Why to apply risk management in project management
It seems negative, but sensible project managers understand this kind of idea is preventive. Problems will certainly come up and about, and you take a modification approach in order to realize how to deal with risks while project planning.
Managing Risk all over the Organization
Risk is any uncertainty that if it occurred would have an impact on one or more. The project objectives put simply it’s uncertainty that matters if you manage risk effectively. You can create value and be more confident that you’re making a good investment decision.
There are two parts to risk the first is uncertainty risks are always in the future and always unknown. So, we can only talk about their likelihood imagine you’re planning a picnic. There’s uncertainty about whether it’ll rain if it’s raining already then, it’s an issue not a risk the second part to risk is impact if that risk did occur.
What would the effect be on the things that mattered for your picnic you and your food would get wet the atmosphere would be dampened. There’s a difference between a risk and the impact some things may be uncertain but not have a material impact risk is neutral the impact isn’t always negative. It can be positive too what if the rain meant that you got to eat in a beautiful house in the countryside instead in the early life cycle.
It’s about anticipation not being diverted by things that could have been anticipated and setting unrealistic expectations and doing your homework. Which will pay dividends down the line risk isn’t a box ticking exercise that happens at the start of a project. It’s dynamic and relevant throughout the Project helping you make better decisions.
What are the Risk Management Process Steps
Here are through the steps to the risk management process risk management is meant to be an iterative process. Which means you have one desired outcome or goal and then you have a series of operational steps that you will repeat until you achieve this goal now for risk the main goal should always be to mitigate or eliminate anything. That may negatively impact your overall business goals so goals for revenue or expansion or increasing your brand’s reputation and awareness anything that may affect that negatively is going to be considered a risk so step one in the risk management process is to identify all those areas that may negatively impact your business.
They don’t just have to be the things that I spoke up earlier. It can also be natural disasters are a huge risk management item that needs to be addressed and needs to be planned for because they can all come down to affecting your overall business goal once you’ve identified all of the risks that you may face as stakeholder analysis, you’re going to take each of those and move to step two and for each item that you identified over here.
in step one you want to analyze and prioritize now the way you do that is with this nice little chart over here you want to measure the impact against the probability so let’s take a natural disaster for example it has probably a low probability but it could have a very high impact if it totally wipes out one department of your business or one region of your business so you’re going to want to plan for that accordingly.
Over to step two which is your plan for mitigation and elimination and it’s simply that what are the steps you’re going to take to either reduce the risk to where it is at an acceptable risk tolerance for your organization.
how will you eliminate the risk potential you’re going to want to decide based on-again impact and probability. Which one you’re going to do next thing is just like you did the business plan or strategy that gave you those business schools. Your risk management plan written out is going to be a constant reminder and something that you can always look back on and review. You may have seen that we posted a template for doing that we also have above a link for you to download that risk management planning template to get you started on writing out all of those goals now the
last step in the risk management Breaker process is going to be your review and improve. So, it’s kind of the last step but not really every couple of weeks or months whatever your plan. It has recorded for your timeline you want to review each of those risks measure again the impact and the probability. You need to move forward with further plans for mitigation or pursue opportunities for elimination.