During this step, you assess your highest ranked risks and set out a plan to treat or modify these risks to achieve acceptable risk levels. This is also referred to as Risk Response Planning. These risk rankings are also added to your Project Risk Register. Depending upon the risk appetite of the organization and the risk tolerance of the stakeholders for the specific project, you make decisions about whether the risk is acceptable or whether it is serious enough to warrant treatment. This risk score is a quantitative measure to prioritize the risks that require attention and can be plotted on a two-dimensional scale to visually indicate the priority. You evaluate or rank the risk by determining the risk exposure, which is the product of likelihood and consequence. This information is also input into your Project Risk Register. You develop an understanding of the nature of the risk and its potential to affect project goals and objectives. Frequently, qualitative risk assessment based on risk scales, such as critical, high, medium, or low, are used for the likelihood or the impact. Once risks are identified, you determine the likelihood and impact of each risk. During this step, you start to prepare your Project Risk Register. The risks identified can impact other projects as well as the programs and portfolios as well. There are many techniques to find the project and product risks. You and your team, in consultation with other business stakeholders, uncover, recognize and describe risks that might affect your project or its outcomes. These five phases are cyclical and iterative. This is the opposite of Risk Avoidance strategy.Ī standard risk management workflow typically has the following five phases. Risk Exploitation - Enabling everything possible to ensure that the positive risk materializes to benefit the project or organization.Risk Enhancement - Increasing the likelihood of the positive risk’s occurrence to maximize the benefit of the opportunity.Risk Sharing - Collaborating with partnership arrangements to improve not only the likelihood of the positive risk but also ensure that the work will be completed collaboratively.Risk Acceptance - accepting risks when the expected profit outweighs the expected risk.Risk Transfer - transferring the weight of the risk away from the business via insurance, etc.Risk Mitigation - reduce the impact of risk and minimize damage.Risk Avoidance - averting risks by negating actions or processes that might exacerbate risks.However, there are universal approaches to managing risks: Without the risk management processes, the company can neither continue to deliver value to customers, shareholders and stakeholders but also sustain value to them.ĭifferent types of risk require different types of expertise and can be managed under independent silos. The risk management process proactively identifies, analyzes, and controls the risk by establishing a risk appetite, risk tolerance, risk triggers, and appropriate risk response strategies to protect both the company’s project initiatives but also the company’s operational resources through business continuity and disaster recovery initiatives. Rajagopalan, our resident Enterprise Agile Evangelist in his book on “Organized Common Sense.” The latter won’t be pleasant for your project,” says Dr. “If you don’t manage risk, risk will manage you. Their survival depends on the impact of several known and unknown uncertainties emerging from many types of risks that challenge their ability to deliver value continuously. Organizations exist to create value for their customers, shareholders, and stakeholders.
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