Risk Management Plan: Identifying Risks And Consequences (Essay Sample)

Risk management
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Summary
Risk management processes
Occurrences that are likely to emerge and bring about positive or negative impressions on projects are risks. (Risk Management Plan). Risk management, on the other hand, is examining the probability of the occurrence of risk and then coming up with ways of controlling them. (Government, 2018). Through risk management, the managers of a project are able to anticipate and come up with a notion of dealing with these risks. The aim of the managers is to ensure that any negative impression is dealt with and the positive ones are utilized efficiently. In risk management, the risk is first recognized, examined and the ways of controlling it are evaluated. Legal papers have to be drawn which recognizes risks at the early age and also at the mature stage which is useful to the managers. The legal paper which is drawn by the managers to control the risk occurrence is the risk management plan. The plan involves recognizing the risk, finding its probability, risk triggers, which risk being administered to first, and how these risks respond (Risk Management Plan). There are several procedures used in managing risks.
Identifying risks and consequences
This is the very first step the stakeholders should put into consideration. In different projects, the nature of the risk varies and changes throughout the process. Risks identified at the early age give confidence to the project since this decrease the degree of risk. Identifying risk helps an organization foresee major risks that might cause a great impact on the project. Studying each and every risk independently can be tiresome. It is therefore advisable to identify risks which appear to be crucial and give them the first concern (Risk Management Plan, 2002). According to risk management plan, some risks can be discovered immediately when the project starts while others are discovered as the project continues. These risks can either be internal or external. Internal risks can be controlled by the organization while external risks are beyond the control of the organization (Goh et al.,2013). In identifying risks, various persons are allocated in different areas to provide information to the manager. The team member should be conscious of the risks that are likely to emerge during the project. This team identifies risks that have the probability of affecting their project and list down their nature. Using the information from the team members, the manager formulates a risk register. Adjustment of the risk register occurs when the causes of the risks change (Risk Management Plan,).
Firstly, one must have a legal paper written and drawn by managers to control the risk. Secondly, in order to identify a risk, the managers must understand the flow of the plan from the beginning to the end so as to recognize the risks that may interfere with the project. They also have to understand different types of risks which comprise of those risks that result from poor technology. Poor management of resources is another type of risk. This can result when the managers are unable to utilize the available resources for optimum output. Additionally, both the internal and external environments of the organization should be studied closely. Considering past stored data of the organization may be used as an input in identifying risk. (Project Management, 2002).
Reviewing information from past projects, plans and books is one of the tools used to recognize the risk. This literature provides useful information concerning the project. Secondly, data collection is a powerful tool for risk identification. Depending on the size of the organization, a proper method is chosen to collect information. Questionnaires may be used to collect data from colleagues. Since the sources of the information are kept anonymous, there may be little or no bias on the information. Face to face interviews may be used as an alternative to questionnaires. However, this method may not give very accurate results due to bias. Another risk identification technique is the analysis of past organizational data. Some organizations store data files while others utilize cloud storage. Documentation of past projects may be a vital source of information to aid in the process of risk identification. Additionally, the general opinion of members may be the key to identifying the risks. However, these opinions have not been practically proven to be true, rather they are wild guesses. Pictorial representation of data may be used to identify factors that bring about the risk. It is vital to understand the various components that make up the organization and how they are linked to each other. This can be achieved through the above mentioned pictorial representations. Therefore, having known these, it becomes easier to identify risk. (Project Management, 2002)
The output from risk identification
After conducting the risk identification process, outputs from the study should be can be dealt with independently. Firstly, one of the outcomes would be the risk itself. Conditions that pose uncertainty are termed as risks as we are unable to predict the outcome of an occurrence. In the event of a risk, an organization may either get positive or negative results. Secondly, another output from the risk identification process may be signs of an impending risk activity that may lead to unpredictable results. A risk may have already have occurred without the consent of the manager. Therefore, having identified these outputs, it will be easier to analyze the identified risks. Finally, from the process, we can also determine the activities that lead to the development of risks which may include poor resource management and failure to complete all the modules of a project. This may be due to inadequate data available for analysis. (Project Management, 2002)
Analyzing and evaluating risk
This is the second stage that the stakeholders should put into consideration. This stage helps the team to know the likelihood of the occurrence of risk and the trigger that it will cause. Lack of appropriate raw facts can result in poor results. (Dziadosz et al., 2015). Analyzing in accordance with the trigger one must incorporate things like the cost. This should be included in the document, even if it does not have a direct impact on the project. Where the output is seen as if it will not be completed as it was foreseen also this should be included in the document (Risk Management). There are basically two ways of analyzing risk; that is, qualitative and quantitative. (Project Management, 2002)
Quantitative analysis
The probability of the recognized risks is examined through a predefined process. Some risks have a greater impact on a project while others have less impact. The risks with a greater impact are dealt with first, followed by those with lesser implications. This may determine whether further research should be done on the risk. Analysis of available useful information helps the organization to analyze risks. This information may be available locally in the offices' files or the Internet. The likelihood of occurrence and the outcomes of these risks are investigated by using this method. It's a method which needs to be implemented throughout the project. (Project Management, 2002)
Inputs to Qualitative risk analysis
After identifying the underlying risks, there is a need to analyze them. Firstly, the use of a legal paper drawn by managers to control the risk should be implemented. This will particularly aid in maintaining policies that control the prevalence of risks. The risks discovered together with their implications for the project may be another input to the risk analysis process. During the early stages of the project, there are fewer risks meaning as the project continues to develop, other risks might emerge. The managers are able to know the likelihood of a risk occurring for projects that have been done several times than for the projects that are starting from scratch. The identified risks should be well researched on and understood by all stakeholders of the project as it is being executed. (Project Management, 2002)
Tools and Techniques
The possibility of the occurrence of a risk is not certain. If it occurs, it causes a certain degree of impact which can be termed in levels. (Project Management, 2002). Therefore, the use of probability proves to be very effective. Mapping the risks to their respective degrees of impact could be another means. This will particularly aid in identifying the risks and the respective objective of the project that it impacts on. A project is usually divided into small manageable portions which have their own output, which are later merged to form the final project solution. It is therefore difficult to view the project as a whole when identifying risks. (Project Management, 2002).
Outputs from Qualitative risk analysis
After a successive risk analysis, the project behavior could be compared and contrasted with other previous projects behavior in the occurrence of risks. Projects may vary in size, scope and requirements, therefore, having different objectives. Objectives may be altered in the event of a risk. It is therefore prudent to compare the successes or failures of projects with each other and determine the main risks in each of them. With this information, a manager will be able to come up with alternatives to reduce risk. Additionally, Stakeholders are able to level risks, according to the urgency of being attended to. Those that are crucial are ranked high while the rest follows (Dumbarav, 2013). A list of high priority risks are developed. Since a project is timely, dealing with the major risks would be prudent. Finally, after a series of qualitative risk analysis on projects, it is possible to draw a bottom line. (Project Management, 2002)
Quantitative Risk Analys...