Risk Response Plan
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In order to go through and define project risk management, firstly it is necessary to understand what risks and opportunities stand for within the scope of project management. These two concepts are described by at least three basic characteristics: an uncertain event, a probability of occurrence and potential impacts on the project’s objectives (time, cost, quality, scope or performance). What differentiates risks and opportunities is the type of impact they have on the project, in case one of these occurs. In a general point of view, risks may cause a negative impact on one project (recognized possible loss), as opportunities may positively impact it (recognized possible gain). As so, there is a level of uncertainty associated with the occurrence of a risk or opportunity event (probability < 1), it is possible to identify what event is it (known events) and its impact on the organization can be quantified. | In order to go through and define project risk management, firstly it is necessary to understand what risks and opportunities stand for within the scope of project management. These two concepts are described by at least three basic characteristics: an uncertain event, a probability of occurrence and potential impacts on the project’s objectives (time, cost, quality, scope or performance). What differentiates risks and opportunities is the type of impact they have on the project, in case one of these occurs. In a general point of view, risks may cause a negative impact on one project (recognized possible loss), as opportunities may positively impact it (recognized possible gain). As so, there is a level of uncertainty associated with the occurrence of a risk or opportunity event (probability < 1), it is possible to identify what event is it (known events) and its impact on the organization can be quantified. | ||
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=== Importance of Risk Planning in Project Management === | === Importance of Risk Planning in Project Management === | ||
Revision as of 23:33, 19 February 2023
Contents |
Abstract
Risks and opportunities in project management refer to potential events or uncertainties that could impact the successful completion of a project. Risks can come from a variety of sources, including internal factors (such as project team performance), external factors (such as changes in the market or regulatory environment), and technical factors (such as changes in technology or equipment). Effective risk management is an important part of project management and involves identifying potential risks, assessing their likelihood and impact, developing response plans, and monitoring and adjusting the response plans as needed. By proactively addressing risks and opportunities, project managers can improve the chances of project success and minimize the impact of risks on the project.
Introduction
Risks and Opportunities
“Risk is exposure to the consequences of uncertainty“
In order to go through and define project risk management, firstly it is necessary to understand what risks and opportunities stand for within the scope of project management. These two concepts are described by at least three basic characteristics: an uncertain event, a probability of occurrence and potential impacts on the project’s objectives (time, cost, quality, scope or performance). What differentiates risks and opportunities is the type of impact they have on the project, in case one of these occurs. In a general point of view, risks may cause a negative impact on one project (recognized possible loss), as opportunities may positively impact it (recognized possible gain). As so, there is a level of uncertainty associated with the occurrence of a risk or opportunity event (probability < 1), it is possible to identify what event is it (known events) and its impact on the organization can be quantified.
Importance of Risk Planning in Project Management
Project risk management processes should be conducted in order to increase the likelihood and impact of positive events and decrease the likelihood and impact of negative events in a project. One of the activities in project risk management is to plan risk responses by developing options and actions to enhance opportunities and to reduce threats to the project’s objectives. Murphy’s Law plays an important role when talking about the importance of managing risks in a project. It is a basic observation that states that “anything that can go wrong, will go wrong”, so it is better to acknowledge what can possibly go wrong and define actions to minimize the impacts it could cause. Besides that, there are several advantages related to risk planning.
- Advantages: Improved decision-making, Increased confidence, better preparedness, Cost savings, Improved risk management. (to be explained)
Steps to develop a Risk Response Plan
Generically describe the process of building a risk response plan
Identify Risks
Ref test[1]
- Brainstorming - Previous experiences - Explore potential situations
Assess Risks
Risks Categorization
- Analyze the causes (Ishikawa diagram) • External factors • Resources • Dependence on third parties - Risk Probability - Risk Impact
(Explain how to build a risk matrix and describe the different types of risks - negligible, minor, moderate, significant, severe, catastrophic)
Prioritize the Risks
Select Risk Responses
Avoid, Transfer, Mitigate, Accept
Monitor and Control Risks
- Define indicators - Nominate a responsible - Define a time-window for monitoring each risk
Limitations
Final Remarks
References
- ↑ Project Management Institute, Inc.. (2021). Guide to the Project Management Body of Knowledge (PMBOK® Guide) (7th Edition). Project Management Institute, Inc. (PMI). Retrieved from https://app-knovel-com.proxy.findit.cvt.dk/kn/resources/kpSPMAGPMP/toc
