Project Risk Management

Project risk management includes planning Risk Management, identifying risks, implementing risk analysis, planning risk response, and controlling risks. The purpose of project risk management is to increase the probability and impact of positive events in the project and reduce the probability and impact of negative events in the project.

I. planning Risk Management

Planning risk management is a process that defines how to implement project risk management activities. The main role of this process is to ensure that the degree, type, and visibility of Risk Management matches risks and the importance of projects to the Organization. The risk management plan is vital to facilitate communication with all stakeholders and obtain their consent and support to ensure the effective implementation of the risk management process throughout the project lifecycle.

Planning risk management: inputs, tools and technologies and outputs

Plan the data flow chart of Risk Management

Ii. Identify Risks

Identifying risks is the process of determining which risks may affect the project and recording its features. The main role of this process is to document existing risks and accumulate knowledge and skills for the project team to predict future events.

Identify Risks: inputs, tools and technologies and outputs

Data Flow chart for identifying risks

2.1 checklist analysis

Risk identification checklist can be prepared based on historical information and knowledge of similar projects and other sources in the past. The bottom layer of the risk decomposition structure can also be used as a risk checklist. Check tickets are easy to use but cannot be exhausted. Therefore, be careful not to replace the necessary risk identification efforts with check sheets. At the same time, the team should also pay attention to the items not listed in the checklist. In addition, the checklist should be adjusted at any time to increase or decrease related entries. The checklist should be reviewed during the project closure process, and the checklist should be improved based on new experiences and lessons for future projects.

2.2 SWOT analysis

This technology starts from every strength, weakness, opportunity, and threat of the project, and examines the project, include all internal risks to take risks into account. First, identify the strengths and weaknesses of an organization from the perspective of a project, organization, or general business scope. Then, the SWOT analysis is used to identify various project opportunities brought about by organizational strengths and various threats caused by organizational weaknesses. This analysis can also be used to evaluate the extent to which an organization's strengths can offset threats and the extent to which opportunities can overcome weaknesses.

Iii. Implement qualitative risk analysis

The implementation of qualitative risk analysis is to assess and comprehensively analyze the probability and impact of risks, and prioritize risks to provide a basic process for subsequent analysis or actions. The main role of this process is to enable the project manager to reduce the level of project uncertainty and focus on high-priority risks.

Implement qualitative risk analysis: inputs, tools and technologies and outputs

Data Flow chart for implementing qualitative risk analysis

3.1 probability and impact matrix

Risk priority should be sorted based on risk rating results to further carry out quantitative analysis and risk response planning. Determine the risk rating by evaluating the risk probability and impact. Generally, a query table or probability and impact matrix is used to evaluate the importance and priority of each risk. Based on the combination of probability and impact, this matrix divides risks into low, medium, and high risks. The specific terms and values that describe the risk level depend on the organizational preferences.

3.2 risk data quality assessment

Risk data quality evaluation is a technology used to assess the usefulness of risk data for risk management. It examines the degree of understanding of risks and the accuracy, quality, reliability, and integrity of risk data.

The use of low-quality risk data may cause qualitative risk analysis to fail. If data quality is unacceptable, better data may need to be collected. It is often difficult to collect related risk information, which consumes more time and resources than originally planned.

3.3 risk urgency Assessment

The risks that need to be addressed in the near future can be identified as more urgent risks. Risk Monitoring, time requirements for risk response, risk signs, warning signals, and risk levels are all indicators that should be taken into account to determine the risk priority. In some qualitative analyses, the urgency of risks and the risk level obtained from the probability and impact matrix can be considered comprehensively to obtain the final risk severity level.

Iv. implement quantitative risk analysis

The implementation of quantitative risk analysis is a process of quantitative analysis on the impact of identified risks on the overall objectives of the project. The main function of this process is to generate quantitative risk information to support decision making and reduce project uncertainty.

Implementation of quantitative risk analysis: input, tools and technology and Output

Data Flow chart for implementing quantitative risk analysis

5. Planning risk response

Planning risk response is a process of developing programs and measures to improve opportunities and reduce threats for the project objectives. The main role of this process is to develop countermeasures based on the priority of risks, and add the resources and activities required for risk response to the project's budget, progress plan, and project management plan.

Planning risk response: inputs, tools and technologies and outputs

Plan the data flow chart for risk response

Vi. Risk Control

Risk Control is the process of implementing risk response plans throughout the project, tracking identified risks, supervising residual risks, identifying new risks, and evaluating the effectiveness of the risk process. The main role of this process is to improve the efficiency of risk response throughout the project lifecycle, and constantly optimize risk response.

Control Risks: inputs, tools and technologies and outputs

Data Flow chart for controlling risks

Project Risk Management