![]() Throughout the project, the risk register is monitored to ensure the analysis remains current. Following the risk response, the issue log, risk register, and lessons learned register are updated. This process happens during the project execution phase and requires good interpersonal and leadership skills. When a risk event is triggered, the response plan springs into action. InputsĪt this step, you take the most important risks to the project and create an action plan, not just for responding to the risk if it happens, but for monitoring the risk triggers so you have the earliest possible warning. This is a sophisticated step that generally requires software and is suited primarily to large projects. This technique is called a Monte Carlo analysis, although other methods are also valid. Then the probability of meeting the overall cost and schedule is calculated. A bell-curve style distribution can also be used. Each task is assigned a probability estimate for various scenarios, say 90%, 50%, and 10% likelihood. Using the risk priorities established during the previous Qualitative Risk Analysis step, the impact on the project’s schedule and budget are determined. Then an overall risk priority ranking is found (by multiplication of the two rankings, or whatever appropriate method). Each risk on the risk register is analyzed and a ranking assigned to the two underlying variables. Since risk has two components – probability of occurrence, and impact, each of these factors should be prioritized on a scale of, say, 1-10. This step involves prioritization of risks. The main output of this process is the Risk Register. If you stick to the most important stuff that has about a 10% or more chance of happening, you will have a good list that the stakeholders will approve of. There is no guideline for the length of the list but you would want more items for projects that have are inherently risky (nuclear power plants, space travel, etc.). But the existence of a list is critical and brainstorming is your friend, that is, list as much as you can and strike off the low priority items later. Maybe a plane will crash into your office. There are usually potential cost or schedule savings based on project events, and identifying them in the risk register is the first step to taking those opportunities. Clients and bosses, however, usually don’t have the same selective memory!Īlso, it’s important to note the opposite of risks – opportunities. The latter tends to be elusive because we all want to forget the bad things that happened on previous projects long ago. Checklists are a good resource, as is expert judgment and previous project experience. A good list of potential risks to a project’s cost, schedule, or any other critical success factor is the key to great risk management. The only output is a Risk Management Plan. ![]() It includes things like itemizing the risk categories (market, procurement, resources, etc.), determining the timing and procedures for reassessing risks, and definitions of risk probability and impact. This initial step involves the production of a risk management plan, a component of the overall project management plan. The PMBOK’s Project Risk Management knowledge area contains 7 processes: A risk register makes a project manager look very good. Especially the most important stakeholder – your boss. Project management is usually focused on cost and schedule, and delivering projects “on time, on budget” sometimes feels like the only criteria.īut as a project manager, there’s nothing that makes you sleep at night better than knowing you’ve got the risks to your project under control and that the required stakeholders know about them. In some industries, risk analysis as a subset of project management is virtually non-existent.
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