Risk Management

Risk management is a logical process or approach that seeks to eliminate or at least minimize the level of risk associated with a business operation. Essentially, the process identifies any type of situation that could result in damage to any resource within the possession of the company, including personnel, then take steps to correct factors that are highly likely to result in that damage.There are six major processes involved in risk management;they are,risk management planning,risk identification,qualitative risk analysis,quantitative risk analysis,risk response planning and risk monitoring and control.

(1)Risk management planning is the process of deciding how to approach and plan for risk management activities for a project and the main output of this is a risk management plan.A risk management plan documents the procedures for managing risk throughout the project.Several planning meetings should be held in the early in the projects life cycle to help develop a risk management plan.In addition to a risk management plan many project also include contingency plans fallback plans and contingency reserves.
A risk breakdown structure is a useful tool that can help project managers consider potential risks in different categories.It is hierarchy of potential risk categories for a project.

(2)Risk identification is the process of determining what potential events might hurt or enhance a particular project.Identifying potential risk early is important but you must also continue to identify risks based on the changing project environment.There are five common information gathering techniques which include brainstorming,The Delphi Technique,Interviewing,Root cause analysis and SWOT analysis.The main output of this process is the risk register which is a document that contains results of various risk management processes often displayed in a table or spreadsheet format.

(3)Qualitative risk analysis involves accessing the likelihood and impact of identified risks.A probability/impact matrix or chart lists the relative probability of a risk occurring on one side of a matrix or axis on a chart and the relative impact of the risk occurring on the other.Each risk is then listed as being high,medium,or low in terms of its probability of occurrence and its impact if it did occur.
Top ten risk item tracking is a qualitative risk analysis tool,and in addition to identifying risks,it maintains an awareness of risks throughout the life of a project by also helping to monitor risks.

(4)The main technique for quantitative risk analysis include data gathering,quantitative risk analysis,and modeling techniques.A decision tree is a diagramming analysis technique used to help select the best course of action in situations in which future outcomes are uncertain.Expected monetary value (EMV) is the product of a risk event probability and the risk event's monetary value.To create a decision tree and to calculate EMV specifically you must estimate the probabilities or chances of certain events occurring.
Simulation uses a representation or model of a system to analyze the expected behavior or performance of the system.Most simulations are based on Monte Carlo analysis.

(5)Risk response planning involves taking steps to enhance opportunities and reduce threats to meeting project objectives.Using outputs from the preceding risk management processes, project teams can develop risk response strategies that often result in updates to the risk register and project management plan as well as risk related contractual agreements.

(6)Risk monitoring and control involves monitoring identified and residual risks,identifying new risks,carrying out risk response plans and evaluating the effectiveness of risk strategies throughout the life of the project.The main outputs of this process include recommended corrective and preventive actions,requested changes,and updates to the risk register,project management plan,and organizational process assets.