project risk management template
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Project Risk Management Template
Daniel LinmanDecember 21, 20104,418 views
A checklist of tasks to analyze, manage and control risks within a project
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The Project Risk Management Template describes the process for identifying, describing, prioritizing,responding and controlling risks to show how to increase the probability that a project will be accomplishedwith the maximum of positive events and the minimum of negative events. The main idea of this template is tohelp project managers and other concerned or interested people to draw up a plan that covers all the aspects ofrisk management. read the template to learn how to increase the impact of positive events and decrease theimpact of negative consequences.
1. Risk Management: OverviewWhat is Project Risk Management? Here’s a common definition of risk management: it’s acomplex process for making decisions on accepting known or identified risks and implementingactions to mitigate negative consequences and decrease the probability of risk occurrence.Process. It’s a series of related activities and tasks to identify, analyze and control risks and theirimpact to a given project. The risk management process is one of the key processes within projectmanagement to detect any threats and uncertainties and produce a solution for responding to risks.Benefit. There are several core benefits from managing risks:
1. Assessment of efficiency of the project management activities;2. Increased confidence in investments and strategic decisions;3. Responding to risks and uncertainties;4. Contingency planning;5. Records on the project risk management process can be used as lessoned learnt for future
projects.Importance. It’s important to carry out the project risk management process because of thefollowing:
1. the probability of success gets higher;2. the decision making process becomes more efficient;3. contingency planning allows making the project viable and feasible.
Best Practices. The successful practice of risk management in projects assumes three core steps:1. Analyzing Risks;2. Planning Responses;3. Controlling and Reporting Risks.
The given below project risk management checklist describes the steps in detail.
2. Analyzing Project Risks.Definition. Project risk analysis is a systematic activity that assumes using all available informationto determine how often a specified event may occur and what results it may bring. Risk analysisentails use of various approaches to describe and calculate risks and to assess undesired events andtheir causes and consequences to a project.Risk Identification. Identifying project risks is a process of determining and classifying anyuncertainties and threats that may affect your project. The following classification of risks is given
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to demonstrate the groups of possible uncertainties and threats that may have an impact to yourproject:
Strategic risks concern long-term strategic objectives and goals of the project. This type ofproject risks affects such areas of the project life-cycle as initial project planning, projectfinancing, technological base, company reputation, stakeholder needs, changes in thephysical environment, etc. Mitigation of strategic risks requires commitments of seniormanagement to the strategic decision making and problem solving.Operational (tactical) risks concern uncertainties that have a shot-term impact on tacticalobjectives of your project within one operational period. Usually tactical risks affect dailyoperations and activities of the project team. Mitigation of such risks requires engagement ofteam leaders and project managers in making tactical decisions.Compliance risks concern challenges associated with the need to comply the project coursewith documented statements and regulations. Compliance risks refer to strategiccharacteristics of your project, such as stakeholder expectations, customer requirements,project baseline. Uncertainties about documentary compliance are managed to ensure currentproject activities are undertaken in the way it should be.Financial risks are associated with existing financial structure of the project and with all thetransitions made to carry out project activities. Detection of financial risks involvesexamining financial operations and flows that ensure the fulfilment of project activities.Financial uncertainties are indications that denote to whether the project has seriousimplications for the viability.Knowledge risks are associated with effective exploitation and control of knowledgeresources, technologies, management methods, communication mechanisms, and protectionsystems. Project knowledge uncertainties may include abuse of intellectual property, loss ofkey project staff, technological inefficiency, system malfunction.
Risk Description. Describing project risks is a process of documenting characteristics andparameters of the risks identified. The process results in creating project risk descriptions andsetting risk priorities which are used later for risk estimating. A risk description is a table whichconsists of the following columns:
Name of riskScope of risk – qualitative description of events that cause risk, their size, number anddependenciesNature of risk – identification of risk type according to the risk classificationExpectations of stakeholders – statement of outcomes that stakeholders expect to achieveRisk treatment – a set of actions to control, monitor and report riskResponsible for risk strategy – a person or a group committed to treating and managing risks
Risk Estimation. Estimating project risks is a process of determining factors that cause projectrisks in term of quantity and quality. There are two analyses conducted during the risk estimationprocess:
Qualitative analysis allows defining reasons that create project risks in the context ofqualitative characteristic of the project. Qualitative analysis is conducted by means ofchecklists, questionnaires, interviews and brainstorming sessions. During the analysis riskassessment forms, risk register and project scope statement are used to determine impacts ofeach risk and measure the likelihood of risk occurrence.Quantitative analysis often involves activities to measure uncertainties associated with theproject schedule and budget. The analysis is focused on estimating deadlines, durations, andcost of project tasks. Quantitative analysis uses the risk register, cost management plan andschedule management plan to estimate tasks.
3. Planning ResponsesRisk Management Plan. The core idea of the plan is to help the team produce better results interms of time, cost, scope and quality. The plan is designed to ensure that:
All threats and uncertainties are identified with reference to potential consequences theyproduce and the likelihood of occurrence.
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Individual risks related to planning and allocation of project resources are assessed andunderstood.Project risk management tools and techniques are planned and implemented to address all theexisting opportunities for successful risk mitigation and responding.Cost-effectiveness is taken into account while planning for risk responses.
Response Strategies. The process of managing risks can be handled through following a certainstrategy. There’re four basic types of strategies for risk responding, such as shown below:
Risk Avoidance Strategy. This strategy is also known as Risk Removal and Risk Prevention.The strategy allows altering a project risk management plan template so that thecircumstances which may cause a risk no longer exist.Risk Mitigation Strategy. It’s also known as Risk Reduction Strategy and targeted at reducingthe probability and impact of project risks.Risk Transference Strategy. It focuses on developing a plan for moving the impact of projectrisks to a third party.Risk Deferral Strategy. It’s a set of risk management guidelines for deferring treatmentactions to a date when the risks are less likely to occur.
Project Risk Register.Definition. Project risk register is one of the major documents of the project risk managementprocess that contains information on identified risks, threats and opportunities that mayimpact qualitative and quantitative characteristics of a project. Risk register is created duringthe identification of project risks and then used throughout the whole life cycle of the projectto manage the identified risks and risk responses.Update. While planning for project risk management template strategies and developing riskresponse approaches, opportunities (any positive outcomes that may bring additional value tothe project through achieving improvement) can be identified. The risk register should beupdated once a new opportunity is identified.
4. Controlling RisksDefinition. The process of controlling and monitoring risks aims at providing assurance thatappropriate procedures for managing risks are clearly understood and strictly followed. The processallows determining whether:
Risk response strategies were successfully implemented ad met what was actually planned.All information on project risk management procedures was appropriate.Risk management knowledge was used to identify what lessons could be learnt for riskmeasurements and assessment for future projects.
Goal. It’s the primary goal of the risk control process to facilitate better change management andcontinuous improvement. The goal is usually achieved through organizing risk audits, re-assessment, technical performance measurements, reserve analysis, status meetings.Report. A project risk management template report is a summary of risks and opportunism, thestatus of responding procedures, and an indication of trends in the scope of risks. It’s an outcome ofthe risk control process that represents:
Work performance dataProject schedule progressStatus of produced project deliverables
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