The Project Notebook

Risk Management Methodology – Part I


Last week, we covered sources of risk, so this week its only natural to start looking at a simple methodology which can be employed to evaluate these risks and promote proper risk management. This methodology weaves itself throughout all project management processes since risk should be addressed from project concept through project closure and ongoing operations.

Step 1: The first step begins with starting the risk management plan. This document is going to tell stakeholders how we are going to manage risk. Incorporating this methodology can provide most of the “meat” for this type of document.

Step 2: The real work begins with risk identification. This typically comes when much of the planning is done so the “hows” of our plan can be used to determine the sources of risk we need to look at. I usually like to get the team together to review the sources of risk for our project, brainstorm the specific risks, then have some of the local subject matter experts review the generated list.

Steps 3a and 3b: This is where the quantitative (determine the probability and impact of risks) analysis occurs. There may be some objective facts and other information to consider, brainstorming, consultation with experts, and review of historical projects necessary to make the proper judgements. The results of this step is the list of risks prioritized by probability and impact (possibly the two multiplied together to give a separate number or organized on a probability impact matrix). Note this step is also a part of project planning. You’ll see why when we review the next step!

We’ll continue a description of the process next week and take a look at a diagram of the process.

Please note I have found a new file hosting service and have begun translating the links to point to the new service. If at any time you are unable to see an image or link, please email me at sdcapmp@aol.com and I will be glad to return the file via email.

Thanks for reading! Don’t forget, a PMP Exam Prep resource will be given away this Fall, so come back often to find out how you can qualify.

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© 2010-2012 Ray W. Frohnhoefer, MBA, PMP, CCP