High quality project risk management relies
on information, common sense, experience — and to a certain degree
— gut instinct and intuition.  These are the keys to
successful “project risk management”.  Read on to learn how it works.

It Takes a Process to Manage Project Risk

Risk management is both a strategy and a process.  As a strategy,
it embraces the concept that all projects have risk, and the goal is
to ensure that those risks are managed to ensure that projects can
be completed successfully.  Risk is no reason to avoid projects
– it’s a basis for making decisions about project scope, planning
and execution.  There may very well be projects that are deemed
to risky to proceed, but on the whole, most risks can be managed. 
That’s where the process come in.

As a standardized
governance process, project risk management
can be broken down into five working elements: risk origination (the
risk is identified), risk assignment (responsibility is assigned), execution
(risk response is planned and put into action), oversight (status is
monitored) and closure (the risk is eliminated).

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Working with the 5 Phases of Managed Risk

What’s the benefit of a standardized approach to managing project
risk?  You get a roadmap to follow, ensuring consistent
results, ready to be adapted to the needs of the project at hand. 
That’s the purpose of the 5-phase process described below:

ORIGINATION: Identify risks according to multiple defining elements:

• Risk characteristics by name and impact.
• Risk identifier (code) for reference and tracking purposes.
• The name of the individual raising the risk.
• The date the risk was raised.
• A target risk response date (when must this risk be analyzed
  and addressed).

ASSIGNMENT: Allocate the work and empower the team:

• Who can submit (raise) risks for action as part of risk management
  processing?
• Who will be responsible for
  risk review and analysis?
• Who will be responsible for developing and selecting risk response
  and control strategies?
• Who will be responsible for approving risk assessments and related
  response and control strategies?
• Who will execute risk response and control plans?
• Who will monitor risk status and the progress of any risk management
  activities?
• Who will approve risk closure?
• Who will be responsible for reviewing the success of the risk
  management process?

EXECUTION: Carry out the work as planned:

• The risk is raised and initially identified.
• The risk is assigned and prioritized for further action.
• The risk is reviewed according to established criteria (category,
  probability, impact & target values).
• Risk response strategies are devised (acceptance, avoidance
  or mitigation).
• Risk response strategies are approved.
• Risk response strategies are implemented as needed.
• Risk management activities as listed above are documented.

OVERSIGHT: Track risk status and management results:

• Management of the risk review schedule, which can include organization
  and prioritization.
• Progress must be readily measured to ensure that risks are reviewed
  on a timely basis, and to maintain a realistic risk review schedule
  suited to project circumstances, overall project status, and external
  resource demands.
• Management of individual risk activities, to include the status
  of all tasks and decisions necessary to manage individual risk events.
• Have risk review assignments been completed as needed?
• Have response and recovery action plans been completed as needed?
• Have risk response plans been properly communicated so that
  the project team can act upon them? Are mitigation activities working?

CLOSURE: Integrate the results into a formal record:

1. Risk status is assessed to determine if a risk is “open” (meaning
   that further analysis or action may be required) or “closed” (no further
   action or analysis is required).
2. Risk status is documented. This documentation should address all
   elements and results of the risk management process as pertaining to
   the risks at hand. This should include the completion of all forms,
   and documented evidence of the ways and means by which specific risks
   were evaluated, as well as the results of the risk response and control
   activities.
3. Risk management “lessons learned” are analyzed and recorded. Every project should
   conclude with a post project review, to include a comprehensive “Lessons
   Learned Analysis”.  An effective “Lessons Learned Analysis”
   must include
   an examination of the risk process itself, as well as an evaluation
   of all risk management results as a contributing factor to overall project
   success or failure.

How Does Risk Management Fit Into the Project Lifecycle?

Risk management takes place through multiple phases of the project
management process, starting with an initial risk assessment as part
of project selection, continuing with
a comprehensive risk analysis, as
part of project definition, sizing of risk management practices as part
of project governance, tracking risks through project oversight, and
evaluating risk management results as part of
project review
activities.

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