You have to do Risk management. What will be your approach?

Our company is expert in providing solutions for a particular domain. You are appointed as a project manager for a new project. You have to do Risk management. What will be your approach?

It’s important to understand that risk management is an integral part of project management. The basic approach is:
1. Identify Risk
2. Priortizie Risk
3. Handle Risk
4. Monitor Risk

It’s always good to have a database to help you do these steps. In a little more detail, I’ll explain the steps. Just want to point out that this is large topic so I’m just pointing out a very basic approach.

1. It depends on the level on which you are identifying risks but mainly, you are looking for things that affect cost, schedule, or quality. Again, that is very basic.

2. To prioritize, you would then rate the risk using the tried and true Risk Matrix which compares the likelihood of an event happening to the impact it would have if it happened. (Probability vs Consequence). Using the rating, you would then know which Risks were high, medium, and low.

3. After you have your Risks in order of priority, you then determine how you will handle them. The basic methods for handling are transfer, accept, avoid, and mitigate.

Here is an example explaining each. A requirement from your customer in your project requires an item to be shipped through a dangerous area. The risk is the item gets stolen. You can transfer the risk to someone else by hiring a company to do it for you. You can accept the risk by saying it might happen but the risk is low enough we aren’t going to do anything and just ship it. You can avoid the risk by removing the requirement from the project. And you can mitigate the risk by shipping it with a convoy of armed guards.

4. Then after you execute your handling strategies, you have to monitor those risks to see if they become problems or the risk rating changes.

It’s important to point out that risks are NOT problems or issues. They are potential problems. Once the probability of it happening becomes 100% or the event already occurs, it is no longer a risk and it is now a problem. Some people confuse risk and problems and track them together.