Executives will be facing increasingly complex challenges during the next decade. These challenges will be the result of high escalation factors for salaries and raw materials, increased union demands, pressure from stock holders, and the possibility of long term high inflation accompanied by a mild recession and a lack of borrowing power with financial institutions. These environmental conditions have existed before but not the degree that they do today. The rapid rate of change in both technology and the market place has created enormous strains on existing organizational forms. The traditional structure is highly bureaucratic; and experience has shown that it cannot respond rapidly enough to a changing environment. Thus the traditional structure must be replaced by project management, or other temporary management structures that are highly organic and can respond very rapidly as situations develop inside and outside the company.

Project Management on the other hand involves five process froups identified in the PMBOK Guide namely;

• Project Initiation
  • Selection of the best project given resource limits
  • Recognizing the benefits of the project
  • Preparation of the documents to sanction the project
  • Assigning of the project manager
• Project Planning

• Definition of the work requirements
• Definition of the quality and quantity of the work
• Definition of the resources required
• Scheduling the activities
• Evaluation of the various risks

• Project Execution

• Negotiating the project team members
• Directing and managing the work
• Working with team members to help them to improve

• Project Monitoring and control
  • Tracking progress
  • Comparing actual outcome to predicted outcome
  • Analyzing variances and impacts
  • Making adjustments
• Project Closure
  • Verifying that all the work has been accomplished
  • Contractual closure of the contract
  • Financial Closure of the charge numbers
  • Administrative closure of the work.

As per the context of the title of the paper we will discuss the risk management planning involved in a project. Risk management is the act or practice of dealing with risk. It includes planning for risk, identifying risks, developing risk response strategies and monitoring controlling risks to determine how they have changed.

Given below is a risk management generic plan.

1. INTRODUCTION

a. Purpose Of The Risk Management Plan

[Provide the purpose of the Risk Management Plan.]

A risk is an event or condition that, if it occurs, could have a positive or negative effect on a project’s objectives. Risk Management is the process of identifying, assessing, responding to, monitoring, and reporting risks. This Risk Management Plan defines how risks associated with the <Project Name> project will be identified, analysed, and managed. It outlines how risk management activities will be performed, recorded, and monitored throughout the lifecycle of the project and provides templates and practices for recording and prioritizing risks.

The Risk Management Plan is created by the project manager in the Planning Phase of the CDC Unified Process and is monitored and updated throughout the project. 

The intended audience of this document is the project team, project sponsor and management.

Risk management Procedure

1.1 Process

[Summarize the steps necessary for responding to project risk.] 

The project manager working with the project team and project sponsors will ensure that risks are actively identified, analysed, and managed throughout the life of the project.  Risks will be identified as early as possible in the project so as to minimize their impact.  The steps for accomplishing this are outlined in the following sections.  The <project manager or other designee> will serve as the Risk Manager for this project.

1.2 Risk Identification

Risk identification will involve the project team, appropriate stakeholders, and will include an evaluation of environmental factors, organizational culture and the project management plan including the project scope.  Careful attention will be given to the project deliverables, assumptions, constraints, WBS, cost/effort estimates, resource plan, and other key project documents. 

A Risk Management Log will be generated and updated as needed and will be stored electronically in the project library located at <file location>.

1.3 Risk Analysis

All risks identified will be assessed to identify the range of possible project outcomes.  Qualification will be used to determine which risks are the top risks to pursue and respond to and which risks can be ignored.

1.3.1 Qualitative Risk Analysis

The probability and impact of occurrence for each identified risk will be assessed by the project manager, with input from the project team using the following approach:

Probability

• High – Greater than <70%> probability of occurrence
• Medium – Between <30%> and <70%> probability of occurrence
• Low – Below <30%> probability of occurrence

Impact

• High – Risk that has the potential to greatly impact project cost, project schedule or performance
• Medium – Risk that has the potential to slightly impact project cost, project schedule or performance
• Low – Risk that has relatively little impact on cost, schedule or performance

Risks that fall within the RED and YELLOW zones will have risk response planning which may include both risk mitigation and a risk contingency plan.

1.3.2 Quantitative Risk Analysis

Analysis of risk events that have been prioritized using the qualitative risk analysis process and their effect on project activities will be estimated, a numerical rating applied to each risk based on this analysis, and then documented in this section of the risk management plan.

1.4 Risk Response Planning

Each major risk (those falling in the Red & Yellow zones) will be assigned to a project team member for monitoring purposes to ensure that the risk will not “fall through the cracks”. 

For each major risk, one of the following approaches will be selected to address it:

• Avoid – eliminate the threat by eliminating the cause
• Mitigate – Identify ways to reduce the probability or the impact of the risk
• Accept – Nothing will be done
• Transfer – Make another party responsible for the risk (buy insurance, outsourcing, etc.)
  
  For each risk that will be mitigated, the project team will identify ways to prevent the risk from occurring or reduce its impact or probability of occurring.  This may include prototyping, adding tasks to the project schedule, adding resources, etc.

For each major risk that is to be mitigated or that is accepted, a course of action will be outlined for the event that the risk does materialize in order to minimize its impact.

1.5 Risk Monitoring, Controlling, and Reporting

The level of risk on a project will be tracked, monitored and reported throughout the project life cycle. 

A “Top 10 Risk List” will be maintained by the project team and will be reported as a component of the project status reporting process for this project. 

All project change requests will be analysed for their possible impact to the project risks.

Management will be notified of important changes to risk status as a component to the Executive Project Status Report. 

2. Tools and Practices

A Risk Log will be maintained by the project manager and will be reviewed as a standing agenda item for project team meetings.
Risk management plan approval

The undersigned acknowledge they have reviewed the Risk Management Plan for the <Project Name>project.  Changes to this Risk Management Plan will be coordinated with and approved by the undersigned or their designated representatives.

[List the individuals whose signatures are desired.  Examples of such individuals are Business Steward, Project Manager or Project Sponsor.  Add additional lines for signature as necessary. Although signatures are desired, they are not always required to move forward with the practices outlined within this document.]

The above risk Management plan can be implemented while you handle risks in your project and I would also suggest you make a risk register of all the risks encountered or forecasted in the project and rate them on a scale of 1 to 10. 10 being the highest risk encountered.