PLANNING STAGE (RISKS) : PLAN RISKS MANAGEMENT

This is the process of defining how to conduct risk management activities for the project. The risk management plan as an output of the process must be communicated, agreed and supported by all stakeholders in order to perform effectively and efficiently throughout the project life cycle.

The inputs to use are:

• Project charter that explains high level risks as one of the components written in the document.
• Stakeholder Register that lists all the stakeholders with their details in relation to the project.
• Enterprise Environmental Factors that explain how the organization is capable of handling risks either by risk tolerance (withstanding the risk), risk appetite (take the risk while expecting reward) or risk threshold (show some interests on the risk).
• Organizational Process Assets that include risk categories, templates, risk statement formats, authority levels for decision making, roles and responsibilities, lessons learnt etc.

The process can be done by:

• Analytical technique whereby the stakeholders’ risk altitudes are analysed and graded by using risk scoring sheets in order to know if  they are qualified for risk appetite or risk tolerance. This will be a help for the project team to know how to allocate appropriate resources and focus on the risk management activities effectively.
• Using experts whereby senior management, stakeholders, project managers from previous similar projects, consultants etc with the specific knowledge on the project provide their judgement concerning the matter.
• Holding a meeting with project team, stakeholders, project manager and anyone who is responsible for risk management in the organization in order to define risk management activities, assign risk management responsibilities and generate risk management template with risk category, level of risk, probability and impact to the project.

The components of Risk Management Plan are:

• Methodology such as approaches, tools, techniques and data sources to use in managing risks of the project
• Roles and responsibilities of risk management team members for the risk management activities
• Budget or estimated fund needed including costs for contigeous and management reserves
• Timing for the risk management activities to take place and how they will be performed in the project
• Risk Categories by grouping the potential causes of risks
• Risk Probability and Impact Matrix by defining and analyzing each risk occurrence; and rated them in relative form (high, moderate or low) as well as numerical form (decimal or percentage). These are usually set by the organization
• Revised Stakeholders’ Tolerances for the project where applicable
• Reporting formats of the risk management such as risk register and other risk reports that will be used for documentation, analysis and communication
• Tracking of risk activities for the project

References:

PMI (2013). A Guide to the Project Management Book of Knowledge (PMBOK Guide 5^th Ed.) USA, Project Management Institute

http://www.cusectech.com/blog/many-financial-institutions-yet-to-align-operational-risk-management-with-strategy-kpmg-and-rma-survey