Project Risk Management Process

visualise essay c be marchIntrouction To run into run a put on the line of infection counselA recent investigating into the recent rise in failed watchs, financial meltdown and the deadly environmental hazards make passring glob severally(prenominal)y capture proved that non-inclusion of hazard wariness in the think and entire stage of the retch, poor and total neglect of invent essay heed physical exertions and overlooking minor dangers account for majority of them.While experts squander stated that a proper and strong pop tabu encounter way mathematical operation can reduce cypher problems by as very much as 75 90%, combining it with concrete project focusing plans, defining a proper scope, managing change and communication, a good project attempt attention helps in reducing and eliminating surprises and unexpected project lucks. A good project risk focus process can in like manner help with resolving problems when they occur.To amaze a better understanding, ability to structure, follow up and execute a good project risk management practice we need to understand the processes concern in PROJECT RISK forethought mightily.What Is calculate jeopardy Management?Project risk management match to the project management body of knowledge book, chapter 11, Pg. 111, it is a term that encompasses and involves all processes concerned with naming, analyzing and retort to project risk. It likewise consists of maximizing the results of likely convinced(p) pointts 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 moldiness have a justified knowledge of major key definitions. Project risks according to the Project management institute perspective be at their core, unknown events. These events are often positive or negative. This makes RISK, electr whizzutral though most eon is spent on tackling negative p roject risks (threats) rather than the positive (opportunities).Processes Involved In Project insecurity ManagementA proper project risk management includes the following quaternion processes take chances identificationRisk quantificationRisk response developmentRisk response controlThese processes are often implemented with different label 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 in any case often referred to as risk response planning and risk response development often referred to as risk management.Whether they are referred to individually or collectively, they usually maintain their requirements, tools and output. A proper analysis of these processes is stated below.Risk Identificationinvolves the identification and finding of the po ssible risks that are more likely to affect the project and properly documenting the properties and effect of each hotshot. This process is not a once in a project affair. It is meant to be carried out regularly as coarse as the project is being carried out. It should also include twain indwelling (activities that can be controlled or influenced by the project team such(prenominal) as terms 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 step involves evaluation of the risks identified in the first step and risk interactions to assess the range of possible project outcomes. Its primary aim is to hear which risks need response. It is complicated and affected by a number of factors only is not limited to them. They include Threats and opportunities can interact in out of the blue(predicate) ways such as regular delays could cause consideration of a new strategy thereby reducing total project duration.A single risk could trigger multiple effects such as a late delivery of a vital get off the ground of the project could result in penalty (fines and payments), over run 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, release for the other). numeral principles used may create a false impression and negatively affect reliability and precision.Risk Response DevelopmentThis step in the project risk management activities involves unobjectionablely 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. exclu sively 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. bankers acceptance which deals with acknowledging the occurrence of a risk and developing a plan to acquire the risk in cases when it occurs.Risk Response ControlThis step involves effect 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 mana gement entails, it is best to have a step-by-step access code for proper operation of all involved activities as a (PROJECT RISK MANAGEMENT).Project Risk Management ProcessVicky Wrona again digestd a possible 7 step outline as a project risk management process. They are note 1 this step states that everyone involved in the project planning process should hear at least 10 possible risk items. This also helps tackle assumption because some 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 silent arise and cause problems. It is best to tackle it rather than ignore it. beat 2- involves collection of all the listed risks and compiling them into a single list ( get across list) with duplicates removed. gait 3 assessment of the probability and impact of the risks outlined in the master list is the third step. This can be achieved by well-favoured each risk a r ating (numerically) or otherwise in order of vulnerability (low, medium, high). Detectability is also important because risks that are not notice or hard to detect e.g. scope creep 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 archetype 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 mishap plan for majority of the risks. This plan should include response to be interpreted 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 terminal 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.Golden Rules For A Successful Project Risk Management.According to baronet 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 an d associated tasks.Benefits Of Project Risk ManagementIt contributes to the boilers suit success of the project because it points out threats and opportunities which are either eliminated or utilized.It results in better business outcomes through more informed decision fashioning activities achieved from corrections made after the risk management activities.Uncertainties are accept and a forecast of possible occurrences is provided.Gives room for better control, tackles time withering and has greater focus on benefits.It influences innovation and positive thinking.Effects Of neglect And Poor Project Risk Management(Using Real Life Scenarios) catastrophic 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. Even after this, the current government ignored weather reports and warnings of impu issance levies and the damage that floods could bring.This led to the death of 1300 people and loss of over 250,000 homes with position 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 Brand Trust Chrysler Corporation introduced the PT cruiser in 2000, with hopes of delivery via dealer showroom in 2001. At the divinatory available date, it wasnt available. Chrysler and its dealers encouraged its customers to deposit for a guaranteed delivery. animated 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, t hey 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 notice 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 count and less regarded by many is a key component for a better project plan, time management, cost estimation and project scheduling. An strong 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. ultimately if project risk management is properly understood and a stepped sexual climax included in this book is followed with application and adherence to the 10 prosperous rules for a successful project risk management, there is possibility or a very successful project because the risk management points out and giv es 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 Jute feed and consultant at Concilio.http//www.projectsmart.co.uk/10-golden-rules-of-project-risk-management.htmlYour risk management process A pragmatic and effective approachVicki WronaProject Management Professional (PMP)President of earlier 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 Williams teach 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/p ages/article/newTMC_07.htmBasics of Managing RisksNeville TurbitIT consultant / head word of Project Perfect.http//www.projectperfect.com.au/downloads/Info/info_risk_mgmt.pdfBibliographyProject Risk Managementchapters 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