Why does the risk management matter?

Why does the risk management matter?

Why does the risk management matter?

The last thing that any project will want to face is risks. Projects are designed to take advantage of resources and opportunities and with these, come uncertainty, challenges and risk. Hence Risk Management becomes a very important key to all project success.

Risk Management: is the project manager’s friend. Done well, it helps you ensure that the ‘appetite for risk’ is appropriately understood at the start; that all risks are agreed upon, prioritised, assessed, communicated and understood in alignment with this ‘risk appetite’; and that you have a solid platform to track agreed actions, including escalation up the management chain if necessary.

Why would you develop a Risk Management Plan?

  • Provide a useful tool for managing and reducing the risks identified before and during the project.
  • Document risk mitigation strategies being pursued in response to the identified risks and their grading in terms of likelihood and seriousness.
  • Provide the Project Sponsor, Steering Committee/senior management with a documented framework from which risk status can be reported upon.
  • Ensure the communication of risk management issues to key stakeholders.
  • Provide a mechanism for seeking and acting on feedback to encourage the involvement of the key stakeholders.
  • Identify the mitigation actions required for implementation of the plan and associated costings.

Risk Management steps:

  • Risk Identification.

It means to engage all the project team to identify what are the possible risks that could happen during the project life cycle.

  • Risk Analysis.

Is to analyse the risks identified based on likelihood and impact and product the Risk matrix.

Risk Matrix:

It is used during risk assessment to define the level of risk by considering the category of probability or likelihood against the category of consequence severity. This is a simple mechanism to increase visibility of risks and assist management decision making.

 

  • Risk Response.

Once we identify where the risk lies in the matrix then we can identify the best response which can be any of the below:

  • Avoid – eliminate the threat by eliminating the cause
  • Mitigate – Identify ways to reduce the probability or the impact of the risk
  • Accept – Nothing will be done
  • Transfer – Make another party responsible for the risk (buy insurance, outsourcing, etc.)

 

  • Risk Monitoring & controlling

The level of risk on a project will be tracked, monitored and reported throughout the project life cycle.

A “Top 10 Risk List” will be maintained by the project team and will be reported as a component of the project status reporting process for this project.

All project change requests will be analysed for their possible impact to the project risks.

Management will be notified of important changes to risk status as a component to the Executive Project Status Report.

 

 

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