Define Risk Management Planning
Risk management planning refers to the procedures utilized by project managers to anticipate the risks associated with a particular decision, estimate its impacts, and define the most appropriate interventions to counter its effects. This process involves the creation of a risk management plan, which is presented as a document to the organizational employees before its implementation. Risk management planning also includes the creation of an assessment matrix that provides insight of the positive and negative impacts of utilizing a particular project application procedure. According to Chance and Brooks (2015), the utilization of risk management plans within organizations augments the chances of policy implementation success by up to 60 percent. As such, risk management planning is an indispensable initiative that fosters the development of an organization by defining the possible harms and benefits of embracing a particular approach.
What are the key inputs and outputs?
Multiple inputs and outputs facilitate the success of a risk management plan. The Project Management Institute (2013) argues that managers need to define the input and output parameters effectively to enhance the effectiveness of their risk management approaches. The activity cost estimate is a crucial input to a risk management plan. It defines the resources needed to facilitate the implementation of the threat neutralization strategy. Additionally, the activity duration estimates are influential inputs that enable the project manager to approximate the time necessary to enact the provisions of a proposal. The schedule management plan is another crucial input that makes enables the project developers to create an implementation approach for the enactment of the proposed alternative. According to the PMI Standards Committee (2009), the communication management plan is a resourceful input, which enhances the success possibilities of a project implementation alternative by making the training and familiarization process lesser challenging. Finally, the scope baseline is an indispensable input that defines the operational boundaries of a project delivery choice.
Similarly, a risk management plan has a variety of output parameters. Sandgrove (2015) argues that the results generated from a threat neutralization strategy are categorized as the outputs of the system. For instance, the risk register is a key output in the management plan. This section of the document outlines the anticipated threats posed to the success of a project plan. Additionally, the risk register updates are also essential outputs in a threat neutralization strategy. The updates involve the changes made to the project plan during the implementation process. According to the title, Risk management: concepts and guidance, project managers need to make the operations of their projects flexible to accommodate the updating of their proposals (Pritchard and PMP, 2014). Once changes are made to an already defined system, the output is referred to as risk register updates. The risk-related contract decisions are also outputs in the operation of a threat neutralization plan. This provision is widely accredited to the fact that the risk plan is implemented according to a spelled out procedure. In this case, when the implementation team follows the pre-defined guidelines, the results of their decisions are outputs. Finally, change requests are influential outputs to the stability and monitoring of a control risk management. They aid in the development of appropriate measures to accommodate the changes made during the implementation procedures.
What are some of the tools used in risk planning?
The risk planning process requires the utilization of appropriate methodologies to define the scope of the project and anticipate the threats posed by the initiatives taken. According to Lam (2014), improper use of risk planning tools significantly affects the success chances of the selected provisions and could result in eventual failure. The checklist analysis is an indispensable tool in the creation of a risk management plan. It enables the project manager to ascertain the availability of the requirements needed to facilitate the completion of a selected proposal. The checklist analysis is also resourceful in determining the outcome of the anticipated results during the creation of the program. Additionally, diagramming techniques are influential tools in the development of a risk plan. They give a provision for creating the layout of the proposal and defining its operational boundaries before specifying the project requirements. Consequently, this tool enhances the success chances of a risk plan by ensuring its relevance to the problems determined before the establishment of the proposal. Moreover, it enables the project manager to define the scope of the risk management plan in accordance with the organization’s goals.
The SWOT analysis is an equally resourceful tool in the creation of a risk management plan. It enables the project manager and the development team to define the strengths of the project before embarking on the implementation process. Through this provision, the threat neutralization team can weigh the constructive impacts of their project as opposed to the returns on the investment. Additionally, the SWOT analysis makes it lesser challenging for the project development team to specify the weaknesses of their policy implementation procedure. Chance and Brooks (2015) argue that improper anticipation of the challenges of a project proposal can lead to the mediocre performance of an organization or its eventual failure. As such, it is imperative for the project development team to define the weaknesses of their approach since lack thereof compromises the stability of a proposal. This tool enables the project management team to outline the opportunities leading to the enactment of their procedure. Consequently, it enhances the productivity of a project as the development process can only occur when an opportunity presents itself. Finally, the SWOT analysis tool outlines the threats posed by the provisions of a risk plan. As such, it makes it easier to amend its operability, making it more efficient.
In my career experience, I have witnessed the relevance of utilizing a SWOT analysis in evaluating the effectiveness of a policy. In most cases, the parameters defined before the establishments of policies are assessed against the goals of the company. The strengths and weaknesses of the alternative are weighed against the investment returns to determine the effectiveness of the policies. Additionally, I have noted project managers utilizing checklist analysis to determine the relevance of a risk management plan. Consequently, these tools are relevant to the development of a risk management plan.
Who should be involved in the risk planning process?
The risk management team is comprised of multiple parties. According to the Project Management Institute (2013), the successful anticipation of the challenges likely to be experienced in an organization and the development of appropriate solutions requires the contribution of multiple personnel. For instance, the risk identification process gives a provision for the involvement of the project manager. He is the overall authority in the development of the implementation procedures within the organization. A team of supervisors and consultants are also involved in the risk planning process. Their role is offering insight on the most appropriate measures to implement to avoid risks and mitigate them. They provide awareness on the measures that need to be taken to neutralize the challenges that would be encountered within the organization. Financial analysts are also influential personnel in the development of a risk management plan. They evaluate the feasibility of utilizing specific intervention approaches and compare the results with the anticipated returns of the company. This team ensures that the project manager uses the most proficient procedures in defining the operability of the risk management plan. Finally, the human resource manager’s role is essential in the implementation process. He ensures that the employees are trained on the operation of the new project, and their roles are defined appropriately to facilitate the success of the policies.
During my career experience, I appreciated the indispensible role of the project manager in facilitating the implementation of risk management plan. He is the overall leader and assesses the effectiveness of utilizing a particular approach over another. Additionally, I had internalized the role of financial analysts in determining the feasibility of specific risk management plan initiatives. Consequently, the abovementioned personnel facilitate the development and implementation of a risk management plan to organizations.
Describe the key pieces of a risk management plan
The success of a risk management plan can best be achieved through proper implementation procedures. According to Sandgrove (2015), outlining the implementation method heightens the success levels of a risk management plan. With this in mind, it is worth appreciating the six pieces that describe the influential methods of implementing a risk management plan. For starters, the definition of the processes to be initiated in the project is a crucial step in the development of a risk management plan. Additionally, the development team needs to outline the project areas and the operational boundaries to oversee the smooth enactment of the plan provisions. The development of an analysis matrix follows as the third piece of an efficient risk management plan. Lack thereof compromises the success levels of a policy implementation procedure. Optimization of the system is the fourth influential part in the development of an appropriate risk management process. The crucial fifth part is the definition of the tools and techniques that would facilitate the success of a policy implementation procedure. This provision makes it lesser challenging for the development team to anticipate the performance of the project before its implementation. Finally, outlining of the inputs and outputs is the final piece that facilitates the influential development of a risk management plan.
What critical things should be defined in a risk management plan?
In addition to the above-explained procedure, it is imperative that the project administration team describes the key fields of the risk management plan. Determining the risks and consequences of implementing a particular method to the project is an influential initiative to the development process. Lam (2014) argues that brainstorming of the probable risks before implementing a project is an influential move throughout the project lifecycle. Consequently, defining the risks of implementing certain initiatives enhances the overall project efficiency. The risk management team should determine the success and failure probabilities that would most likely be embraced through all the alternatives that can be taken during the project implementation phase. Through this provision, the organization welcomes a greater chance of succeeding in the overall procedures. The project manager and the development team should define the impacts of the risk management plan should it be implemented. This approach makes it easier for the financial analysts to evaluate it effectiveness. Definition of priorities needs to be done during the development of the plan. This method makes it possible to dedicate more research time to the most prioritized sectors. Finally, the research team should define the mitigation response to eliminate the possibilities of suffering detrimental risks.
In a large section of my career experiences, I acknowledged the importance of doing research before settling on a specific alternative. For instance, I have appreciated the indispensable role of a discussion panel necessary for brainstorming and discussion of project ideas. As such, my personal work experience certifies the credibility of the above-provided information.
Define risk tolerance, its impacts on stakeholders and how it should be handled
Risk tolerance is the measure of the degree to which an investor is willing to accept risks in place of better returns. The complete guide to business risk management reports that successful risk management plans need to include risk tolerance to enhance its success possibilities (Sandgrove, 2015). Lack thereof leads organizations into making impulsive financial decisions to avoid losses, and this has a long-term effect on the welfare of their securities. The impact of the utilization of this provision to the stakeholders, customers, and project managers is immense as it ensures proper decisions are made regardless of the market performance. For starters, the poor performance of a risk management procedure can be overcome through greater risk tolerance, if the customers and shareholders are willing to maintain higher levels of risk tolerance in their belief of the organization’s recovery, increased productivity will be embraced. Risk tolerance should be captured in the risk management plan by giving a failure provision to a certain degree before seizing its operation.
References
Chance, D., & Brooks, R. (2015). Introduction to derivatives and risk management. Cengage Learning.
Lam, J. (2014). Enterprise risk management: from incentives to controls. John Wiley & Sons.
PMI Standards Committee. (2009). Practice standard for project risk management (2nd Ed.). Newtown Square, Pa.: Project Management Institute.
Pritchard, C. L., & PMP, P. R. (2014). Risk management: concepts and guidance. CRC Press.
Project Management Institute. (2013). A Guide to the project management body of knowledge (5th Ed.). Upper Darby, PA: Project Management Institute.
Sadgrove, M. K. (2015). The complete guide to business risk management. Ashgate Publishing, Ltd.
