Wednesday, December 3, 2008

Creating a List of Potential Risk Responses

How do you deal with risks throughout the life cycle of your projects? How do you formulate appropriate and effective responses to identified project risks?

During the risk identification process, project managers identify any risks that have the potential to negatively impact project objectives and overall project outcomes. These risks are then subjected to a qualitative and a quantitative risk analysis in order to produce a list of prioritized risks that can be dealt with in the risk response planning process.

When project managers, stakeholders, and subject matter experts are involved in identifying project risks, they often formulate a tentative list of potential responses to address these risks. These potential responses are strategies that are designed to enhance risk opportunities and reduce risk threats to project objectives. Although any action may be classified as a response, this list of potential responses created during risk identification is always specific to the project needs and the characteristics of the identified risk.

Specific details concerning the accuracy or effectiveness of these potential responses are not necessary during risk identification since that is the focus of the risk response planning process.

As a result of a project's risk identification process, you will have a list of potential responses that you can either accept, modify, reject, or add to during risk response planning.

It is important to remember that the list of potential responses created during risk identification is not a comprehensive or exhaustive list. It is simply a list of proposed suggestions that can be used to help address those risks that can have a negative impact on the success of a project. As a project manager, you will take this list of potential responses into consideration when deciding on an appropriate and effective risk response for identified and quantified project risks.

These potential responses are only suggested methods of dealing with these types of risks. Selecting the most effective and accurate response will occur later in the risk response planning process.

The following are some examples of common project risks and corresponding potential responses.

Common Project Risks
overly optimistic schedules
lack of adherence to quality procedures
unclear or vague project goals
inappropriate vendor or technology selection
budget cuts

Potential Responses
Review and monitor schedules at regular intervals.
Implement a quality management program.
Ensure that each goal is well-researched and realistic.
Perform a decision tree analysis for each major decision.
Reallocate project resources.

As a project manager, it is important to remember that your project's list of potential responses, developed during risk identification, is a valuable input to the risk response planning process. This list will help you develop specific actions that you can use to minimize or prevent threatening risks from occurring, as well as to maximize potential opportunities.

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