Risk management is considering and acknowledging these risks throughout the project life cycle. Essential processes include reviewing new risks and closing out risks that are no longer a factor. Ultimately, the level of acceptable risk is based on company policy and stakeholder risk appetite (Schwalbe, 2021).
Risk can be positive or negative. Positive risks results in opportunities, while negative risks are considered threats. Both kinds of risk are always in the future because risks turn into events when they occur.
Planning and Reserving
Planning for risk responses needs to occur early in the project life cycle. Early planning allows for enough time for a proper response. In addition, funding can be accounted for and allocated before likely events occur.
- Contingency Plans are pre-determined plans for if/when a foreseeable risk occurs.
- Fallback Plans are essentially contingency plans of the last resort.
- Contingency Reserves/Allowances are the funds for the contingency plans. These are already included in the cost baseline (Schwalbe, 2021).
- Management Reserves are for unknown risks, but the cost of using these reserves is added to the cost baseline after the change is approved (Schwalbe, 2021).
Risk Register
I have filled out a sample Risk Register and embedded it below. The first row on the register has descriptions of what should be entered into each field. This risk register is based on the one shown in An Introduction to Project Management, Seventh Edition.
Works Cited
Schwalbe, K. (2021). An Introduction to Project Management, Seventh Edition. Minneapolis: Schwalbe Publishing.
A digital copy of the book is available here
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