TIMING/LENGTH (IN MINUTES): 30’
In this activity, you will learn what risk management is, and why it is necessary to include a risk management strategy in your activity.
Risk management refers to the practice of identifying potential risks in advance, analysing them and taking precautionary steps to curb the risk.
Every business and organization face the risk of unexpected, harmful events that can cost the company money or cause it to permanently close. Risk management allows organizations to know how to react and not lose extra money.
To simplify, risk management is a process that allows individual risk events and overall risk to be understood and managed. The purpose is to optimise success by minimising threats and maximising opportunities.
All projects are somehow risky because they are unique, constrained, based on assumptions, performed by people and subject to external influences. Risks can affect the achievement of objectives either positively or negatively.
5 steps to understand and create your risk management process:
Step 1: Identify the Risk
You and your team have to recognize and describe risks that might affect your project. During this step you start to prepare your Project Risk Register.
Step 2: Analyse the risk
Once risks are identified you determine potential consequence of each risk. You develop an understanding of the nature of the risk and its potential to affect project goals and objectives. This information is also going to your Project Risk Register.
Step 3: Evaluate or Rank the Risk. You evaluate or rank the risk by determining the combination of likelihood and consequence. You make decisions about whether the risk is acceptable or whether it has to be taken seriously.
Step 4: Treat the Risk.
During this step you assess your highest ranked risks and develop a plan to solve it the potential problem.
Step 5: Monitor and Review the risk. During this step you take your project risk register and use it to prepare your business for risky situation.