Risk Management Plan in Project Management

Risk management plan is a significant part of the project management plan. Beforehand, we've mentioned in our blog that the basic logic of risk management is to increase the positive effects of the risks that may occur within the scope of the project and to increase the probability of success of the project by minimizing its negative effects. 

Like all other knowledge areas, risk management has a plan that needs to be dealt with in great detail. In PMBOK 7 this process is related to uncertainty performance domain and planning performance domain. Risk management plan is categorized as a project artifact.

What is the goal or objective of a risk management plan?

Risk management plan ıs created to define how to conduct risk management properly. The Risk management plan makes risk management more visible and makes it more clear to all stakeholders, the project team, risk owners, and even senior management how the project's risk approach is.

How to develop a risk management plan?

The risk management plan should provide clarity on issues such as what actions should be taken to effectively manage risks, what criteria to determine the severity of positive and negative risks, how often and with whom meetings will be held to identify new risks, and how statistical information will be used.

In this way, people who will respond to risk, people who will monitor risk, and people who need to be aware of risks can better understand what intensity of management will be applied to which types of risks. Deveoloping a risk management plan is categorized under risk management knowledge area.

Components of Risk Management Plan

In the risk management plan, everything related to the proper risk management may be included. however, there are some recommendations. In a risk management plan, the approach of the project in terms of risk management should be involved. Therefore it can guide the project team to follow a path, similarly, a methodology of risk should be defined together with tools and techniques to use.

The second most important component of the risk management plan is roles and responsibilities. This is especially very essential to react after a realized risk. Also, the necessary budget, contingency reserves, and management reserves should take place.

Another essential part of the risk management plan is risk categories. A list of risk categories should be involved in the plan. This categorization may be depicted as the breakdown structure. Risk appetite and risk tolerances of stakeholders are an important part of the plan. As a project manager, you have to make sure that you have defined the reporting format of risks in the plan.

Inputs of Plan Risk Management Process

  • Project Charter: At the beginning of the project, project charter includes the high level risks of the project together with high level assumptions. These risk identification and assumptions will contribute our risk planning process.
  • Project Management Plan: The whole project management plan is taken as an input to plan risk management process.
  • Stakeholder Register: Risk management is a task done together with stakeholders so the list of identified stakeholders will be helpful.
  • Organizational Process Assets: Information including roles and responsibilities inside the organization, existing risk policies, common definitions of risk concepts, lessons learned from similar projects are examples of OPA used here.
  • Enterprise Environmental Factors: Overall risk thresholds set by the organization, existing industry policies of risk management are common EEF's.

Tools and Techniques of Plan Risk Management Process

  • Stakeholder analysis: In order to be aware of risk tolerances of stakeholders and risk thresholds of the project, an analysis of stakeholders is needed.
  • Meetings: A useful tool to provide engagement of stakeholders in terms of risk planning.
  • Expert judgment: Everyone who has an idea about how to deal with risks including industry experts, stakeholders and other project managers can contribute with their opinions.
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