Project Risk Management is a crucial aspect of project management that helps identify potential risks, assess their impact, and plan appropriate responses to mitigate or avoid those risks. PMBOK 6th edition provides guidelines for managing risks through a structured approach that involves seven processes. This article will discuss each process of the project risk management knowledge area, including their inputs, tools and techniques, and outputs.
1. Plan Risk Management
The Plan Risk Management process is the first step in managing project risks, where the project team develops a plan to guide risk management activities throughout the project lifecycle. The following are the inputs, tools and techniques, and outputs of this process:
Inputs:
- Project charter: The charter provides an overview of the project’s goals, objectives, and constraints.
- Project management plan: The project management plan describes how the project will be executed, monitored, and controlled.
- Stakeholder register: The stakeholder register provides information about the project’s stakeholders, their interests, and their impact on the project.
- Organizational process assets: Internal documents, tools, and procedures that can help plan and manage project risks, such as risk management policies and guidelines.
Tools and Techniques:
- Expert judgment: Input from individuals or groups with specialized knowledge or experience in risk management.
- Meetings: Formal or informal gatherings of project team members and stakeholders to discuss risk management planning and identify potential risks.
Outputs:
- Risk management plan: A document that outlines how risks will be identified, assessed, prioritized, and managed throughout the project.
2. Identify Risks
The Identify Risks process involves identifying potential risks impacting the project’s objectives. The following are the inputs, tools and techniques, and outputs of this process:
Inputs:
- Risk management plan: The risk management plan developed in the Plan Risk Management process guides risk identification activities.
- Project documents: Documents such as the project charter, project scope statement, and stakeholder register that provide information about the project’s objectives, constraints, and stakeholders.
- Organizational process assets: Internal documents, tools, and procedures that can help identify potential risks, such as historical information from similar projects and checklists.
Tools and Techniques:
- Documentation reviews: A review of project documentation to identify potential risks.
- Information-gathering techniques include brainstorming, checklists, and interviews to gather information about potential risks.
- Risk probability and impact assessment: An assessment of the likelihood and impact of identified risks.
- Risk categorization: Grouping risks based on their sources or impacts.
- Expert judgment: Input from individuals or groups with specialized knowledge or experience in risk identification.
Outputs:
- Risk register: A document that identifies potential risks, their sources, likelihood, and potential impact on the project.
3. Perform Qualitative Risk Analysis
The Perform Qualitative Risk Analysis process involves prioritizing identified risks based on their probability of occurrence and potential impact on the project objectives. The following are the inputs, tools and techniques, and outputs of this process:
Inputs:
- Risk management plan: The risk management plan developed in the Plan Risk Management process guides qualitative risk analysis activities.
- Risk register: The risk register developed in the Identify Risks process provides information about potential risks.
Tools and Techniques:
- Risk probability and impact assessment: An assessment of the likelihood and impact of identified risks.
- Risk probability and impact matrix: A tool used to prioritize risks based on their probability of occurrence and potential impact on project objectives.
- Risk data quality assessment: An evaluation of the data quality used in the risk analysis.
- Risk categorization: Grouping risks based on their sources or impacts.
- Expert judgment: Input from individuals or groups with specialized knowledge or experience in risk analysis.
Outputs:
- Updated risk register: The risk register is updated with the qualitative risk analysis results, including the risk score and prioritization.
4. Perform Quantitative Risk Analysis
The fourth process in the Project Risk Management knowledge area is to Perform Quantitative Risk Analysis. This process involves numerically analyzing the effect of identified risks on project objectives.
Inputs:
- Risk Register: The risk register lists identified risks that must be analyzed quantitatively.
- Risk Management Plan: The risk management plan guides how to conduct a quantitative risk analysis.
- Project Documents include project schedules, budgets, and requirements documents that can help assess the impact of risks on the project.
- Enterprise Environmental Factors: These external factors, such as industry standards and regulations, can impact the project.
- Organizational Process Assets: These internal factors, such as organizational policies and procedures, can impact the project.
Tools and Techniques:
- Data Gathering and Representation Techniques: This involves collecting and analyzing data to quantify the effect of identified risks on the project.
- Quantitative Risk Analysis and Modeling Techniques: Using statistical analysis and simulation techniques to assess the impact of identified risks on project objectives.
- Expert Judgment: This involves consulting with subject matter experts to analyze the impact of identified risks on the project.
Outputs:
- Risk Register Updates: The risk register is updated with the quantitative risk analysis results, including the expected monetary value of identified risks.
5. Plan Risk Responses
Plan Risk Responses is the fifth process in the Project Risk Management knowledge area. This process involves developing strategies for responding to identified risks.
Inputs:
- Risk Register: The risk register lists identified risks that must be addressed.
- Risk Management Plan: The risk management plan guides the developing of risk response strategies.
- Project Documents include project schedules, budgets, and requirements documents that can help assess the impact of risks on the project.
- Enterprise Environmental Factors: These external factors, such as industry standards and regulations, can impact the project.
- Organizational Process Assets: These internal factors, such as organizational policies and procedures, can impact the project.
Tools and Techniques:
- Strategies for Negative Risks or Threats: This involves developing strategies for addressing identified risks that may harm the project.
- Strategies for Positive Risks or Opportunities: This involves developing strategies for addressing identified risks that may positively impact the project.
- Contingent Response Strategies: This involves developing strategies for addressing risks that cannot be mitigated or avoided.
- Expert Judgment: This involves consulting with subject matter experts to develop effective risk response strategies.
Outputs:
- Risk Register Updates: The risk register is updated with the identified risk response strategies.
6. Implement Risk Responses
Once the risk responses have been planned, the next step is implementing them. This process focuses on executing the planned risk responses and taking appropriate steps to ensure the risk responses are working as intended. The key inputs, tools and techniques, and outputs for this process are as follows:
Inputs:
- Risk Management Plan: This document provides the framework for implementing the risk responses.
- Project Management Plan: This document outlines the overall project management approach.
- Approved Change Requests: Any changes that have been approved must be implemented as part of the risk response plan.
- Risk Register: This document provides information on the identified risks, their potential impact, and planned risk responses.
Tools and Techniques:
- Risk Response Strategies: These strategies are designed to address the identified risks and include avoiding the risk, transferring the risk, mitigating the risk, or accepting the risk.
- Risk Register: The risk register is updated throughout the implementation process to ensure that all risks are appropriately addressed.
- Change Requests: Any changes that need to be made to the project or risk response plan are documented through a formal change request process.
- Project Management Information System: The PMIS tracks the risk response plan’s implementation and provides real-time information on project status.
Outputs:
- Implemented Risk Responses: The risk responses that have been implemented are documented and tracked to ensure they are working as intended.
- Change Requests: Any project or risk response plan changes are documented through a formal change request process.
- Work Performance Data: This information is used to track progress on implementing the risk response plan and identify any issues that need to be addressed.
7. Monitor Risks
The final process in the Risk Management Knowledge Area is Monitor Risks. This process focuses on tracking identified risks, monitoring residual risks, identifying new risks, and evaluating the effectiveness of the risk response plan. The key inputs, tools and techniques, and outputs for this process are as follows:
Inputs:
- Risk Management Plan: This document provides the framework for monitoring risks throughout the project.
- Risk Register: This document provides information on the identified risks, their potential impact, and planned risk responses.
- Work Performance Reports: These reports provide information on the progress of the project and any issues that have been identified.
- Change Requests: Any project or risk response plan changes must be monitored to ensure they are effective.
Tools and Techniques:
- Risk Reviews: These reviews are conducted regularly to evaluate the effectiveness of the risk response plan and identify any new risks that may have arisen.
- Variance and Trend Analysis: This analysis is used to identify any trends or changes in the risks identified and to evaluate the effectiveness of the risk response plan.
- Technical Performance Analysis: This analysis is used to evaluate the effectiveness of the risk response plan in meeting technical objectives.
- Reserve Analysis: This analysis is used to determine if the contingency reserves allocated for the project are sufficient to address any remaining risks.
Outputs:
- Work Performance Information: This information is used to track progress on implementing the risk response plan and identify any issues that need to be addressed.
- Change Requests: Any project or risk response plan changes are documented through a formal change request process.
- Project Management Plan Updates: The project management plan is updated as needed to reflect changes in the risk management plan or risk response plan.
- Project Documents Updates: The risk register and other project documents are updated as needed to reflect changes in the project risk profile.