Question

Why are risk management plans necessary? (220–250 words)

Answer 1

Risk Management is an approach that enables a business to identify and deal with a threat that can potentially derail a project. With a risk log in hand, a project manager can prepare himself and his team for any scenario.

A Risk management plan provides a business with many benefits:

• Fewer jolts

An abrupt problem that arises in the middle of a project can prove to be a huge setback. Risk management enables a team to spot these concerns much before they pose a serious threat. Early awareness can enable a team to assign the right people to tackle the pain point. This enables the smooth functioning of the project.

• Managing expectations

Everyone envisions their project as a huge success and in many cases this expectation leads to disappointment. Risk management allows the stakeholders to understand the risks associated with the project and prepare themselves for the possible outcome even if it isn’t as pleasant as expected.

• Better Communication

Good risk management promotes important conversations between project teams and key stakeholders. They can communicate the points of concern with each other and come up with a collective decision to tackle the situation. Suppliers are also involved in these conversations as their activities are crucial in the risk management process. Thus, risk management promotes better coordination among the team.

• Handling Project Constraints

Time and Cost are two of the most important factors in a project. By perceiving the risks and concerns, we can create a better scenario pertaining to time and cost allocation as far as the project activities are concerned.

• Improves focus

As the risks are actively monitored, the team can focus its attention on the critical activities of the project. As risk management highlights the point of concern, the team has a clear picture of the problem it faces and can work on the solution with a focused view.

• Dealing with escalations

There are certain scenarios where a team might face a problem that cannot be resolved without the support of upper management. Sometimes, it might be confusing to identify such a situation at the right time. A clear risk management plan ensures that important decisions and problems are tackled by the right people. It gives a clear picture of the magnitude of the problem and if senior support is required to deal with it.

• Better information

A Risk management process provides a team with additional information about the project. This information is vital as it pertains to the pain points of the project. Accessibility to risk information during the project greatly enhances the planning process. This information can also be used as a reference point for similar projects in the future.