Thursday, March 12, 2009

Two Indicators of Additional Risk Planning

When you build a house, many factors can cause construction to veer off track. Similarly, in project management, there are many risks that can affect the progress of a project. The risk monitoring and control process watches for signs that a project is going off track so project managers can do additional planning to regain control of the risk.

Two signs that may indicate the need for additional risk response planning are: the occurrence of an unanticipated risk and a risk having a greater effect on a project than expected.
  • the occurrence of an unanticipated risk
    When an unanticipated risk occurs, you must do additional risk response planning. Since unanticipated risks are not covered in the initial risk response plan, the project team will now have to decide on a strategy to deal with the risk. The most common risk response strategies include avoidance, transference, mitigation, or acceptance.

    • Avoidance - is a strategy that requires changing the project plan to eliminate the risk. This is done to protect the project from the potential effects of the risk. A team might reschedule an activity to avoid the risk of having resources spread too thin.
    • Transference - is a strategy that does not eliminate the risk but moves the ownership of the risk to a third party. This third party is then responsible for the management of the risk. A team might transfer a financial risk by paying a premium to insure against the risk.
    • Mitigation - is a strategy that attempts to reduce the risk to a manageable level. Early actions will reduce the probability of the risk occurring. A team might add more time to its schedule to reduce the effects of a risk.
    • Acceptance - is a strategy that indicates that the project team has decided not to take any actions in regards to this risk. For example, a team might decide to accept the effects that an employee strike will have on the project if it occurs.
  • a risk having a greater effect on a project than expected
    The second sign that additional risk response planning is necessary is a risk that has a greater effect on a project than expected. In this case, the planned response was implemented but was not effective in controlling the risk. If there is no contingency plan in place, the project team must then reevaluate the risk response and decide what changes need to be made to gain control of the risk or to better control the risk in the future.
Skilled project managers look for risks that have a greater effect on the project than expected. They also look for unanticipated risks. Learning to recognize these signs that additional risk response planning is necessary will help you gain control of project risks and increase your chances of achieving your project objectives.

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