Rita Mulcahy, an expert on advanced project management, on the PMP Exam and on risk management techniques, shares her views on how to approach risk management. To understand risk management, it is important that terminology and definitions be understood.
Project management – The discipline of planning, organizing, securing, managing, leading, and controlling resources to achieve specific goals is known as project management.
Risk Management – An important aspect of project management is risk management. This can be defined as “the systematic application of management policies, procedures and practices to the tasks of establishing the context, identifying, analyzing, assessing, treating, monitoring and communicating.”
* Risk management is applicable to all level of an organization. Its underlying principle is to use the planning stage to identify or determine what might go right or wrong and implement strategies to prevent these or to reduce the impact of losses in an uplifting and empowering manner.
* Analyze what is right or wrong, then prioritize what needs to be done in which order.
* Risk management should be viewed as a fun part of management, that shouldn’t have to include complicated factors in order to get started and to be effective.
* The number one root cause of problems that take place on a project is poor communication. The solution to this problem is proactivity. Once you determine that there might be communication problems, you should implement measures to prevent or deal with them.
* Studies show that dealing with a problem takes 100 times longer than preventing it.
The benefits of risk management include:
* Reducing liabilities.
* Protecting people from harm.
* Saving resources.
* Protecting the reputation and public image of the organization.
* Preventing or reducing legal liability and increasing the stability of operations.
An effective risk management practice does not eliminate risks. The important factor is to recognize and understand the project, then prioritize and do something to reduce the impact.
Communication is an integral part of any process; it is important to include effective communication in the planning process. This should include what is to be communicated and to whom. Preventing the problem takes less time than dealing with the problem.