Risk Management

Once we have determined the WBS, Network Diagram, and Critical Path, we are in a position to further define our risk.

Risk Management is one of the most critical success factor.

If you actively manage your risk, you can save money for the company, and you have a greater chance of finishing your project on time, within budget and with satisfied customers and other stakeholders.

The process is a simple step-by-step check-list:

1. Identify the risks

2. Check probability

3. Evaluate the impact

4. Document

5. For medium and large risks, define action plan (with data)

6. To define high risk, Disaster

7. Action Management

8. Check results

9. Repeat weekly project meetings

Make sure you repeat the process every week, because changing the risk, and if you ignore them, they often change very quickly in trouble.

To identify your risks, you can use several methods:

• Review previous projects

• Interview experts

• Study the flow charts of existing or future processes

• Create a 'What-If Analysis "

• Negative Brainstorming

• SWOT analysis

• Cause and Effect Diagram

When you and your team have defined your risk, the next step is to analyze each one.

Probability of occurrence 1 - Low

2 - Medium

3 - High

Impact on my project 1 - Low

2 - Medium

3 - High

Then you can risk matrix below, to illustrate their relative positions.

If you have a lot of danger, you can add a third dimension: Time

This means that how quickly the danger may occur:

1 - Long Term

2 - Medium Term

3 - Short Term

4 - Critical

Just when you begin an assessment of the risks to decide what to do to avoid the truth (or problems).

We recommend placing the risk in a Risk Register - an Excel sheet (with a description of their impact, their probability and impact number, and the multiplication of the two - the X-factor - allowing you risk by fixing their importance).

You can then code the risk of color: red, yellow and green.

• The to be solved at high risk (RED), transferred or mitigated

• It must be resolved or worked out an emergency plan with a medium risk (yellow)

• Who should be left with a low risk (GREEN) to solve the team

Your goal then take the necessary steps to carry out some yellow and green risk action.

It may not be possible to do all actions for each risk. It is therefore important to analyze the risks and decide what to do.

Risk Strategies 

Transfer :Shift responsibility of the third party (ie insurance or suppliers)

Reduce :soften probability and / or impact - creating Mitigation Plan and Reserve Plan

Accept :Accept and create contingency reserves

It is also important to add the action, the expiration date and the person responsible for your Risk Register.