk, your plans to deal with the risk, and make any necessary adjustments. Not all dangers are bad. Risks can present both opportunities and threats to a project. All risks have a cause, and if the risk event occurs during a project, the risk has consequences.
Those consequences will almost certainly have an impact on one or more of the project objectives, and you’ll need to know whether they’re positive or negative. After all, the risk is uncertainty. The more you know about risks and their consequences ahead of time, the better prepared you will be to deal with a risk when it occurs. The processes that involve risk, more than any other project planning process, are likely to be concerned with balance. You want to get to the point where you and the stakeholders are comfortable taking the risk based on the potential benefits. In a nutshell, you are weighing the action of taking a risk against the consequences or impacts of that risk.
The first step is to carry out the Risk Management Planning procedure. Here, you decide how you will approach risk management activities and document your plans in a risk management plan. You’ll take a look at that process right now. Risks occur for a variety of reasons. Some are internal to the project, while others are external to it. Risk can be introduced by the project environment, the planning process, the project management process, insufficient resources, and so on. Some risks will be anticipated and planned for in advance; others will arise unexpectedly during the project.
Project Risk Management is defined as the identification, analysis, and control of potential threats to the project. Because projects frequently involve numerous parties both inside and outside your organization, the question becomes, “How can you proactively control and mitigate a threat if you are unaware of it?” Each group within a project typically keeps a spreadsheet with a list of project risks and mitigation actions, making it impossible to prioritize resources on the most serious risks that could derail a project.
Inputs for Risk Management Planning
Risks associated with a project generally concern the project objectives, which have an impact on time, cost, scope, and quality, or any combination of the four. As you might expect, the project scope statement is an input to this process because it defines your project’s objectives.
This Process’s Inputs Are As Follows:
Environmental aspects of business
Assets of organizational processes
Statement of Project Scope
Project management strategy
Risk Management Planning Tools and Techniques
Planning meetings and analysis are the primary tools and techniques used in the Risk Management Planning process. The goal of these meetings with project team members, stakeholders, functional managers, and others who may be involved in the risk management process is to contribute to the risk management plan. The fundamental plans for performing risk management activities will be discussed and determined during these meetings, and then documented in the risk management plan. The following are the key outcomes of these planning meetings:
Risk cost elements are created to be included in the project budget.
Risk-related activities are developed for inclusion in the project schedule.
Risk management responsibilities have been delegated.
For this project, risk category templates are being defined or modified. Terms are defined and documented (for example, probability, impact, risk types, risk levels, and so on). For any project, the probability and impact matrix is defined or modified. Finally, the goal of this process is to document the risk management plan (the output of this process).
Top Project Risk Management Capabilities Include
A centralized risk register that eliminates the need for disparate spreadsheets.
Built-in accountability management assigns mitigation actions and timeframes clearly, increasing an organization’s risk-bearing capacity.
Executive dashboards with key performance indicators provide visibility into high-priority risks that may have an impact on project cost, schedule, or technical performance.
To avoid surprises, it has an automated alerts engine that notifies project managers early.
Workflow management guides each risk through its lifecycle and ensures that nothing falls between the cracks.
Managing project risk is critical to delivering a successful project, whether you are building the world’s next rocket, a liquefied natural gas production plant, or the next generation air traffic control system.
