A ‘Risk’ is any event that, should it occur, would negatively affect the project’s objectives.
A risk has a root cause, which should be ferreted out as part of developing the detailed risk management plan.
Identifying the root cause of each risk requires the isolation of each possible cause and the description of each risk event with relation to its cause(s). For example: A concern that the management’s commitment level towards the project is too low may have several root causes. Each of those needs to be examined and requires a different management plan. Low commitment level due to a competing project will require a different response than low commitment level due to changes in management.
Therefore, a risk event must be identified and defined as specifically as possible to facilitate developing an appropriate response strategy.
The Risk Management Plan is developed on an ongoing basis—from the day the project is initiated until its completion. The purpose of this plan is to provide the project managers and stakeholders with reliable information regarding anything that might pose a risk to the project and to offer ways of managing those risks.
The process begins with identifying events that might negatively affect the project or its goals. Next, the odds that these events will occur as well as the impact they will have on the project are estimated. Finally, appropriate strategies for managing and mitigating both the risk and the possible ensuing problems are developed.
Risk management plans should be constantly monitored and updated, since the risks a project is exposed to are not static. New risks are constantly identified, whereas risks that have been previously identified change: become more or less relevant, gain in impact, solidify into problems, etc.
No special tools are required to develop and manage a good risk management plan. A well organized Excel file will do the job excellently!
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