Chapter 5 Ideas

Chapter 5

1.  All project management is risk management, which is the primary job of a PM.  The techniques used in project management are essentially utilized to mitigate risks throughout the project.  Thus, however in project management there is a specific risk management process that identifies, manages, and projects the outcomes of risk for the project.  Each assumption represents a specific threat.  Risk management influences the project plan and changes assumptions in the project rules.  Planning has two major components: risk management and schedule and budget development.  These two mechanisms interchange first with the side of RM, where items like deliverables, development approach, responsibilities, and risk monitoring flow into the schedule & budget.  Once those attributes are declared, they each develop new risks that flow back against the project. 

2.  The framework of risk management is materialized in a process that is repeated during the project life cycle.  Risks need to be identified in the beginning phase.  These would be the known risks that potentially can arise.  Once the risks are collated they can be analyzed and prioritized according to degree.  Then a response plan can be produced; one which establishes reserve requirements on contingent and unknown risks, and another for continuous risk management.  The risk management process as mentioned in section one of my ideas, will include monitoring for new threats, report regularly, and act upon risks taking place only to update the entire plan afterwards.  As my project goes through its phases, it will be necessary for myself to be informed every step of the way for contingency management.

3.  Now identifying risks should involve the team.  A great way to assess the risk factors for the project is to involve all of the stakeholders.  This is where all of their prior expertise (or lack of it) can come into action.  By brainstorming everyone’s ideas can surface in the open and be documented for further analysis. After the list has been created order them all by probability and magnitude.  Capture the easy answers but don’t fall out of focus on identifying the risk and avoid response development.  A more formal way to discover risks for the project is to interview each stakeholder.  Make sure to include all perspectives and embrace the mind-set of Murphy’s Law. 

4.  The strategies for dealing with risk are incorporated in the response plan development.  The most effective way to reduce risk is to reduce the impact, the probability, or both if possible.  There are five categories of classic risk response strategies and they are: accepting, contingency plans, transferring, and mitigating the risk.  When dealing with risk factors always take into consideration the business impact.  If you would like a high ROI, then more risk will have to be accepted.  In the same respect risk avoidance will lead to lower returns.  In my project, ROI is not a direct factor of concern.  A high amount of risk will directly impact my budget requirements approved for the project.