Assume that you are a project team member for a highly complex project, based on a new technology that has never been directly proven in the marketplace. Further, you require the services of a number of sub-contractors to complete the design and development of this project. Because you are facing severe penalties in the event the project is late to market, your boss has asked you and your project team to develop risk mitigation strategies to minimize your company

Answer:

The benefits of risk management in projects are many. You can save a lot of money if you deal with uncertain project events in a proactive way. The result would be that you may minimise the impact of project threats and also seize the opportunities that happen. This helps you to deliver the project on time, on the planned budget and even with the quality results the project sponsor had demanded. Team members will be happier if they do not have to enter a "fire fighting" scene needed to repair the failures which could have been prevented.

Make Risk Management a part of the Project

The first rule is important to the success of project risk management. If you don't  include risk management in your project, you would not reap the entire benefits of this approach. You can come across many faulty approaches in companies. Some projects use no approach at all for risk management. Some persons blindly trust their project manager.However, the professional companies make risk management a part of the day to day operations and also include it in the project meetings and in the training of staff.

Identifying the Risks Early in Your Project

The initial step in project and risk management is to identify risks that are present in the given project. This needs an open mind set that focuses on the future circumstances and scenarios that can occur. Two sources exist to identify risks. People are the team members who bring with them their personal experiences and expertise. Other people to refer are experts outside the project that have track record with the same type of project which you are facing. They can reveal some traps that you may encounter or even some good opportunities which may not have crossed your mind. Interviews and also team sessions (that is risk brainstorming) are common ways to discover the risks people know. Then,projects tend to generate a high number of documents that comprise project risks. They might not always have that name, but if you read carefully (between the lines) you will find them. The project plan, the business case and also resource planning are the starters.

Communicate About the Risks

Failed projects show that project managers in such projects were usually unaware of the big hammer that was to hit them. The frightening observation is that someone of the project organisation actually did see that hammer, but failed to inform the project manager of its existence. If you do not want this to occur in your project, you better pay attention to risk communication.

A nice approach is to include risk communication in the tasks you carry out. In a team meeting, make risks a part of the default agenda . This reflects that risks are important to the project manager .

Another essential line of communication is that of project manager and project sponsor . Take care that the sponsor makes decisions about the top risks, as usually some of them are above the mandate of the project manager.

Consider Threats and Opportunities

Project risks usually have a negative connotation. However, modern approaches also focus on the positive risks.These are those uncertain events that can be beneficial to your project . These make your project faster, better and even more profitable.

Clarify the Ownership Issues

Project managers think they are done once they have created a list of risks. This is however,only a starting point. The next step is to make clear who will be responsible for which risk. The way is simple: assign a risk owner for each risk that you have found.

Prioritise your Risks

As some risks have a higher impact than the others. Thus, you better concentrate on the risks that can cause the biggest losses . Check for any showstoppers in your project that may derail the project. These are the first priority . The other risks may be prioritised on a gut feeling or, objectively, on some set of criteria.

A Risk Matrix is a matrix which is used in Risk Assessment inorder to define the different levels of risk as the product of harm probability categories and the harm severity categories. This is a easy mechanism to enhance visibility of risks and also assist management decision making