Scribd
Upload
28 views

Scenario Analysis Is The Easiest and Most Commonly Used Technique For Analyzing

The 5 key steps in a sound risk management process are: 1. Identify potential risks, 2. Analyze the likelihood and impact of each risk, 3. Evaluate and rank risks based on likelihood and impact, 4. Develop treatment plans for high-ranked risks to reduce likelihood or impact, 5. Continuously monitor and review risks throughout the project. Following these 5 steps helps projects run more smoothly by reducing surprises and barriers while also helping capture any opportunities.

Uploaded by

Meghna Cm
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
28 views

Scenario Analysis Is The Easiest and Most Commonly Used Technique For Analyzing

The 5 key steps in a sound risk management process are: 1. Identify potential risks, 2. Analyze the likelihood and impact of each risk, 3. Evaluate and rank risks based on likelihood and impact, 4. Develop treatment plans for high-ranked risks to reduce likelihood or impact, 5. Continuously monitor and review risks throughout the project. Following these 5 steps helps projects run more smoothly by reducing surprises and barriers while also helping capture any opportunities.

Uploaded by

Meghna Cm
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

What are the 5 Risk Management Steps in a Sound Risk Management Process?

Every project manager understands risks are inherent in projects. No amount of planning can overcome risk, or
the inability to control chance events. In the context of projects, risk is an uncertain event or condition that, if
it occurs, has a positive or negative effect on project objectives.

Risk management identifies as many risk events as possible (what can go wrong), minimizes their
impact (what can be done about the event before the project begins), manages responses to those events that do
materialize (contingency plans), and provides contingency funds to cover risk events that actually materialize.

Organizations use risk breakdown structures (RBSs) in conjunction with work breakdown structures
(WBSs) to help management teams identify and eventually analyze risks.
A risk profile is another useful tool. A risk profile is a list of questions that address traditional areas of
uncertainty on a project.

Scenario analysis is the easiest and most commonly used technique for analyzing
risks. Team members assess the significance of each risk event in terms of:
• Probability of the event.
• Impact of the event.

FMEA
Probability analysis – PERT

As a project manager or team member, you manage risk on a daily basis; it’s one of the most
important things you do.5 risk management process steps, then your projects will run more
smoothly and be a positive experience for everyone involved. A common definition of risk is an
uncertain event that if it occurs, can have a positive or negative effect on a project’s goals. The
potential for a risk to have a positive or negative effect is an important concept.
Uncertainty is at the heart of risk. Likelihood – the probability of an event occurring, and
consequence – the impact or outcome of an event, are the two components that characterize the
magnitude of the risk.
All risk management processes follow the same basic steps,
Step 1: Identify the Risk. You and your team uncover, recognize and describe risks that might
affect your project or its outcomes. There are a number of techniques you can use to find project
risks. During this step you start to prepare your Project risk register.  
Step 2: Analyze the risk. Once risks are identified you determine the likelihood and consequence
of each risk. You develop an understanding of the nature of the risk and its potential to affect
project goals and objectives. This information is also input to your Project Risk Register.
Step 3: Evaluate or Rank the Risk. You evaluate or rank the risk by determining the risk
magnitude, which is the combination of likelihood and consequence. You make decisions about
whether the risk is acceptable or whether it is serious enough to warrant treatment. These risk
rankings are also added to your Project Risk Register.
Step 4: Treat the Risk. This is also referred to as Risk Response Planning. 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. How can you minimize the probability of the negative risks as well as
enhancing the opportunities? You create risk mitigation strategies, preventive plans and
contingency plans in this step. And you add the risk treatment measures for the highest ranking
or most serious risks to your Project Risk Register.
Step 5: Monitor and Review the risk. This is the step where you take your Project Risk Register
and use it to monitor, track and review risks.
Risk is about uncertainty. If you put a framework around that uncertainty, then you effectively
de-risk your project. And that means you can move much more confidently to achieve
your project goals. By identifying and managing a comprehensive list of project risks, unpleasant
surprises and barriers can be reduced and golden opportunities discovered. The end result is that
you minimize the impacts of project threats and capture the opportunities that occur.

You might also like