The need for identifying issues and risks, and managing them on an ongoing basis is a crucial part of any project. This is done through ad hoc informal communication and also formally as part of the weekly status reports and weekly status meetings.
As with the Project Communications Plan, whether or not your project or your customer requires the Risk Management Plan to be an actual deliverable, you should still create the plan and orchestrate your risk mitigation activities accordingly. In the article that follows we provide a brief overview on how to create the risk management plan, plus you can download a free template that can help you start drafting your own version.
The Importance of the Risk Management Plan
Merely said a risk management plan is a project document that is prepared to predict risks, estimate impacts, and define responses to risks.
However, we also include the main definition of risk management in our document. This is a high-level description of what the document covers. For the purpose of Risk Management, we usually just put the definition to show understanding - something like this:
'Risk management is the systematic process of identifying, analyzing, and responding to project risk. It includes maximizing the probability and consequences of positive events and minimizing the probability and consequences of adverse events to project objectives.'
By creating this plan at the beginning of the project and having the customer signoff on it, you will have done three very important things to set the right tone early on:
- Created a sense of importance and urgency around risk management
- Let your team know that this is important and will be tracked
- Let your customer know that you're on the ball as the Project Manager
The Content
The high-level items that should be covered in the Risk Management Plan are:
- Introduction
- Risk Management Planning
- Risk Identification
- Risk Analysis and Response Planning
- Risk Monitoring and Control
- Comments section
- Review/Approval
The two most important sections in this document are risk analysis and response planning and risk monitoring and control. As you can see, the risk analysis and response planning section consists of two parts. The risk analysis is the process of assessing the impact and likelihood of the identified risks. In this section, you need to identify how the risks will be analyzed and prioritized. Risk analysis requires that the probability and consequences of the risks are being evaluated using established analysis methods and processes. Those methods and processes need to be defined and described in details as much as possible. While the risk response planning is the process of developing options and determining actions to enhance opportunities and reduce threats to the project's objectives. In other words, identifying ways to mitigate the identified risks as much as possible should they actually occur. The effectiveness of response planning can actually directly determine whether certain risks increase or decrease for the duration of the project. Risk response planning must be appropriate to the severity of the risk, cost effective in meeting the challenge, timely to be successful, realistic within the project context, agreed upon by all parties involved, and owned by an assigned person.
Moreover, risk monitoring and control is the process of keeping track of the identified risks, monitoring residual risks and identifying new risks, ensuring the execution of the risk plans and evaluating their effectiveness in reducing risk. Risk monitoring and control is an ongoing process during the life of the project.
Things to Consider
One of the things to have on mind is to describe in detail what is involved in planning for risk management for the project. Also, describe how meetings are going to take place to brainstorm on risk management and prioritizing the risks that are identified for ongoing tracking. You can put this in the introduction section.
Moreover, you can draft an extra register document that will be an accompanied part of the risk monitoring and control section. This document should identify how the risks will be tracked on an ongoing basis. This document may be combined with an issues list. These documents are recommending for large projects.
Finally, it is likely not necessary that the Risk Management Plan be a formal deliverable on the project. But it is important that this plan is something that both the delivery team Project Manager and the customer-side project sponsor signoff formally and communicate the importance to team members on both sides of the project. Again, establishing this process and its importance at the beginning of the project will help ensure that everyone is considering and looking out for risk items throughout the engagement.
Final Thoughts
It looks intimidating to create the risk management plan. But be sure that this document can forecast some important issues that solving them on time may save the project. Download our Risk Management Plan completely free of charge, and start drafting your own plan.
And, if you still got any questions or certain points of view about the risk management plan, post them in the comments section at the end. We are eager to know your opinion.