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Risk management - The core steps to assess a risk?

What are the core process steps to assess a risk?

Everyday, many people deal with problems. We all have things to do which require various hurdles to be crossed.
Some of those need a few simple actions to achieve but others present problems.

We do this without thinking:

  1. An issue is identified.
  2. It is assessed.
  3. Some action is taken to bring the issue under control.
  4. If that doesn’t work then the back up plan comes into operation.

Once the issue has been identified a decision is usually made on who will need to be consulted.
If the issue is of a strategic nature the project team may need to consult higher management (steering group for example) to consider and ratify any action to be taken.
This would usually be the case if a lot of money was involved and budgets would be exceeded.
On the other hand, the action may be relatively straight forward and can be implemented by the project team directly.

What happens if these actions don’t work?

That’s when the contingency or back up plan comes into operation. Before this can be implemented a set of criteria must be agreed.
(See comments elsewhere on proactive and reactive plans [see Types of plans])

For example, if an activity is waiting on a particular part from one manufacture it might be useful to consider purchasing the same item from another manufacture.
The second manufacturer (possibly more costly, longer lead time) would be the back up.
The problem here is that we would have to instigate the ordering procedure before we know if the first manufacturer is going to deliver.
This could be very costly if the former does provide the item on time. We will need a trigger point at which we will order from the second manufacturer as cover.
The project team will need to agree on the trigger point. We can only know whether we need to activate the trigger by using good project management [see ‘The Complete Project Management package’] and [see 'The Complete Project Management plus PRINCE2'] control and monitoring.