Capturing and Managing the Risks
The two aspects that are of utmost importance to the stakeholders who are involved in project management are the cost-sharing and the timely performance of activities. In each project, there must exist some risks (Prosad & Vasugi, 2017). For instance, the prime causes of the risks in most of the projects involve delay and failure to complete the work at a specified cost and within the agreed time frame. Delays in projects can be late completion, disputes and loss of reputation of the organization. According to Prosad and Vasugi (2017), delays in projects can lengthen schedule, increment in project costs and jeopardizing quality as well as safety. The delays are always caused by internal as well as external environments embedding several risk factors that may concurrently occur. Therefore, these risks must be captured and managed. As a member of the governance board, I have to recommend a process of capturing and managing the risks.
A risk is an uncertain event that when it occurs, can cause a positive or negative effect on the goals of the project. Therefore, the first step involved in the process of capturing and managing the risks is identifying the risk. The members of the team must uncover, recognize as well as describe the risks that might affect the project and its outcomes in general. The process involves various techniques. Moreover, a project risk register is prepared during this step. The next step is analyzing the risk that has been identified in the first step. More importantly, it includes determining the likelihood and consequences of the risks. Nevertheless, developing an understanding of the nature of the risk is considered in this step. Besides, there is analyzing the potentiality of the risk to affect the goals and objectives of the project. The information gathered is input to the project risk register.
Another step is the evaluation and ranking the risk. This is done under the consolidation of the risk analysis results. The main goal of the consolidation of risk analysis results is to ensure that the correct level of risk is assigned to each risk (Refsdal, Solhaug, & Stolen, 2015). Regarding this, the magnitude of the risk is determined, which is the combination of likelihood and consequence. The decisions made are whether the risk is acceptable or is it serious enough to warrant treatment. These rankings are also added to the project risk register. To manage the risk, the treatment of the risk must occur. This step is also called risk response planning. During this step, members must assess the highest-ranked risks hence setting out a plan that involves treatment or modification of the risks to achieving acceptable risk levels. As a board member, I have to demonstrate to the members how to minimize the probability of the negative risks as well as enhancing the opportunities. More importantly, if the subjective probabilities are applied to indicate the uncertainties, there is also a need to reflect on the knowledge that fully supports the probabilities (Aven, 2016). Concerning this, it involves the creation of risk mitigation strategies, preventive plans and contingency plans. Besides, members must add the risk treatment measures for the highest-ranking risks to the project risk register.
Nevertheless, monitoring and reviewing the risk is also another crucial step. During this step, the project manager takes the project risk register and uses it to monitor, track and review the risk. The process helps the project to work towards the achievement of expected as well as reliable goals and objectives. Periodically, the members should revisit the basic assumptions and premises of the risk (Katende, Ann & David, 2017). The risk may have changed sufficiently; as a result, the current mitigation techniques put in place may be ineffective and needs to be scrapped in favour of a different one.
When and How the Risks are Analyzed
There are circumstances when it is particularly advisable to apply project risk analysis techniques. For example when there are specific targets that must be met. Particularly, these targets are spelt out by the stakeholders bearing the main objectives of the project (Apm, 2018). Furthermore, it is done when there is an unexpected new development in a project. The developments are scrutinized based on the effects that may come along with its objectives. Besides, project risk analysis is done at points of change in the life cycle of a project.
The risks are analyzed using two techniques, for instance, the qualitative and quantitative methods. Regarding qualitative risk analysis, identification is perceived as being the first phase of qualitative analysis (Apm, 2018). Identification can be achieved through many ways, for example, interviewing key members of the project team, organizing brainstorming meetings with all interested parties, through using the personal experience of the risk analyst as well as reviewing past corporate experience if appraisal records are kept. More importantly, all these are enhanced through the use of checklists. Regarding quantitative risk analysis, it enables the impacts of the risk to be quantified against the basic success criteria. These success criteria are performance, cost and time. Sensitivity analysis is a technique developed to analyze the effect of risks on the final cost as well as the timescale of projects.