?Define risk and give a basic list of risk management steps.

Question

What will be an ideal response?

Answer 1

A risk is an event that could affect the project negatively. Risk management is the process of identifying, analyzing, anticipating, and monitoring risks to minimize their impact on a project.


The first step in risk management is to develop a specific plan. Although project management experts differ with regard to the number of steps or phases, a basic list would include the following tasks:
• Develop a risk management plan. A risk managementplan includes a review of the project's scope, stakeholders, budget, schedule, and any other internal or external factors that might affect the project. The plan should define project roles and responsibilities, risk management methods and procedures, categories of risks, and contingency plans.

• Identify the risks.Risk identification lists each risk and assesses the likelihood that it could affect the project. The details would depend on the specific project, but most lists would include a means of identification, and a brief description of the risk, what might cause it to occur, who would be responsible for responding, and the potential impact of the risk.

• Analyze the risks. This typically is a two-step process: Qualitative risk analysis and quantitative risk analysis. Qualitative risk analysis evaluates each risk by estimating the probability that it will occur and the degree of impact. Project managers can use a formula to weigh risk and impact values, or they can display the results in a two-axis grid. For example, a Microsoft Excel XY chart can be used to display the matrix. In the chart, notice the various combinations of risk and impact ratings for the five sample values. This tool can help a project manager focus on the most critical areas, where risk probability and potential impact are high. The purpose of quantitative risk analysis is to understand the actual impact in terms of dollars, time, project scope, or quality. Quantitative risk analysis can involve a modeling process called what-if analysis, which allows a project manager to vary one or more element(s) in a model to measure the effect on other elements.

• Create a risk response plan. A risk response plan is a proactive effort to anticipate a risk and describe an action plan to deal with it. An effective risk response plan can reduce the overall impact by triggering timely and appropriate action.

• Monitor risks. This activity is ongoing throughout the risk management process. It is important to conduct a continuous tracking process that can identify new risks, notice changes in existing risks, and update any other areas of the risk management plan.