Learn how to develop a risk management plan by assessing risks and choosing risk responses.
- [Voiceover] A Risk Management Plan helps you prepare for dealing with the risks you might encounter during the project. Once you have a Risk Management Plan in place, you've already decided how to respond when risks become reality. So, you're ready to make informed and prudent decisions. After you identify risks, the next step in developing a Risk Management Plan is to analyze each risk you've identified.
Analyzing risks boils down to asking two questions. First, ask, what is the likelihood that the risk will occur? For example, state of the art technology is renowned for being problematic, so technology risks are likely. The second question is, how big is the impact if it does occur? If the new technology isn't dependable or doesn't work at all, the impact on a conference at the conference center is significant.
Ask the same people who helped you identify risks to assess their probability and impact. After you analyze all the risks, the next step is to prioritize the risks and decide which ones you're going to manage. For example, if you use low, medium, and high, you might decide to manage risks if their probability or impact are medium or high. The next step in a Risk Management Plan is to decide how you will respond to each risk in your plan.
Here are some risk responses you can use. The easiest option is to simply accept the consequences. That's fine for risks with low probability and impact. Another option for less significant risks is to use contingency funds to address the issue. Avoiding risk is another approach. For instance, changing the project scope to remove the risky part of the project, or leaving plenty of time in the schedule to replace technology that doesn't work.
Mitigating risk means taking steps to reduce the consequences. For example, by building a prototype, you'll know whether the technology works early on. Transferring risk simply means handing off the risk to someone else, like you do when you purchase insurance. When you choose responses, make sure they aren't overkill. If the impact of a schedule delay is a $500 late fee, it doesn't make sense to spend $5000 to prevent the delay.
The final step in a Risk Management Plan is defining how to monitor risks and measure responses. You create a risk log with information about each risk you plan to manage. This log summarizes your plan for each risk, a description of the risk, the events or circumstances that trigger the risk, the response you've chosen, who will monitor the risk, and the result you expect from the response if you have to use it.
You create a Risk Management Plan during planning. That way, you'll be ready to implement that plan once the project is underway. To learn more about managing risks, check out Bob McGannon's course, Managing Project Risk.
Bonnie Biafore has always been fascinated by how things work and how to make things work better. In this course, she explains the fundamentals of project management, from defining the problem, establishing project goals and objectives, and building a project plan to managing team resources, meeting deadlines, and closing the project. Along the way, she provides tips for reporting on project performance, keeping a project on track, and gaining customer acceptance.
Lynda.com is a PMI Registered Education Provider. This course qualifies for professional development units (PDUs). To view the activity and PDU details for this course, click here.
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- Defining the components of a project
- What it takes to be a project manager
- Using project management software like Microsoft Project
- Managing project scope, budget, and schedule
- Managing project resources, including people
- Managing project risk
- Initiating a project
- Identifying and managing stakeholders
- Identifying requirements and deliverables
- Developing a project plan
- Building a project schedule
- Assigning resources to tasks
- Understanding the critical path
- Running the project
- Managing teams
- Monitoring performance
- Closing a project
Skill Level Beginner
Project Management Foundations: Communicationwith Doug Rose1h 47m Appropriate for all
Project Management Foundations: Budgetswith Bob McGannon1h 11m Appropriate for all
1. Getting to Know Project Management
2. Exploring Project Management Knowledge Areas
3. First Things First
How to develop requirements4m 19s
4. Developing a Project Plan
5. Building a Project Schedule
6. While You Run the Project
7. Working with Teams
8. Monitoring and Controlling Progress and Performance
9. Closing a Project
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