Question

how do I prepare a risk management report?

Answer 1

It is a common thing that when a project is pursued it faces various types of risks. The nature of the risk may be external or internal. Since the firm that undergoes the project has to work into a certain environment. The social structure prevailing in the environment should be comprehended as the firm is not an outside entity of the society but a part of the society where it belongs. However, even as a part of the society the firm has to face the problem known as risks as the environment of the society where the firm belongs is ever changing. The capacity to adapt the changes is an import factor for the sustenance of the firm. When any risk arises it is required to identify the risk, its nature and the degree of negative side of that risk. The function also requires to response towards the risk and implementing proper monitoring process as two factors are two important aspects in the operational process of the firm. When the risk is identified properly it is required to set proper plan so that the firm is able to handle the risk in an effective way through the life cycle of the project. Therefore it is indispensable for a project manager to understand the likelihood of occurrence and the outcome of risk in a project and accordingly prepare a plan to combat the degree of risk.

There are several processes in respect of the preparation of risk management plan

1. Risk identification and maintaining risk register

In order to identify the risk several documents assist the project manager to understand the probable risk for the project. The stakeholders of the firm are able to acknowledge the threats of the project therefore a united effort to be made to collect the information from them. The collection of the information can be done by going through relevant documents, the documents of the different department of the project and to collect the past records of the project. Apart from that the old employees of the firm can provide the necessary information about the past incident of risk held in the firm relating to similar types of project work. After receiving all the supportive facts and figures of the probable risk it is then required to record the scope of the risk likely to happen in the project. This documentation can be done in the risk register.

2. Risk analysis

   After identifying the risk and making the documentation of facts and figures from the necessary information the next step is to analyze the risk. While analysing the risk the probability or the probable occurrence of the risk to be identified. The tool can be used known as PI Matrix which provides the numerical values that are the base to know the probability of the risk on cost, time and resource of the firm. The analysis can be done on the basis of qualitative and quantitative.

Qualitative Risk result

The function of qualitative analysis is to mark the risks for subsequent analysis.

Those which not marked that should be identified by exercising the probability of occurrence and how such unidentified risk factors influence the objectives of the project.

Some gradation can be employed to segregate the risk into different levels:

The occurrence level of probability of risk more than 70% is considered as high risky

The occurrence level of probability of risk less than 70% but more than 30% is known as medium level of risk

and when it is below 30% is known as low level risk

Quantitative risk

The impact of the identified risks to the objective of the project is the subject matter of quantitative risk. The size of cost together with implementing the plan of contingencies is computed for these identified risks. This is done for the prediction of project outcomes relating to price or time relating to the combined effect of risk associated with the project.

3. Risk triggers

while designing the risk of the project several group of designer can be formed in order to assign them the part of the principal risk list to identify the warning signs related to such segment of the main risk. Each and every group should identify such triggers according to the part assigned to them and all the produced triggers are to be documented. The report of the trigger should contain at least three triggers which is a standard form of noting the triggers.

4. Risk resolution

After identifying the risks from the subgroups the positive risks associated with the project and the negative side of the project should be documented. In this connection, all the departments of the project are to be connected with the risks identified by these subgroups after the identification of triggers. The object of the project manager lies to use the identified positive risks which are known as opportunities of the firm in order to effective use of the time and money for the advancement of the project. It is required to overlook the negative side of the risk as the time, money, human capital are misused for such spending.

5. Action plan

After the measurement of qualitative risk, quantitative risk, triggers, opportunities and threats the next plan of the project manager is design an effective resolution of the risk priority wise.

The ranking method can be used to identify the priority of the risk. It indicates that the risk with P1 priority should be taken care of on urgent basis. Setting the priority is an important aspect as it saves time money human capital of the firm.

6. Responsibility and accountability

Use of responsibility assignment matrix relating to the responsibility of each department of the project is the tool which narrates the role of responsibility to be taken by each member of the project in order to minimize the risk and such assignment of role of each member to be reported to the owner so that he can get the information about the allocation of risk preventing strategy and action implemented by the project manager in the light of reducing the cost of the project and saving the time and resource of the firm.

In every step there are some key functions that are described earlier so the reporting of these functions are very important aspect as it shows the specific risk associated with the projects and the probable triggers of the project together with positive threats for the organization and negative threats which is a wastage of time, money and human capital.