The Project Manager and Risk Management Part 1: Why You Need a Risk Management Plan

Risk Management Part 1No two projects are exactly the same, except, perhaps, in that there are risks associated with every project. A risk management plan is an essential piece of the project management plan. In fact, it’s such an essential tool in the project manager’s toolbox that it is often presented as a separate plan.

The aims of the risk management plan

Risk management is how the project manager mitigates the potential risks to a project. These risks can threaten cost, time, and quality, as well as be potentially hazardous to the health and safety aspects of a project. Taking a risk management approach to project management prepares the project team for potential risks, and helps to monitor and mitigate any such project risks.

The aim of the risk management plan therefore is to:

  • Identify potential risks
  • Prepare for those risks
  • Be proactive in mitigating those risks
  • Finally, act as a guide to successful completion of the project on time, at quality, and within budget

Setting strategy

The risk management plan will also detail the structured approach that the project team will take to manage any negatives. It will state how risk management processes will be implemented throughout the project term and adapt risk management standards (such as ISO/NZS/AS 31000:2009) to the project itself.

In order to complete the risk management plan, the project manager will have made some assumptions. These will need to be stated within the document.

Hiring the right people

The risk management plan will be customised to the specific project, and its individual complexities and scope. Lessons learned from one project can and must be used as experience to increase performance and identify and mitigate risks on subsequent projects. However, in addition to stipulating the risk management processes to be used, the project manager must ensure that any identified risks are also used to identify:

  • Required roles and responsibilities
  • The size of the team required to successfully see the project through to satisfactory completion
  • Qualifications and training needed for specific project appointments

In conclusion

The risk management plan will prepare the project team and stakeholders to recognise risks as they occur and to deal with them in a structured way. By employing such a structured approach, the project manager will ensure that the project team is properly qualified, trained, and equipped to handle risk situations and deliver the outcomes the client expects.

In our next article, we’ll examine how the risk register is used as a project management tool.

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