Risk Management

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Risk Management

• How To Develop a Risk Response Plan

alphaPM Inc. www.alphaPM.com
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The Value of Risk Management

• Risk Management is one of the most powerful and
  effective tools for ensuring that a project meets
  its schedule, budget and quality objectives yet
  it is all too often one of the least used.It is
  an obvious fact that problems occurring later in
  a project are harder and more costly to fix (if
  they can be fixed at all), than if they were
  anticipated and addressed earlier (think
  Titanic).
• The Risk Response Plan is a very easy tool to
  use for applying Risk Management to your project.
  

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Risk Management Processes
There are four stages to developing and
maintaining a Risk Response Plan
Risk Identification
and they are iterated throughout the project
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Risk Response Plan
Risk Response Planning
Risk Analysis
Risk Identification
Risk Monitoring and Control
This Risk Response Plan can be used to identify
and maintain project risks,and covers all the
stages of Risk Management (A soft copy of this
template is available in the PM Toolkit library).
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Risk Management Processes
The following are some of the inputs, tools and
techniques and outputs that can be used to
complete the Risk Response Plan through each Risk
Management Stage.
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Risk Response Plan
Step 1 Identify Risks Using some of the tools
and techniques shown in the previous slide (e.g.
brainstorming with subject matter experts and key
team members or using checklists), identify the
risks that may affect the project. Identify
categories of risk (e.g. Technology, Staffing,
Contractual etc.), to improve the process of
discovering risks.Do not start to red light
or resolve risks at this Risk Identification
stage.
Step 1 Identify Risks
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Risk Response Plan
Step 2 Analyze Risks Determine (with the
involvement of subject matter experts and key
project stakeholders) the probability of
occurrence and the impact for each risk, using
the following criteria as a guide. Probability
of occurrence High 70 - 100 Medium 30
70 Low 0 - 30 Impact High Will
delay cutover or have major cost impact e.g.
more than 15,000.Medium Will cause impact to
major milestones or cause cost impact of 5,000
to 15,000. Low Will have only minor effects on
the schedule or the cost of the project. Note
These values can be adjusted to match the risk
tolerance of your organization and the size and
nature of the project.
Step 1 Identify Risks
Step 2 Analyze Risks
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Risk Response Plan
Step 2 Analyze Risks (continued) Using the
tables below, match the probability and impact
for each risk to find the Expected Value of the
Risk Exposure.

Probability
Impact

Step 1 Identify Risks
Step 2 Analyze Risks
High
Medium
Low
Expected Value
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Risk Response Plan
Step 2 Analyze Risks (continued) Using the
tables below, match the probability and impact
for each risk to find the Expected Value of the
Risk Exposure.

Probability
Impact

Step 1 Identify Risks
Step 2 Analyze Risks
High
Medium
Low
Expected Value
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Risk Response Plan
Step 1 Identify Risks
Step 2 Analyze Risks
Step 3 Identify actions to mitigate each risk
Step 3 Identify actions to mitigate each
risk For risks with a High and Medium Risk
Exposure, identify the actions that can be taken
to mitigate each risk (i.e. Reduce the
probability and/or the impact of the risk).
Ensure an owner and due date is assigned for
each action. Note A best practice is to
directly address any risks that have a
probability of occurrence that is greater than
50 and incorporate the mitigating actions for
those risks in the project plan.
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Risk Response Plan
Step 1 Identify risks
Step 2 Analyze risks
Step 3 Identify actions to mitigate each risk
Step 4 Monitor and control risks
Step 4 Monitor and control risks This Risk
Response Plan should be started at a high level
at the very beginning of the project, and then
done at a more detailed level during the planning
phase, with high risks directly addressed in the
project plan. The status of each risk and
mitigating action should be reviewed regularly
(e.g at the weekly project team meeting, along
with the review of the project schedule) and
documented here to provide an audit trail. The
Risk Response Plan should be revisited formally
at least monthly during the project life cycle,
and/or at the end of each phase, to monitor
identified risks and ensure new potential risks
are identified and addressed.
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Risk Management Lessons Learned
What are some of the Lessons Learned
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Risk Management

• How To Develop a Risk Response Plan

alphaPM Inc. www.alphaPM.com