5 Main Steps in Risk Management Process

As a project manager or team member, you manage risk on a daily basis; it’s one of the most important things you do. And to do it successfully and ensure that your projects will run smoothly you should know the main steps to make good risk management process.
Before we get started on a risk management plan, it’s a good idea to define some terms that can be confused.
Risk: something that might happen that will have an impact, either positively or negatively, on the project. It can be an event or a condition.
Issue: something that has already happened in a project, which might have been a risk previously identified, or another unknown problem that can have a small or large impact

Now let’s begin with the steps of risk management process:
Step 1: Identify the Risk.
You and your team uncover, recognize and describe risks that might affect your project or its outcomes. There are a number of techniques you can use to find project risks. During this step you start to prepare your Project Risk Register.
Step 2: Analyze the Risk
Analyzing risk is hard. There is never enough information you can gather. Of course, a lot of that data is complex, but most industries have best practices, which can help you with your analysis. You might be surprised to discover that your company already has a framework for this process.
So, how do you analyze risk in your project? Through qualitative and quantitative risk analysis, of course. What does that mean? It means you determine the risk factor by how it impacts your project across a variety of metrics.
Those rules you apply are how the risk influences your activity resources, duration and cost estimates. Another aspect of your project to think about is how the risk is going to impact your schedule and budget. Then there is the project quality and procurements. These points must be considered to understand the full effect of risk on your project.

Step 3: Evaluate or Rank the Risk.
You evaluate or rank the risk by determining the risk magnitude, which is the combination of likelihood and consequence. You make decisions about whether the risk is acceptable or whether it is serious enough to warrant treatment. These risk rankings are also added to your Project Risk Register.
Step 4: Treat the Risk.
This is also referred to as Risk Response Planning. During this step you assess your highest ranked risks and set out a plan to treat or modify these risks to achieve acceptable risk levels. How can you minimize the probability of the negative risks as well as enhancing the opportunities? You create risk mitigation strategies, preventive plans and contingency plans in this step. And you add the risk treatment measures for the highest ranking or most serious risks to your Project Risk Register.
Step 5: Monitor the Risk
You can’t just set forces against a risk without tracking the progress of that initiative. That’s where the monitoring comes in. Whoever owns the risk will be responsible for tracking its progress towards resolution. But you will need to stay updated to have an accurate picture of the project’s overall progress to identify and monitor new risks.
You’ll want to set up a series of meetings to manage the risks. Make sure you’ve already decided on the means of communications to do this. It’s best to have various channels dedicated to communication.
You can have face-to-face meetings, but some updates might be best delivered by email or text or through a project management software tool. They might even be able to automate some, keeping the focus on the work and not busywork.
Whatever you choose to do, remember: always be transparent. Its best if everyone in the project knows what is going on, so they know what to be on the lookout for and help manage the process.

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