Project Risk Management Process

childbed Risk Management ProcessIntrouction To regorge Risk ManagementA recent investigation into the recent exclude in failed chucks, financial meltdown and the deadly environmental hazards occurring glob onlyy pay off proved that non-inclusion of venture management in the proposalning and entire stage of the disgorge, paltry and total neglect of pouch danger management gives and overlooking minor jeopardys account for majority of them.While experts have stated that a becoming and punishing view risk management process can reduce project problems by as much as 75 90%, combining it with concrete project management casts, defining a proper scope, managing change and communication, a good project risk management helps in reducing and eliminating surprises and un evaluate project risks. A good project risk management process can also help with resolving problems when they occur.To have a mitigate understanding, ability to structure, apply and execute a good project r isk management practice we need to understand the processes involved in PROJECT RISK MANAGEMENT properly.What Is escort Risk Management? get word risk management according to the project management body of knowledge moderate, chapter 11, Pg. 111, it is a term that encompasses and involves all processes concerned with identification, analyzing and reply to project risk. It also consists of maximizing the results of promising positive events and minimization of the impacts of negative events.Also according to Vicki Wrona, a project management professional, before we begin a project risk management process, we must have a justified knowledge of major key definitions. come out risks according to the Project management give perspective are at their core, unknown events. These events are often positive or negative. This makes RISK, neutral though most cartridge holder is spent on tackling negative project risks (threats) rather than the positive (opportunities).Processes Involved In Project Risk ManagementA proper project risk management includes the succeeding(a) four processes Risk identificationRisk quantificationRisk response schoolingRisk response controlThese processes are often implemented with different name though they all arrive and achieve the same goal. Also they are often renamed and combined as stated below Risk identification and quantification are often treated as a single process and the resultant process is called risk analysis or risk assessment. Risk response development is also often referred to as risk response planning and risk response development often referred to as risk management.Whether they are referred to respectively or collectively, they usually maintain their requirements, tools and output. A proper analysis of these processes is stated below.Risk Identificationinvolves the identification and determination of the possible risks that are more likely to affect the project and properly documenting the properties and effect of each one. This process is not a once in a project affair. It is meant to be carried out on a regular basis as long as the project is beingness carried out. It should also include both internal (activities that can be controlled or influenced by the project group such as cost estimation) and external (risks beyond the project teams control such as business laws or government action) risk. Risk identification could be achieved by either identifying causes and effects (events likely to occur and what will be the result) or effects and causes (outcomes to be avoided or appreciated and method of occurrence).Risk QuantificationThis tint involves evaluation of the risks set in the first timber and risk interactions to assess the range of possible project outcomes. Its primary aim is to determine which risks need response. It is compound and affected by a number of factors but is not limited to them. They include Threats and opportunities can interact in unforeseen ways such as re gular delays could cause consideration of a new strategy thereby reducing total project duration.A single risk could trigger triple effects such as a late delivery of a vital part of the project could result in penalty (fines and payments), over go bad cost, delay in schedule and often a poor quality product.Reduced cost may favor a stakeholder at the expense of the other. (opportunity for one, qualifying for the other).Mathematical principles used may create a false impression and negatively affect reliability and precision.Risk Response DevelopmentThis step in the project risk management activities involves clearly defining enhanced move to utilize opportunities and respond to threats. Threat response usually fall into one of three categories-Avoidance which has to do with eliminating a threat by eliminating the cause. All risks cannot be eliminated but certain ones can often be eliminated.Mitigation which deals with reducing the expected cost of a risk event by reducing the occurrence probability, buying insurance and using proven technology.Acceptance which deals with acknowledging the occurrence of a risk and developing a plan to tackle the risk in cases when it occurs.Risk Response ControlThis step involves execution of the developed risk management plan in response to the risk events during the course of the project. Whenever there are changes made to the project, the first three risk management processes (identification, quantification and response) are repeated. It is a good practice to bear in mind that even the most comprehensive and thoughtfully structured analysis cannot point out all risks and likelihood of occurrence correctly. This makes the project risk management processes an activity to be repeated often.After a clear definition of all the activities project risk management entails, it is best to have a step-by-step approach for proper execution of all involved activities as a (PROJECT RISK MANAGEMENT).Project Risk Management ProcessVi cky Wrona once again outlined a possible 7 step outline as a project risk management process. They are whole tone 1 this step states that everyone involved in the project planning process should make at least 10 possible risk items. This also helps tackle assumption because few risks that are believed to be known are often neglected and they end up occurring. Scope creep is a perfect example because even with a perfect management process, it could still arise and cause problems. It is best to tackle it rather than ignore it.Step 2- involves collection of all the listed risks and compiling them into a single list (master list) with duplicates removed.Step 3 assessment of the probability and impact of the risks outlined in the master list is the third step. This can be achieved by giving each risk a rating (numerically) or otherwise in order of vulnerability (low, medium, high). Detectability is also important because risks that are not discover or hard to detect e.g. scope cre ep are even more risky.Step 4 involves dividing the planning team into smaller groups and dividing the master list into portions and giving it to them. They are then to find out the warning signs for the risks. These warning signs (triggers) should be documented and none should be overlooked.Step 5 involves the small groups that identified the risks to also structure out preventive measures.Step 6 here, the small groups created from the planning team develop a contingency plan for majority of the risks. This plan should include response to be taken if a risk occurs. This is usually done for risks with high vulnerability so as to give room for proper management of the risk management process because if the risk management process takes a lot of time and couldnt be executed, then it is a futile effort.Step 7 this is the final step in the risk management planning process. It involves giving each risk an owner. This owner is usually responsible for tackling the risk should it occur and utilizing the approved contingency plan. Though other members are advised to also be vigilant for all risks.At the end of the above steps, a risk register is created. It is advisable to have this register in tabular format so that it could carry enough information on one page. roaring Rules For A Successful Project Risk Management.According to Bart Jutte, managing director of Concilio, a consultancy specialized in project risk management these 10 steps usually result in proper project risk management implementation. They include Make risk management part of your project.Identify risks early in your project.Communicate about risks.Consider both threats and opportunities.Clarify ownership issues.Prioritize risks.Analyze risks.Plan and implement risk response.Register project risks.Track risks and associated tasks.Benefits Of Project Risk ManagementIt contributes to the overall success of the project because it points out threats and opportunities which are either eliminated or uti lized.It results in better business outcomes through more assured decision making activities achieved from corrections made after the risk management activities.Uncertainties are recognized and a forecast of possible occurrences is provided.Gives room for better control, tackles time wasting and has greater focus on benefits.It influences innovation and positive thinking.Effects Of Negligence And Poor Project Risk Management(Using Real Life Scenarios) harmful Example The hurricane Katrina is an example of negligence of project risk management by the government. During the construction and development of the country, the then government didnt focus on the risks this project (development) would cause. all the same after this, the current government ignored weather reports and warnings of failing levies and the damage that floods could bring.This led to the death of 1300 people and loss of over 250,000 homes with property worth billions being destroyed. If project risk management had been implemented at the development period, the effect of weak levies and flood would have been identified and tackled and this would have prevented this risk (hurricane Katrina).Loss Of Market, Customers And home run Trust Chrysler Corporation introduced the PT CRUISER in 2000, with hopes of delivery via dealer showroom in 2001. At the supposed available date, it wasnt available. Chrysler and its dealers encouraged its customers to baffle for a guaranteed delivery. Eager customers did this but only few cars were produced due to manufacturing constraints and poor production efforts and conditions.This resulted in a refund of all deposits to the prospective customers and a further loss of faith in Chrysler by its customers. They decided that instead of waiting for the PT Cruiser, they decide to patronize other vehicles from other manufacturers.If Chrysler had included project risk management in their project (PT Cruiser), the production and delivery constraints would have been dis covered and tackled and the goals of the project (delivery of the PT cruiser by 2001) would have been met.ConclusionProject risk management as simple as it may seem and less regarded by many is a key component for a better project plan, time management, cost estimation and project scheduling. An effective project execution is also achieved through inclusion of risk management at all stages of the project starting from the planning, to implementation and finally execution.Finally if project risk management is properly understood and a stepped approach included in this book is followed with application and adherence to the 10 golden rules for a successful project risk management, there is possibility or a very successful project because the risk management points out and gives you room to tackle, correct and utilize problems that could have risen at the execution / completion of the project.References10 Golden rules of project risk management.Bart JuteFounder and consultant at Concili o.http//www.projectsmart.co.uk/10-golden-rules-of-project-risk-management.htmlYour risk management process A practical and effective approachVicki WronaProject Management Professional (PMP) death chair of Forward Momentum, LLC, instructor with Westlake Training and development.http//www.projectsmart.co.uk/your-risk-management-process-a-practical-and-effective-approach.htmlProject management Risk ManagementCJ WilliamsTutor Mgt. ConsultantBrighton School of Business Mgt. in the UK.http//www.projectsmart.co.uk/project-management-risk-management.htmlA Guide to the Project Mgt. Body Of Knowledge (PMBOK)PMI Standards CommitteeWilliam R. DuncanDirector Of Standards.Risk Analysis Risk ManagementEvaluating and Managing the Risks You FaceMind tools websitehttp//www.mindtools.com/pages/article/newTMC_07.htmBasics of Managing RisksNeville TurbitIT consultant / Principal of Project Perfect.http//www.projectperfect.com.au/downloads/Info/info_risk_mgmt.pdfBibliographyProject Risk Managementcha pters 1, 3, 8, 9, 10By Bruce T. BarkleyCopyright 2004Project risk management a proactive approachChapters 1, 3, 5By Paul S. RoyerCopyright -2001Practical Project Risk Management The Atom MethodologyChapter 1, 2, 3 6David Hillson Peter SimonCopyright-2007