Top 10 Best Practices in Risk Management

Top 10 best practices in risk management

Risk management is important to the success of the project because unexpected risks could arise anytime and it occurs because of lack of risk identification, assessment, and prioritization. Risks will affect a project's cost, schedule and quality of work. It all depends on how the risk is handled. Risk management helps project manager to be prepared in facing the risk in the planned and measured manner. Moreover, risk management is important to move uncertainty away from risk and toward opportunity. Listed below are top ten best practices in risk management.

Identification

The first step in managing risk is identifying risk. Risk identification can start by looking at the source of the problem or the problem itself. Using the problem's source analysis, a project manager can identify the source of the risk (external or internal) that impacts to the project. For example, the stakeholders and the employees of the project are the internal source of the risk while the external source of the risk that could impact to a project could be the weather. Furthermore, a project manager can also use problem analysis to identify the threats for a project.

Assessment

In the assessment stage of risk management, risk could be assessed into different levels based on its potential impact and the possibility of its occurrence to the project. It is important for a project manager to decide which risk management plan that needs to be used for the success of the project (prioritize the risk). Moreover, risk assessment increases the chances of a project to be succeeded because it identifies the alternatives available in delivery and methods for the project.

Response

In this stage, a project manager needs to figure out on how to mitigate the risks. A project manager could make a decision whether to accept/treat the risk by transferring, avoiding, or ignoring the risks.

Documentation

Documentation is needed because it can be used for the same project in the future. All the documentation from the previous project can help project managers to avoid the risk and save time for their next project. In the other words, all the documentation from the past projects can be used as a template for the upcoming projects. Moreover, it is important to have a trustworthy person who is responsible for doing a certain task in a project by binding him/her in a contract. The purpose to have a person who can responsible in a certain task is to make sure that there is someone that can be blamed it on when the task is not working according to the plan.

Continually Reassess Risk

Things could change, and so do risks. These changes can be happened slowly or suddenly. Therefore, it is important