Risk mitigation and contingency planning
By applying a mitigation plan, we reduce the probability of impact of the identified risk. By identifying the contingency plan, we do not change the probability or impact of the current risk, but we plan to control the impact as risk event looks like occurring. This works as a fallback plan for high exposure risks.
Project risk management is perhaps the least understood—and most effective—tool project managers can employ to increase the odds of project success. When implemented correctly, project risk management not only boosts the probability of success, but it also alleviates anxiety and offers a higher degree of predictability. Over the last decade, project risk management has become the backbone of organizations, which successfully deliver projects, and in the current period it is absolutely essential to the success of a project.
According to A Guide to the Project Management Body of Knowledge (PMBOK@ Guide) (Project Management Institute [PMI], a risk is an uncertain event that, if it occurred, has an effect on at least one project objective. The first and foremost thing to note is that risk is an event that has not happened yet but could happen in the future. Therefore, when we talk about risk we are talking about the future, not the present or the past. Therefore, if an event has already occurred or is already occurring it cannot be called a risk. This kind of event would be classified as an “issue” or “problem.”
Answer the following questions:
1.1 What is the difference between risk mitigation and contingency planning? What must the contingency plan include?
1.2 What should be included in a risk management plan?
Sample Solution
Project risk management is the process of systematically identifying, analyzing, and responding to potential risks that could affect a project's progress and outcome. The goal of project risk management is to reduce the likelihood of unexpected problems occurring during a project by anticipating and avoiding as many risks as possible. It also helps ensure that when problems do occur, they can be addressed quickly and efficiently.
The first step in effective project risk management is to identify all potential sources of risk. This involves looking at everything from external forces such as changes in market conditions or technology developments to internal issues like resource constraints or budget limitations. Once the potential sources of risk have been identified, they need to be assessed based on their likelihood and impact on the project if they were to occur. This assessment will help prioritize which risks need immediate attention so that appropriate strategies can be put in place for addressing them before they become an issue.
After assessing each potential source of risk, it’s important to create a response plan for each one. These plans should include strategies for mitigating (minimizing) the probability or impact of each specific risk occurring as well as contingency plans for how to best respond if any part of the expected outcome does not come about due to unforeseen circumstances. It's also critical that regular reviews are conducted throughout the duration of a project in order to ensure no new risks have arisen since its initiation or those already identified have been adequately managed over time.
Effective project risk management requires strong communication between stakeholders throughout its implementation cycle so that everyone understands what steps are being taken along with their objectives and responsibilities within this process - this allows for any necessary adjustments/revisions throughout without disrupting progress too greatly. Furthermore, establishing an early warning system will prevent overall damage from escalating further should something unexpected arise; allowing managers & teams ample time address issues properly until completion rather than reactively dealing with unanticipated effects at a later stage where more effort may be required along with additional resources/time commitment(s).
In short, successful project execution lies heavily upon thorough preparation & planning prior; including continual monitoring & updating whenever necessary over its life span- Project Risk Management being key amongst these processes ensuring projects remain viable even when faced with challenging circumstances; allowing them reach completion under favorable terms while maximizing value addition across all stakeholders involved