Risk Planning

Risk planning is the detailed formulation of a program of action for the management of risk. It is the process to:

• Develop and document an organized, comprehensive, and interactive risk management strategy.

• Determine the methods to be used to execute a program's risk management strategy.

• Plan for adequate resources.

3. This risk management structure, and some of the information in subsequent subsections, is derived from work performed by the Department of Defense in 1996-1998, and summarized in: "Risk Management Guide for DoD Acquisition," Defense Acquisition University and Defense Systems Management College, Fourth Edition, February 2001. This is quite simply the best introductory document on project risk management that exists and it is applicable, with suitable tailoring, to a wide variety of projects, including commercial projects. (The URL to download this risk management guide free of charge at the time of this writing is: http://www.dsmc.dsm.mil/ pubs/gdbks/risk_management.htm.) Dr. Conrow's book, mentioned in note 1, uses this risk management process and explains some of the keys to tailor and implement it on a variety of projects.

Risk planning is iterative and includes the entire risk management process, with activities to assess (identify and analyze), handle, monitor (and document) the risk associated with a program. An important output of the risk planning process is the Risk Management Plan (RMP). (Note: the RMP is an output of risk planning, and not the risk planning process itself.)

Risk planning develops a risk management strategy, which includes both the process and implementation approach for the project. Early efforts should establish the purpose and objective, assign responsibilities for specific areas, identify additional technical expertise needed, describe the assessment process and areas to consider, define a risk rating approach, delineate procedures for consideration of handling strategies, establish monitoring metrics (where possible), and define the reporting, documentation, and communication needs.

The RMP is the risk-related roadmap that tells the project team how to get from where the program is today to where the program manager wants it to be in the future. The key to writing a good RMP is to provide the necessary information so the program team knows the objectives, goals, and techniques of the risk management process: reporting, documentation, and communication; organizational roles and responsibilities; and behavioral climate for achieving effective risk management. Since it is a roadmap, it may be specific in some areas, such as the assignment of responsibilities for project personnel and definitions, and general in other areas to allow users to choose the most efficient way to proceed. For example, a description of techniques that suggests several methods to perform a risk analysis is appropriate, since every technique has advantages and disadvantages depending on the situation.

Another important aspect of risk planning is providing risk management training to project personnel. The vast majority of current risk management trainers and teachers have either never had long-term responsibility to make risk management work on an actual project, focus on a minor subset of risk management (e.g., Monte Carlo simulations), or have a knowledge base that is far below the state of the art. It is important that risk management training be performed by individuals, whether inside or outside the project, with substantial "real world" experience in making risk management work on actual projects; else the training may be nothing more than an academic exercise with little or no value. Finally, risk management training should be tailored to various groups within the project as necessary, and a different emphasis may exist for decision-makers versus working-level personnel and technical versus nontechnical personnel.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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