The RMP describes how risk management will be structured and performed on the project. It becomes a subset of the project management plan.
The RMP comprises four main sections of risk assessment:
- Risk Identification
- Risk Analysis (Qualitative & Quantitative)
- Risk Response Strategy
- Risk Monitoring and Control
Risk Identification determines which risk might affect the project and documents their characteristics. Risk identification is an iterative process because new risks may become known as the project progresses through its life.
The frequency of iterations and who participates in each cycle will vary from case to case. The project team is involved in this process to develop and maintain a sense of ownership of, and responsibility for, risks and associated risk response strategy.
The Risk Identification process leads to one of the two main segments of the Risk Analysis section.
The Risk Identification section includes:
- Priority, this is the ranking of the risks by priority and occurs subsequent to the risk analysis.
- Risk Status defines the status of the risk event. The user has three status scenarios to choose from such as
a. Active when the risk is being actively monitored and controlled
b. Dormant when the risk is low priority but may become high priority in the future
c.Retired when the risk is demised for any reason. - Risk Identification number is a unique number assigned to the risk for tracking purpose.
- Date Identified and Project Phase represents the date when the risk was first identified and the phase of the project when the risk was first identified. Valid entries for the project phase are: Scoping, Design/PS&E, and Construction.
- Risk Event (threat/opportunity), present a summary definition of the risk. It clarifies the risk outcome: · If the risk outcome provides a negative impact to the project (higher cost and/or longer duration) the risk is named a Threat, which should be minimized. · If the risk outcome provides a positive impact to the project (lower cost and/or shorter duration) the risk is named an Opportunity, which should be maximized.
- SMART Column provides a detailed description of the risk. Including information on the risk that is Specific, Measurable, Attributable, Relevant and Time-bound. It describes the consequences of the risk to scope, schedule, budget or quality.
- Risk Trigger presents symptoms and warning signs that indicate whether each risk is likely to occur. This information is used the determine when to implement the Risk Response Strategies.
- Impact Area identifies the primary impact on the scope, schedule, budget, or quality.
- Affected MDL/WBS Level 2 process identifies which WBS element(s) will be modified as part of the response strategy.
Qualitative Risk Analysis includes methods for prioritizing the identified risks for further action, such as Quantitative Risk Analysis (See A Policy for Cost Risk Assessment) or Risk Response Planning.
Qualitative Risk Analysis assesses the priority of risks by using their probability of occurring, corresponding impact on project objectives if the risks do occur, as well as other factors such as the time frame and risk tolerance of the project constraints of scope, schedule, budget, and quality.
Time-critical risk-related actions may magnify the importance of a risk. Qualitative Risk Analysis is a method for establishing priorities for Risk Response Planning and may lead to Quantitative Risk Analysis when required. See the Project Managment Online Guide for more information about quantitative risk analysis.
Risk Response Planning is the process of developing options and determining actions to be taken to enhance opportunities and reduce threats to the objectives of the project. Planned risk responses must be appropriate to the significance of the risk, cost-effective, timely, realistic within the project context, agreed upon by all parties involved, and owned by a responsible person.
Risk Monitoring and Control tracks identified risks, monitors residual risks, and identifies new risks, ensuring the execution of risk plans, and evaluating their effectiveness in reducing risk. Risk Monitoring and Control is an ongoing process for the life of the project.
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The list of project risks changes as the project matures, new risks develop, or anticipated risks disappear. Periodic project risk reviews repeat the tasks of identification, analysis, and response strategies. The project manager regularly schedules project risk reviews and ensures that project risk is an agenda item at all Project Team meetings. Risk ratings and prioritization commonly change during the project lifecycle.
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