Risk planning is a critical and often overlooked process on every project. Allowing for the proper amount of risk planning in your project schedule can mean the difference between project success and project failure when those potential risks become real issues.
Risks come about for many reasons. Some are internal to the project, and some are external. The project environment, the planning process, the project management process, inadequate resources, and so on can all contribute to risk. Some risks you’ll know about in advance and plan for during this process; others will occur unannounced during the project. The Risk Management Planning process determines how you’ll plan for risks on your project. Risks associated with the project generally concern the project objectives, which in turn impact time, costs, or quality, or any combination of the three. The purpose of Risk Management Planning is to create a risk management plan, which describes how you will define, monitor, and control risks throughout the project. The risk management plan becomes part of the project plan at the conclusion of the Planning process.
The Risk Management Plan
The risk management plan is the only output of this process. The risk management plan details how risk management processes will be implemented, monitored, and controlled throughout the life of the project. It details how you will manage risks but does not attempt to define responses to individual risks. In a separate risk response plan, individual risk responses can be discussed. The risk management plan might include a description of the methodology you’ll use to perform risk management. Roles and responsibilities are included in the document and describe the team of people who are responsible for managing the identified risks and their responses. These teams are not always the project team – they can be individuals with ties to the project but not actively part of the project delivery team or customer team. Risk analysis should be unbiased, which may not be possible when project team members are involved.
The budget for risk management is included in the plan as well. Qualitative and quantitative scoring interpretation methods are described in the plan including thresholds for risk.
The plan also describes the timing of risk management processes and the criteria that establish risk thresholds. And the plan also describes how the risk management information will be maintained and updated, reported to project participants, and documented for future reference.
It’s very important to spend time developing this plan as the risk management plan is an input to every other risk-planning process. Be sure to allow for enough time in your schedule and show this using a tool such a Seavus’ Project Viewer. It is also an input to the Risk Monitoring and Control process, a later part of the entire risk management process.