Risk Management
CMGT 411
Risk Management Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise. Before developing a risk management plan an analysis of risk needs to be performed. This analysis should include all aspects of the project that may be part of
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This part of the plan works to tie an owner to a particular risk and ensure that resources are immediately made available to respond to the risk. Once these details are documented, they then become the basis for the risk response plan. Risk monitoring and control is the next step and involves the owners of the risks to monitor various risk triggers. This works by scanning the project environment for both identified and unidentified threats and opportunities much like a radar screen (Marchewka, 2009). This approach directly relates to how to respond to the risk. Risk response allows the owner of the risk to commit resources and take actions once the risk is known or opportunity is available. This action usually follows the planned risk strategy. The last step in a risk management plan is to evaluate the risks. This is a learning step and works to provide experiences gained form working with risks. This evaluation should consider all aspects of the plan and identify best practices. The evaluation should answer the questions pertaining to how the project team did, what could be done better, what lessons were learned, and how can best practices be incorporated into the risk management process. This risk evaluation helps to influence how the organization will plan, prepare and commit to future risk management plans. Another important plan described in
The following short case will give you a good idea of how risks surface in business and project planning and what companies do about it. Consider that you are the Risk Manager as you look at this case, as it will be a good exercise for the time when you will be that Risk Manager!
Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering
You must identify potential risks to a specific project planed develop a risk plan to monitor and control risks effectively, identifying preventative and contingent actions to prevent the risk from occurring or reduce its impact, to increase the chances of achieving project success.
Risk management is important because it helps identifies the known threats within a project. This management method can exposed the strength, weaknesses, opportunities and threats (SWOT) analysis of underway projects. Risk management plan provides documents of procedures throughout the whole project. The project team should review the documents as well as corporate risk management policies, risk categories and lesson learned reports. It is very important to learn from the mistakes made from previous projects.
2. Risk management should be done at all stages. The initial assessment should be made in the proposal stage then the assessment should be revised and reevaluated throughout the projects life. New risks will become apparent at different stages and other ones will change with different circumstances.
As part of project start-up activities, which included the creation of Project Management Plan and Schedule, I also created a Project Risk Management Plan. This plan outlined how risk identification, analysis and evaluation would be monitored and controlled over the life of the
careful risk planning greatly mitigates the impact it can have. All projects carry some risk. The
1. Why should all projects include risk in their project planning? What are some of the drawbacks if risks are not considered?
Today’s society has become a world of disconnected, unpredictable happenings and challenging events. (Yoder, With this plan in hand, a Risk Plan can help foster a firm understanding of and methodology to risk, and how it affects the entire organization which can lead to more successful projects and business models when put into place. A Risk Management Plan will help provide a structure for identifying risks and can stop complications from occurring that can impend the accomplishments of the project.
Effective risk response can help prevent a project failing or at least reduce the negative impacts of risks that affect it. Discuss the risk response strategies that could be used for this project
A risk is event or occurrence upon which its materialising would disrupt the attainment of project objectives, therefore a risk management plan is that which is prepared to identify, assess, report, mitigate and monitor risks. It outlines clearly how risk management activities will be performed, recorded, and monitored and in some case mitigated throughout the lifespan of the project. It is prepared, monitored and updated by the project manager for the primarily the project sponsor and team officials, as it affords the opportunity to prioritize risks. Many experts refer to project managers as risk managers, Wysocki, (2009) and it is often assumed that anything bad that can happen to a project, will happen, hence the need for a project management plan, Olomolaiye, (2013).
During the integration phase of any competently designed project management program, the effective evaluation of potential risks is a critical component for managers and other project leaders tasked with supervisory role. The sheer number of unforeseen circumstances which can arise during the course of a business project is daunting indeed, but proper project planning requires the anticipation and neutralization of various risks to assure that a goals are met without external disruption. According to the authors of Integrated Project Management, a recognized authority on the subject of risk management, "every project plan approaches work structure and tasks in terms of overcoming uncertainty and barriers to project completion," and this universal approach to risk management is based on the tenet that "risk is inherent in a project simply because projects are usually new and different from past work and because there is a level of uncertainty and risk involved in every aspect of the project" (Barkley, 2006). The fact remains that innovative and enterprising ideas typically result in experimental projects involving untested techniques, and the innate uncertainty of these business projects creates a litany of risk factors. Managers and project leaders who are capable of predicting risks and adjusting to them, rather than simply reacting when risks are manifested, are those who routinely encounter the most consistent success in the world of business (Raz, Shenhar & Dvir,
The realistic definition of risk is “any uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives” (Project Management Institute, 2008). Since risk is associated with uncertainty, it should be appropriately planned for in the early stages of the project. Risk is inherent with any project and should be assessed continually while simultaneously developing plans to address them. Different types of risk we expect to
As we know there are some uncertain events that can impact to the project objective that called Risk. Therefore, I consider the following set of process that Risk Management must do these. Overall, Risk management should involve identifying, assessing, and responding to project risks in order to minimize the likelihood of the potential impact of the events on the accomplishment the project out comes. Managing risk includes taking action to prevent or minimize the impacts.
There are typically four major steps involved in project risk management, which when followed well are helpful in managing the risks effectively in the business organization. They are risk identification, risk quantification, risk response, and risk monitoring and control (Cervone 257). The benefits of project risk management can be massive. A manager can bring about the gain of a lot of money in the handling of the various unexpected events. Project managers endeavor to reduce the impact of project threats and seize the opportunities that come about. Risk management requires that managers be proactive in assessing their projects and have contingency plans in place rather than be reactive and wait for the risk to happen to handle it then. This essay will thus elucidate on all the steps of effective project risk management to reduce the happening of an unexpected event and the respective magnitude of its impact.