Project Management: Project Risk Planning

Back2Basics - Project Management: Project Risk Planning

In previous post we briefly looked at the project quality planning aspect of projects, in this post we will look at project risk planning. Given how critical it is for continuity of the project, it is difficult to understand why so-many-project-managers take project risk planning so casually.

Project Management Project Risk Planning

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Risk Management Plan

Assuming you are responsible for setting up of a power plant and in the wake of recent nuclear mishaps occurred, governments in all countries have enforced stringent compliance requirement of fail-safe mechanisms at every possible stages of nuclear power generation & nuclear waste disposal management. And this compliance requirement will get applicable to all existing as well as new power plants. You would be stranded if you have not thought "someday it is going to come to us". What would you do? Wouldn’t you be better off, if you have had project risk planning in place, more specifically risk mitigation, risk contingency plan to handle such event?

Project Risk Planning and Management

The project risk is futuristic uncertainty that may occur during life of a project and can affect project deliverable. The risk can be recorded through cause-effect analysis. The cause of risk could be some hypothesis, limitation, requirement, etc. and the effect could be slippage of timeline, cost overrun/save, performance degradation/improvement, etc. of the project for example – new regulatory compliance may be enforced on power projects, economic uncertainty may lead to higher cost of labor, etc.

Project risk planning is about assessing future uncertainties which can have potential impact on project objectives and the exercise of creating risk management plan, prepares team for effectively managing those uncertainties.

What can we expect from project risk planing or risk management plan?

Sr.

No

Item

Description

1

Risk Identification

1.1

Identification process

The success of the risk management depends on the pro-activeness exhibited by project team in identifying & reducing effect of risks on project. This can be facilitated if risk identification process is well documented & is easy to understand for team members. It also

1.2

Risk Categories

The project risk planner specifies categories of the risks based on the potential impact on the project objective e.g. catastrophic, severe, low, etc.

2

Risk Assessment

2.1

Risk probability and impact

Well established criterions to help team members to assess risk probability & impact.

2.2

Risk Tolerance

The plan to indicate what could be risk tolerance level that would be acceptable to stakeholders and what strategy to be adopted if risk level crosses the tolerance level.

3

Risk Responses The risk planner must define under what conditions response should be to avoid, accept, mitigate or transfer the risk.

4

Risk Management

4.1

Mechanism

It outlines what approach to take, whom to consult, what utility to use, etc.

4.2

Roles and responsibilities

This section specifies who should do what if risk occurs. It is not uncommon to find armies world over have defined personnel to command and own specific responsibility.
4.3

Budget Provisioning

This section marks budget provisioning for known & unknown risks and provide justification of doing so.

4.4

Risk Tracking

It details who would track risk, in what frequency, with what inputs, etc

Table : Project Risk Management

What do you think of this post? Let me know your feedback & comments.

To read the series of blog post about Risk Management visit Risk Management articles.

You can jump to Project Planning | Project Scope | Project Delivery Schedule Planning | Project Resources Planning | Project Cost Planning | Project Quality Planning | Project Risk Planning | Project Communication Planning

Img Refer: EP-Consult

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