Lesson 1: Risk Management in Projects | CPD
Risk Identification
Risk identification is the process of determining and documenting risks that could affect the project. It's a collaborative effort involving project team members, stakeholders, and sometimes external experts.
- Risk Probability: Estimating the likelihood of a risk occurring (e.g., high, medium, low).
- Risk Impact: Evaluating the potential effect of a risk on project objectives (e.g., critical, moderate, low).
- Probability and Impact Matrix: A visual tool for plotting risks based on their probability and impact scores.
- Expected Monetary Value (EMV): Calculating the potential financial impact of risks.
- Decision Tree Analysis: Modelling complex risk scenarios and their potential outcomes.
- Monte Carlo Simulation: Using statistical modelling to predict a range of project outcomes considering multiple risk variables.
Avoid:
Eliminating the threat by changing the project plan or approach.
Transfer:
Shifting the impact of the risk to a third party (e.g., insurance).
Mitigate:
Reducing the probability and/or impact of the risk.
Accept:
Acknowledging the risk but taking no proactive action.
Continuous risk monitoring involves regular risk review meetings, updating the risk register, and monitoring risk triggers to ensure all potential issues are tracked and addressed promptly.
Risk reassessment includes evaluating the effectiveness of risk responses, identifying new risks as the project progresses, and adjusting risk priorities based on project changes to ensure the risk management approach remains relevant.
Risk reporting focuses on communicating the risk status to stakeholders, incorporating risk information in project status reports, and escalating significant risks to appropriate management levels for timely intervention.
Adapting risk strategies involves modifying risk responses if they prove ineffective, implementing secondary plans if primary mitigation strategies fail, and reallocating resources based on changing risk priorities to maintain project stability.
Learning from risk management is about documenting lessons learned from risk events and updating organisational process assets for future projects to improve overall risk management practices.