Project Risk Management – Plan Risk Management

This process defines how to conduct risk management activities for a project. It ensures that the degree, type, and visibility of risk management are commensurate with both the risks and the importance of the project to the organization. Planning for Risk is important as when you communicate with stakeholders you get and obtain agreement and support from all. By carefully planning you can plot the probability that you need more resources and time for activities and you can build this into the plan.

Let’s take a look at the Inputs, Tools and Techniques, and Outputs of this process:

1)      Project Management Plan

·         All approved subsidiary management plans and baselines should be taken into consideration in order to make the risk management plan consistent with them.

2)      Project Charter

·         Provides various inputs such as high-level risks, project descriptions and requirements.

3)      Stakeholder Register

·         Contains all details related to the project’s stakeholders and provides an overview of their roles.

4)      Enterprise Environmental Factors

·         May include:

·   Risk attitudes

·   Thresholds

·   Tolerances that describe the degree of risk

5)      Organizational Process Assets

·         May include:

·   Risk categories

·   Common definitions of concepts and terms

·   Risk statement formats

·   Standard templates

·   Roles and responsibilities

·   Authority levels for decision making

·   Lessons learned

6)      Analytical Techniques

·         Use to define the overall risk management context of the project. This is a combination of stakeholder risk attitudes and the strategic risk exposure of a given project based on the overall project context.

·         Strategic risk scoring sheets can be used to provide high-level assessment of the risk exposure of the project based on the overall project context.

7)      Expert Judgment

·          People with specialized training and knowledge in subject area are who you should meet with.

8)      Meetings

·         Hold meetings to develop the risk management plan.

·         Other items that need to be planned:

·   Cost elements

·   Schedule activities

·   Risk contingency reserve application approaches

·   Risk management responsibilities assigned

·   General organizational templates for risk categories

·   Definitions of terms such as levels of risk, probability by type of risk, impact by type of objectives, and probability and impact matrix

9)      Risk Management Plan

·         Includes:

·   Methodology – defines the approaches, tools, and data sources that will be used to perform risk management on the project

·   Roles and Responsibilities – defines the lead, support, and risk management team members along with their responsibilities

·   Budgeting – estimates the funds needed for inclusion in the cost baseline and application of contingency and management reserves

·   Timing – defines when and how often the risk management processes will be performed throughout the project life cycle

·   Risk Categories – provides a means for grouping potential causes of risk. This can be displayed or documented using a Risk Breakdown Structure (RBS).  This is a hierarchical representation of risks according to their risk categories.

·   Definitions of risk probability and impact - This can be outlined in table format but it requires that different levels of risk probability and impacts be defined.

·   Probability and impact matrix – this is a grid for mapping the probability of each risk occurrence and its impact on project objectives if that risk occurs. They are prioritized using a look-up table or a probability and impact matrix and rated high, moderate and low.

·   Revised stakeholder’s tolerance  - tolerances may be revised in the Plan Risk Management Process

·   Reporting formats – define how the outcomes of the risk management process will be documented, analyzed, and communicated. It also describes the content and format of the risk register.

·   Tracking – documents how risk activities will be recorded for the benefit of the current project and how risk management processes will be audited

Source: PMBOK 5^th ed.