a. Risk Analysis is the process of defining and analyzing the dangers to individuals, business and government agencies posed by potential natural and human caused adverse events. In IT, a risk analysis report can be used to align technology-related objectives with a company’s business objectives. A main objective of a business is to determine the potential RE a.k.a Risk Impact, or the probability of a potential loss. These expected values give you a sense of how much loss your company may take, before you can implement mitigation actions.
b. As a project manager it is important to expect and prepare for unexpected events. With risk management you can identify your projects weaknesses, strengths, and threats that may have your project in a negative aspect. Risk Analysis is important because it may help you avoid or mitigate these risks. As a project manager it is part of their responsibility to make sure that team is prepared for these “expected” risks.
c. When it comes to Risk Analysis there is a formula that is used to derive an estimated impact of each risk. Risk Analysis = Probability of Loss * Size of Loss. For example if the probability of a risk, at some cost, is 30% over an 8 year period, every 2.4 you would estimate an expected risk at some cost.
d. Once you have an expected risk analysis, as a project manager you would need to enforce a mitigation plan to avoid, or mitigate these risks. As a project manager you have the choice to share, accept, or control the
Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.
Indeed, Project Risk Management includes the processes of conducting risk management planning, identification, analysis, response planning, and controlling risk on a project. (PMBOK Guide - Fifth Edition, 2013).
All efforts will be made by the Project Manager to plan for and handle any risks. Continual risk monitoring will be done by the project manager throughout the projects duration.
Risks management is an important step during the process of a project. Failing to manage a risk may result in unforeseen event happening and a project’s failure. For example, with limited budget, an unforeseen event or an accident occurs in the middle of a project and this matter has not been considered and needs a big sum of expense, then the project may be stopped because of this unexpected event. We should know it is necessary to understand how to identify risks and assumptions based on the information. After identifying risks, it is important for project managers to set contingency plans to prevent and deal with these risks when they occur. Of course, several problems may happen during considering
Risk or threat is common and found in various fields of daily life and business. This concept of risk is found in various stages of development and execution of a project. Risks in a project can mean there is a chance that the project will result in total failure, increase of project costs, and an extension in project duration which means a great deal of setbacks for the company. The process of risk management is composed of identifying, assessing, mitigating, and managing the risks of the project. It
Risk analysis: the process of defining and analyzing the dangers posed by potential natural and human-caused events. Major limitations include
Definition: A Risk is an unwanted situation which might arise in an organization which might lead to negative impact on the desired result. Risk management plans involves the analyzing, managing and evaluating the projects risk and threats. It involves layout of the entire project i.e from the beginning during and after results of the project.
Project Risk Management – identifies potential risks (good and bad) that can affect the objectives of the project.
In order to perform project risk management effectively, the organization or the department must know the meaning of the risk clearly. With regards to a project, the management must focus on the potential effects on the objectives of the project, for example, cost and time (Loosemore, Raftery and Reilly, 2006). Risk is a vulnerability that really matters; it can influence the objectives of the project
Risk Planning and Analysis is used to develop risk responses which are options and actions to mitigate and reduce project threats. Risk responses delegate the owner for each potential risk and are agreed upon by all parties involved. There are four ways risk can be managed which are transferring risk, avoiding risk, reducing or mitigating risk and accepting risk.
Risk Management Systems are designed to do more than just identify the risk. The system must also be able to quantify the risk and predict the impact of the risk on the project. The outcome is therefore a risk that is either acceptable or unacceptable. The acceptance or non-acceptance of a risk is usually dependent on the project manager’s tolerance level for risk.
A risk can be defined as the probability that something unwanted will happen. Risk analysis and management therefore refers to the process of identifying risks to an organization’s information assets and infrastructure, and taking steps to reduce these risks to an acceptable level.
Concept of risk, risk assessment, risk management and how uncertainty affects the process will be discussed.
The project manager working with the project team and project client will ensure risks are actively identified, analyzed and managed throughout the life of the project. Risks will be identified as early as possible to minimize their impact. This can be done using several ways like