Risk management is one of the most fascinating processes you face when managing any project, organization or strategy. Great, because identifying and assessing risk is both a creative and systematic process .
Companies that run a risk management process on a fairly typical multi-month project (no longer than 12 months) are likely to identify and manage five to ten easily identifiable project risks. However, this number should be much higher. With a large number of project risks identified early, the team becomes more aware of what to look for, so potential issues can be identified earlier and opportunities spotted more easily.
It may seem that project risks cannot be managed without deviating from the actual project work. However, this can be effectively achieved through a seven-step risk management process that can be used and modified in any project.
The Risk Management Process
Step 1: Identify
You and your team discover, identify, and consider risks that may affect your project or its results. There are several techniques you can use to find project risk. At this stage, preparation for project risk registration begins.
Step 2: Analyze
Once you have identified the risks, identify the likelihood and consequences of each risk. Gain a better understanding of the nature of risks and their potential impact on project objectives. This information is also recorded in the Project Risk Register.
Step 3: Evaluate or Rank
Risk is assessed or ranked by determining the magnitude of the risk, which is a combination of probability and outcome. Decide whether the risk is acceptable or severe enough to be treated. These risk rankings are also added to the Project Risk Register.
Step 4: Treat
Risks should be eliminated or managed as much as possible. This is done by experts in areas where risk is involved.
Step 5: Monitor and Review
Not all risks can be excluded. Market risk and environmental risk are just two examples of risks that should always be monitored. It is important to make sure that you monitor all risk factors carefully.
Risk management in India is an important process that managers must maintain within their organization. Risks are inevitable and managers need to devise better strategies to deal with them. The long-term survival of an organization depends on its ability to manage risk. The fierce competition in the global market has forced managers to focus on maintaining a strong risk management program by instilling values.
