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Risk Management Planning

March 24, 2009 | Author: PM Hut | Filed under: Project Management for Beginners, Risk Identification, Risk Management, Risk Quantification & Analysis, Risk Response & Control

Risk Management Planning (#1 in the series How To Effectively Manage Project Risks)
By Michael D. Taylor

PMBOK defines risk as “an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives.”

Risks can be foreseeable and unforeseeable. In both cases, astute project managers are prepared with some means of dealing with them. Many risk management plans address only foreseeable risks and fail to address the unforeseeable ones. For that reason, project planning must include a degree of schedule, cost, and scope margin. Margin management techniques are addressed later in this series.

The most effective way to manage project risks is to adopt a process that systematically deals with the overall problem of uncertain events and conditions that might affect a project’s objectives. This process involves the following five steps:

  1. Risk Identification
    • Process Flowcharts
    • Analogous Project Comparisons
    • Risk Checklists
    • WBS
    • Brainstorming
    • Ishikawa Diagrams
    • Affinity Diagrams
  2. Qualitative Analysis
    • Weighted Risk Factor (WRF Method)
    • Probability of Risk
    • Consequence of Risk
    • Project Priorities
  3. Quantitative Analysis
    • High Risks
    • Moderate Risks
    • Low Risks
  4. Risk Response Planning
    • Transfer
    • Avoid
    • Reduce
    • Share
    • Accept
    • Increase Tolerance
    • Exploit
    • Enhance
  5. Risk Monitoring and Control
    • Decision Lead Times
    • Risk Monitoring Table
    • Identify New Risks

Risk Management Processes

MICHAEL D. TAYLOR, M.S. in systems management, B.S. in electrical engineering, has more than 30 years of project, outsourcing, and engineering experience. He is principal of Systems Management Services, and has conducted project management training at the University of California, Santa Cruz Extension in their PPM Certificate program for over 13 years, and at companies such as Sun Microsystems, GTE, Siemens, TRW, Loral, Santa Clara Valley Water District, and Inprise. He also taught courses in the UCSC Extension Leadership and Management Program (LAMP), and was a guest speaker at the 2001 Santa Cruz Technology Symposium. His website is www.projectmgt.com.

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