Risk Management Plan

Our blog previously emphasized that the core objective of Risk Management is to raise the chances of the project being a success by curtailing any potential negative impacts and amplifying any positive effects that may come about during the project's duration.

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.

Developing a Risk Management Plan enables stakeholders, the project team, risk owners, and even senior management to clearly comprehend the procedures of proper risk management. It renders risk management highly visible and understandable, allowing for improved efficiency and communication.

How to develop?

With a risk management plan in place, people who need to respond, monitor, and be aware of risks can have a better idea of what kinds of risks they are facing, and the severity of each. Furthermore, it can clarify the kind of actions that should be taken to manage the risks, what criteria should be used to differentiate between positive and negative risks, when meetings should be conducted to identify any new risks, and how to use statistical information. Developing a risk management plan is categorized under risk management knowledge area.

Components

The risk management plan should include all elements related to proper risk management, with certain suggestions included. The plan should articulate the project's approach to risk management and provide a method for the project team to follow. Moreover, it should identify the tools and techniques to be utilized. Additionally, the plan should designate roles and responsibilities so the team is prepared to respond to a risk should it be realized. Finally, it should provide the necessary budget, contingency reserves, and management reserves.

As a crucial component of the risk management plan, risk categories should be included. This segmentation can be depicted as the breakdown structure. It is vital to factor in the risk appetite and risk tolerances of the relevant stakeholders. Moreover, it is essential for the project manager to determine the risk reporting format in the plan.