Risk management process - Revision history

Tkokotas at 12:41, 18 December 2018

2018-12-18T12:41:53Z

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			''Developed by Bjarni Jakob Gunnarsson''


	'''Risk management process (RMP)''' is a concept or a framework to manage risk both internal and external in all industries. It is a concept that has been coming popular for project managers to improve performance and increase the profit. This concept helps management teams to construct a strong and systematic approach to the whole risk analysis process. With risk process and strong project management practice the problems in a project can by decreased. Furthermore, it could also help to resolve problems that occur later on in projects.		'''Risk management process (RMP)''' is a concept or a framework to manage risk both internal and external in all industries. It is a concept that has been coming popular for project managers to improve performance and increase the profit. This concept helps management teams to construct a strong and systematic approach to the whole risk analysis process. With risk process and strong project management practice the problems in a project can by decreased. Furthermore, it could also help to resolve problems that occur later on in projects.

Bjarnijakob: /* Step 5: Risk treatment/response */

2016-09-21T19:57:49Z

Step 5: Risk treatment/response

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	=== Step 5: Risk treatment/response ===		=== Step 5: Risk treatment/response ===

	The project team for this project tried to mitigate the risk that could cause electrical shock by implementing barriers. Barriers for risk events I, II, III ~~and~~ the values for probability/likelihood and impact ~~decreased significantly~~, as can be seen in Figure 10.		The project team for this project tried to mitigate the risk that could cause electrical shock by implementing barriers. Barriers for risk events I, II, III decreased significantly the values for probability/likelihood and impact, as can be seen in Figure 10.

Bjarnijakob: /* Step 3: Risk analysis and Step 4: Risk evaluation */

2016-09-21T19:55:05Z

Step 3: Risk analysis and Step 4: Risk evaluation

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	After finding the risk value, the management team places the risk events into the risk matrix. The outcome of the risk analysis, evaluation and explanation can be seen in Figure 9 below. The event I and III are a major threat category (yellow box), with a risk value equal to 9 and therefore need urgent attention or investigation. Same goes for the event II, the event have risk value of 15 and therefore is placed in the extreme category (red box) and needs also urgent attention.		After finding the risk value, the management team places the risk events into the risk matrix. The outcome of the risk analysis, evaluation and explanation can be seen in Figure 9 below. The event I and III are in a major threat category (yellow box), with a risk value equal to 9 and therefore need urgent attention or investigation. Same goes for the event II, the event have risk value of 15 and therefore is placed in the extreme category (red box) and needs also urgent attention.

Bjarnijakob: /* Step 2: Identify the risk involved */

2016-09-21T19:53:32Z

Step 2: Identify the risk involved

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	# Lack of EMC		# Lack of EMC

	In this case Electrical shock will be the top event ~~and we broke this~~ top event into smaller risk events with risk breakdown structure.		In this case Electrical shock will be the top event. The top event is broken down into smaller risk events with risk breakdown structure.

	{\| class="wikitable" style="margin-left: auto; margin-right: auto; border: none;"		{\| class="wikitable" style="margin-left: auto; margin-right: auto; border: none;"

Bjarnijakob: /* Monitoring risk */

2016-09-21T19:49:05Z

Monitoring risk

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	== Monitoring risk ==		== Monitoring risk ==

	Risk monitoring is not part of the five step process that are in RMP concept. Risk monitoring is not a step that has to be done or be taken. Monitoring risk should be throughout the life cycle of a project and done at each step in the RMP, because that ensures new and changing risk events will be detected and manage before it occurs by implementing risk response action. To be able to monitor all risk events, meetings should be held regularly to maintain, update old and inform if there is a new threat. To identify new threat, the project manager and the team need to go through the steps that are in the process and repeat them until the project life cycle is over, because there are not many risk that remain static <ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref>.		Risk monitoring is not part of the five step process that are in RMP concept. Risk monitoring is not a step that has to be done or be taken. Monitoring risk should be throughout the life cycle of a project and done at each step in the RMP, because that ensures new and changing risk events will be detected and manage before it occurs by implementing risk response action. To be able to monitor all risk events, meetings should be held regularly to maintain, update old and inform if there is a new threat. To identify new threat the project manager and the team need to go through the steps that are in the process and repeat them until the project life cycle is over because there are not many risk that remain static <ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref>.

	= Case example =		= Case example =

Bjarnijakob: /* Monitoring risk */

2016-09-21T19:47:36Z

Monitoring risk

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	== Monitoring risk ==		== Monitoring risk ==

	Risk monitoring is not part of the five step process that are in RMP concept. Risk monitoring is not a step that has to be done or ~~take~~. Monitoring risk should be throughout the life cycle of a project and done at each step in the RMP, because that ensures new and changing risk events will be detected and manage before it occurs by implementing risk response action. To be able to monitor all risk events, meetings should be held regularly to maintain, update old and inform if there is a new threat. To identify new threat, the project manager and the team need to go through the steps that are in the process and repeat them until the project life cycle is over, because there are not many risk that remain static <ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref>.		Risk monitoring is not part of the five step process that are in RMP concept. Risk monitoring is not a step that has to be done or be taken. Monitoring risk should be throughout the life cycle of a project and done at each step in the RMP, because that ensures new and changing risk events will be detected and manage before it occurs by implementing risk response action. To be able to monitor all risk events, meetings should be held regularly to maintain, update old and inform if there is a new threat. To identify new threat, the project manager and the team need to go through the steps that are in the process and repeat them until the project life cycle is over, because there are not many risk that remain static <ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref>.

	= Case example =		= Case example =

Bjarnijakob: /* Risk treatment/response (Step 5) */

2016-09-21T19:47:07Z

Risk treatment/response (Step 5)

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	'''Acceptance/retaining risk'''		'''Acceptance/retaining risk'''

	The least strategy that ~~we would~~ use is to accept a risk event to happen, but sometimes project manager or teams need to accept the risk event can occur, because it could be that it is too expensive or too large to transfer or reduce the event. Project managers should be well aware of the risk events that could occur and sometimes they have to take conscious decision to accept the risk knowing it is very slim changes of that event occurring. When acceptance of any risk, project managers and teams are acknowledging to take on the risk when it occurs<ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref> <ref name=Projectmanagement> Larson, E. W. and Gray, C.F (2010) ''Project Management'', The Managerial Process (5th ed.).McGraw - Hill/Irwin, NY </ref>.		The least strategy that is use is to accept a risk event to happen, but sometimes project manager or teams need to accept the risk event can occur, because it could be that it is too expensive or too large to transfer or reduce the event. Project managers should be well aware of the risk events that could occur and sometimes they have to take conscious decision to accept the risk knowing it is very slim changes of that event occurring. When acceptance of any risk, project managers and teams are acknowledging to take on the risk when it occurs<ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref> <ref name=Projectmanagement> Larson, E. W. and Gray, C.F (2010) ''Project Management'', The Managerial Process (5th ed.).McGraw - Hill/Irwin, NY </ref>.

	== Monitoring risk ==		== Monitoring risk ==

Bjarnijakob: /* Risk treatment/response (Step 5) */

2016-09-21T19:43:54Z

Risk treatment/response (Step 5)

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	'''Transferring risk'''		'''Transferring risk'''

	Risk event could be in full or in part transferred. This strategy involves another stakeholder who is willing to take responsibility and the liability if the risk event happen. Transferring risk to another stakeholder is very common because in practice the aim is to ensure the risk event is in the hand of the stakeholder that is willing and is in the best position to deal with it effectively. Passing risk to another stakeholder in the value chain will always ~~cost premium~~. Therefore, management team needs to evaluate if it is more valuable to adopt the strategy to another stakeholder or keep it and try to avoid or mitigate the risk<ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref> <ref name=Projectmanagement> Larson, E. W. and Gray, C.F (2010) ''Project Management'', The Managerial Process (5th ed.).McGraw - Hill/Irwin, NY </ref>.		Risk event could be in full or in part transferred. This strategy involves another stakeholder who is willing to take responsibility and the liability if the risk event happen. Transferring risk to another stakeholder is very common because in practice the aim is to ensure the risk event is in the hand of the stakeholder that is willing and is in the best position to deal with it effectively. Passing risk to another stakeholder in the value chain will always be expensive. Therefore, management team needs to evaluate if it is more valuable to adopt the strategy to another stakeholder or keep it and try to avoid or mitigate the risk<ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref> <ref name=Projectmanagement> Larson, E. W. and Gray, C.F (2010) ''Project Management'', The Managerial Process (5th ed.).McGraw - Hill/Irwin, NY </ref>.

	'''Acceptance/retaining risk'''		'''Acceptance/retaining risk'''

Bjarnijakob: /* Risk treatment/response (Step 5) */

2016-09-21T19:42:17Z

Risk treatment/response (Step 5)

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	'''Avoiding risk'''		'''Avoiding risk'''

	This strategy is very important and should always be the first to consider in a project. Sometimes avoiding risk or eliminate it is not an option, because it can be too expansive or it could be time consuming. Avoiding risk is done by removing the cause or executing the project phase in a different way than it was planned. Even though we decide to avoid the risk the project objectives needs to be achieved. If the situation comes up that we cannot eliminate the risk that occur in the project, we try to eliminate that risk before the project starts <ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref> <ref name=Projectmanagement> Larson, E. W. and Gray, C.F (2010) ''Project Management'', The Managerial Process (5th ed.).McGraw - Hill/Irwin, NY </ref>.		This strategy is very important and should always be the first to consider in a project. Sometimes avoiding risk or eliminate it is not an option because it can be too expansive or it could be time consuming. Avoiding risk is done by removing the cause or executing the project phase in a different way than it was planned. Even though we decide to avoid the risk the project objectives needs to be achieved. If the situation comes up that we cannot eliminate the risk that occur in the project, we try to eliminate that risk before the project starts <ref name=PRM_book> Risk Management Task Group (2012) ''Project Risk Management Handbook: A Scalable Approach ''</ref> <ref name=Projectmanagement> Larson, E. W. and Gray, C.F (2010) ''Project Management'', The Managerial Process (5th ed.).McGraw - Hill/Irwin, NY </ref>.

	'''Transferring risk'''		'''Transferring risk'''

Bjarnijakob: /* Risk treatment/response (Step 5) */

2016-09-21T19:40:02Z

Risk treatment/response (Step 5)

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	* Retaining		* Retaining

	It is up to the project manager and the team to choose which risk strategy they will go for. If the risk event is inside the red zone in the risk matrix, like in Figure 6, the project manager needs to pay attention to those risk. Following the guidance in Figure 6, will help the managers and the team to treat and evaluate what to do in next steps.		It is up to the project manager and the team to choose which risk strategy they will go for. If the risk event is inside the red zone in the risk matrix, like in Figure 6, the project manager needs to pay attention to those risk. Following the guidance in Figure 7, will help the managers and the team to treat and evaluate what to do in next steps.

	'''Mitigating risk'''		'''Mitigating risk'''