It’s impossible to imagine a project that wouldn’t involve certain risks. All businesses should take into account unexpected events that may occur in the future, especially if relationships between sponsors and clients are not particularly strong.
If something bad happens, you should be ready to quickly identify the problem and to come up with possible solutions so that this problem won’t turn into a complete disaster. That’s why you need a risk management plan.
What Risk Management Is
Risk management is an integral part of project management. This area of project management focuses on the potential impact of different factors on the project. Managing risks is very important for the success of any project. It’s a continuous process that includes planning, identification of problems, analysis, and control. Most of these processes will be updated at different stages of your project’s lifecycle, but initial planning is one of the most important parts of risk management.
You need to identify risks before the project starts, while also keeping in mind that the number of risks will likely grow. You should also determine the tolerance levels for your businesses to figure out what risks your organization can accept or reject. It’s important to assess the probability of occurrence and to determine what aspects will be affected by a particular issue. Developing a risk management plan is a complex task, so we decided to help you with some useful tips.
How to Make a Risk Management Plan
- Identify risks
You may already know some possible risks, but it doesn’t mean that you know all of them. Therefore, this stage of risk management planning requires some additional research. You should determine risks associated with your type of project and divide them into categories (e.g. organizational, technical, budget-related, etc.). We recommend that you talk to industry experts and stakeholders to identify common risks specific to your niche and your type of project.
- Evaluate the impact and likelihood
Once you’ve determined all the possible risks that your organization cannot accept, you should analyze their quantitative and qualitative impact. Compare the likelihood of a certain event occurring to its possible impact on your project and map it out into a spreadsheet.
We recommend that you assign each risk a score and classify its likelihood as high, medium, or low. In the same way, you can classify risks based on their severe, medium, or low impact. This scoring system will help you understand how quick your response to each issue should be.
- Plan your response
When it comes to planning your response, it’s important to determine the objectives first. You may try to eliminate the risk completely, to lower its probability, or to minimize its impact. Therefore, it’s important to properly evaluate each particular risk at the previous stage and to clearly understand how much time you’ll have to respond, as well as what your budget is.
- Assign responsibilities
Every risk must have an owner. Usually, project managers are responsible for any issues that might occur, but it’s important to know who will be able to respond to each event properly, as well as who is responsible for preventing this event. When all members of the team clearly understand their responsibilities, it’s easy to ensure a timely response. It’s also important to outline the response and to make sure that stakeholders are aware of what the response will look like.
We recommend that you write a comprehensive response plan so that all the people involved will clearly understand what they should do in each particular situation, as well as what actions will be considered inappropriate. To write such a document, you can hire professional business writers. For instance, you can check out writing services review websites like Online Writers Rating.
- Know the triggers
Understanding your triggers is important regardless of whether or not risk has already affected your project. However, you should also understand what triggers are relevant at a particular stage of the project. For instance, some risks may no longer bother you at some point because there will be no conditions necessary for these issues to exist. Some risks may also have a different impact on your business depending on the stage of your project. Therefore, you should also have a backup plan.
- Make a backup plan
Your probability and impact spreadsheet is a living document. Both the probability of occurrence and the impact of a certain risk on your project might change depending on numerous factors, and you should keep them in mind when planning your response. As your project lives and evolves, you should discover new risks and re-evaluate the existing ones, adjusting your risk management plan, and creating new backup plans.
- Determine your risk threshold
If risks are too high, it’s important to talk to stakeholders to understand whether or not the project is worth keeping it alive. You should also determine what risks are relatively safe in terms of the impact on your project, and what risks might require additional consultation.
Risk management is an important part of project management. All project managers deal with unforeseen circumstances at some point. To ensure the success of your project, you must determine what risks you might face and plan an adequate response. Therefore, risk management planning is a crucial process. We recommend that you follow our tips and develop a flexible risk management plan that will evolve along with your project. You may also use a risk management plan template. Many such templates are available online so you can choose the one that fits your needs.
Frank Hamilton has been working as an editor at essay review service Best Writers Online. He is a professional writing expert in such topics as blogging, digital marketing and self-education. He also loves traveling and speaks Spanish, French, German and English.