Monday, November 3, 2008

What Are the Inputs to Risk Management Planning?

In his famous book, "Poor Richard's Almanac," Benjamin Franklin wrote, "An ounce of prevention is worth a pound of cure." What might this mean in the context of risk management planning?

Prevention seems like a common sense idea, but achieving it does require some thought. Remember that projects are often long and complex and that they involve large amounts of money and other resources. Therefore, it's important to plan your risk management approach so that an "ounce" of risk prevention is in place.

You will use several different types of information and documents as inputs when planning for the management of your project's risks. The inputs used in risk management planning are the:
  • project charter and work breakdown structure (WBS)
  • organization's risk management policies
  • defined roles and responsibilities
  • template for the organization's risk management plan
  • stakeholder risk tolerances.
The project charter and the WBS are key documents you use when planning risk management activities. Some of these activities are budgeting, scoring and interpretation, and tracking.
The project charter is a document that formally authorizes a project. It includes the business need that the project is undertaken to address.

The WBS is a deliverable-oriented grouping of project components that organizes and defines the total scope of the project.

When it comes to an organization's risk management policies, every organization is different. Some organizations have predefined approaches to risk analysis and response that need to be tailored to match individual projects that are carried out by the organization. It is your responsibility to know whether or not your organization has these predefined approaches. If it does, you need to make sure that you tailor and apply the predefined approaches to risk analysis and response to the project you are managing.

Another input to effective risk management planning is the defined roles and responsibilities. These include the predefined roles, responsibilities, and authority levels of the people that will influence project planning.

Templates for the organization's risk management plan are used as a format for creating the risk management plan. Many organizations have developed templates that are also known as pro-forma standards. Project team members adapt the template to their current project. Companies continuously improve the template based on its application and usefulness to the project.

The final input to risk management planning is stakeholder risk tolerances. Different organizations and different individuals have varying tolerances for risk. These tolerances may be expressed in policy statements or in actions.

The starting point of any risk management planning process must include inputs. Without them, the effect of your risk management planning would be like trying to take medicine from an empty bottle: no inputs, no positive benefits. Understanding the inputs used in planning risk management activities is basic to a sound project management approach at any level of expertise.

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