If it can go wrong, it will. -Murphy’s laws
That’s not very encouraging, in fact, it’s downright discouraging.
We do the best we can as project managers to identify, assess, and manage potential projects risks, but seems that we are forever looking over our shoulders, waiting for the next shoe to drop.
Well, what can we do about it?
Risk Management Framework
The answer to that question is a strong risk management framework – a process that is repeated throughout the project lifecycle. The risk management framework consists of 4 components.
- Risk Identification
This is a systematic process that methodically looks for all the factors that threaten the project objectives. Identified threats or risks are evaluated for the potential impact and probability of occurrence. The expected value for each event is calculated and is used to rank and prioritize the risks.
- Risk Response Plan
A risk response plan is developed for each identified risk that describes in detail the specific actions that will be taken when the risk event occurs. A trigger is identified for each risk event that will initiate the response plan when the trigger exceeds the threshold criteria.
- Establish Reserves
A risk reserve fund should be established to cover the costs of the managed risks. The money set aside in this fund is typically the risk’s expected value as determined by the product of the risk’s impact and the probability of occurrence.
- Continuous Risk Management
Risk management should not be a one-time activity that only occurs during the project’s planning phase. Risk management should be a continuous activity that is regularly revisited throughout the project’s lifecycle. Consider adding Risk Management to your regular project team meeting’s agenda.
Yes, Murphy is alive and working on your project, but a strong risk management framework will reduce the negative impacts to your project.