Managing Risk
The
management of risk is one of the most important parts of the Project
Board's
and Project
Manager's jobs. The Project Manager is responsible for ensuring
that risks are identified, recorded and regularly reviewed. The Project Board
has three responsibilities:
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Notifying the Project
Manager of any external risk exposure to the project |
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Making decisions on the
Project Manager's recommended reactions to risk |
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Striking a balance
between level of risk and potential benefits that the project may achieve. |
The
Project Manager modifies plans to include agreed actions to avoid or reduce the
impact of risks. An 'owner' should be identified for each risk, who should be
the person best situated to keep an eye on it. The Project Manager will
normally suggest the 'owner' and the Project Board should make the decision.
Project Board members may be appointed `owners' of risks, particularly risks
from sources external to the project.
In
order to contain the risks during the project, they must be managed in a
disciplined manner. This discipline consists of:
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Risk analysis, which
involves the identification and definition of risks, plus the evaluation of
impact and consequent action |
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Risk management, which
covers the activities involved in the planning, monitoring and controlling of
actions which will address the threats and problems identified, so as to
improve the likelihood of the project achieving its stated objectives. |
The
risk analysis and risk management phases must be treated separately, to ensure
that decisions are made objectively and based on all the relevant information.
Risk
analysis and risk management are inter-related and undertaken iteratively. The
formal recording of information is an important element in risk analysis and
risk management. The documentation provides the foundation that supports the
overall management of risk.
Risk
analysis requires input from the management of the organisation. The
organisation's management, in turn, is kept informed by the analysis in a
highly iterative manner. Communication is particularly important between the
project and programme levels within the organisation.
Where
the project is part of a programme, the management of risk procedures used by
the project must be the same as those of the programme unless there are valid
reasons not to do so. Where a risk is uncovered in the programme, any affected
projects should be involved in the analysis of that risk. Similarly project risk
evaluation should include staff from the programme.