Project Risk Management

The following table addresses the structured methods for identifying, evaluating, and responding to risks throughout the project environment.

 
Priority
Area
4
Not a significant investment; familar project tasks; low risk technologies; low impact of project failure.
3
Moderate investment; some unfamiliar tasks and technologies; medium risk impacts.
2
Significant investment; unfamiliar project tasks; new or innovative technologies.
1
Complex project with potentially volatile risk issues and exposures; uncertainites inherent in plan and technologies.
Risk Elements Analysis
Use management judgment to list expected risk areas; compare project objectives to risk items and identify manageable risks.
Document risk areas and evaluate low-medium-high risks; identify risks with significant impact.
Establish structured methodology for identifying, quantifying, and assessing all potential project risks.
Document risk identification, probability, and consequences for objectives, specifications, and stakeholder interests; employ Delphi, multi-attribute utility, and PERT analysis.
Risk Avoidance and Mitigation
Identify technologies or approaches presenting unattractive risks; plan actions to minimize risk exposure.
Assign study teams to develop risk avoidance and/or mitigation plans for excessive risk items.
Develop risk deflection strategies for all significant project risks; incorporate adaptive actions into project plans.
Conduct cost/benefit analysis to select candidates and strategies for risk deflection.
Risk Management Plan
Structure PM approach and work processes specifically to address risk areas and exploit opportunities; use modular and phased approaches to compartmentalize risk and minimize risk compounding.
Address each significant risk item and apply a specific PM or technical approach to minimize, manage, and control risk events.
Develop action steps and staffing to reduce uncertainties and control risk areas.
Document plans for risk focused management attention to respond to all risk areas; apply risk templates (or lessons learned) to project life cycle.
Risk Metrics
Identify issues to monitor using subjective or qualitative risk assessments; follow-up reporting risk issues at periodic reviews; highlight high risk areas and adverse trends.
Assign all risk areas low-medium-high assessment and update and report status and trends; use qualitative or subjective metrics if none better available.
Develop measurable indicators of risk exposure; report status and trends.
Develop metrics for risk areas, report status and trends; track impact of risk control actions on lessening risks; focus on areas not responding to corrective actions.
Version 1.2
© Copyright 1997, James R. Chapman

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