THE RISK MANAGEMENT PROCESS

Risk management is a sequence of steps that help a software team to

understand, analyse, and manage uncertainty. Risk management process
consists of
 Risks Identification.
 Risk Assessment.
 Risks Planning.
 Risk Monitoring

 Risk Identification
 Risk identification refers to the systematic process of recognizing and
evaluating potential threats or hazards that could negatively impact an
organization, its operations, or its workforce. This involves identifying
various types of risks, ranging from IT security threats like viruses and
phishing attacks to unforeseen events such as equipment failures and
extreme weather conditions.
 Risk analysis
 Risk analysis is the process of evaluating and understanding the
potential impact and likelihood of identified risks on an organization. It
helps determine how serious a risk is and how to best manage or
mitigate it. Risk Analysis involves evaluating each risk’s probability and
potential consequences to prioritize and manage them effectively.
 Risk Planning
 Risk planning involves developing strategies and actions to manage and
mitigate identified risks effectively. It outlines how to respond to
potential risks, including prevention, mitigation, and contingency
measures, to protect the organization’s objectives and assets.
 Risk Monitoring
 Risk monitoring involves continuously tracking and overseeing
identified risks to assess their status, changes, and effectiveness of
mitigation strategies. It ensures that risks are regularly reviewed and
managed to maintain alignment with organizational objectives and adapt
to new developments or challenges.
 RISK ASSESSMENT
Identifying, assessing, and controlling hazards and risks in the systematic
process is the meaning of risk assessment. Determining which safeguards are in
place—or ought to be—to eliminate or manage risk in the workplace in any
conceivable circumstance is the responsibility of a competent person. These
evaluations aid in identifying these innate risks and offer countermeasures,
procedures, and controls to lessen their adverse effects on business operations.

Risk Assessment Steps

Depending on the risks particular to the type of business, the industry that
business is in, and the compliance regulations relevant to that specific business
or industry, a risk assessment is undertaken in various ways. However,
regardless of the nature of their business or industry, organizations can still use
the following five general processes -

Step 1

Determine the dangers. Finding possible risks that, if they materialized, would
have a negative impact on the organization's ability to conduct business is the
first stage in a risk assessment. Natural catastrophes, cyberattacks, utility
outages, and power outages are examples of potential risks that might be taken
into account or discovered during the risk assessment process.

Step 2

Ascertain who or what might be affected. The next phase is identifying which
corporate assets would be adversely affected if the risk materialized after the
identified risks. Critical infrastructure, IT systems, business operations, business
reputation, and even employee safety are all examples of corporate assets that
may be exposed to these risks.
Step 3

Assess the hazards and create preventative measures. A risk analysis can assist
in determining the potential effects of risks on business assets and the protective
actions that can be taken to lessen or eliminate such effects. For example, risks
could result in property damage, financial loss, company interruption, and legal
repercussions.

Step 4

Make a record of your findings. The company needs to record the risk
assessment results and store them in conveniently accessible formal papers. In
addition, records should contain information on prospective risks and strategies
for avoiding them.

Step 5

Conduct a frequent review and updating of the risk assessment. Potential

threats, risks, and associated controls can alter quickly in a present company
context. To keep up with these changes, it's critical for businesses to update
their risk assessments regularly. 

RISK PLANNING

Risk planning is the process of identifying, prioritizing, and managing risk. risk
planning involves identifying the most important risk events in advance,
prioritizing them, and developing the appropriate risk response plans. There are
three steps to risk planning:

1. Identifying Risks
2. Prioritizing Risks
3. Determining Response Plans
A strong risk identification process is important to the successful completion of
the critical success factors. This is particularly true for large or inherently risky
projects, like nuclear power plants. But if it’s beneficial for large projects, an
appropriately sized risk planning process will benefit small projects too. A Risk
Management Plan is prepared which includes items such as:

 Risk Register
 Risk Breakdown Structure
 Risk Analysis
The risk register is the itemized listing of most important risks and it becomes
the cornerstone of the Risk Management Plan. It requires careful consideration
of the project risks and what could affect the project’s critical success
factors. Here are a few ideas to ensure that each risk is identified:

1. Use a Risk Breakdown Structure. Dividing risks into categories is

intuitive and allows for better organization. Since many risks are
unrelated to each other (the wrong chemical is delivered vs. the
forklift operator quits), the systematic categorization of risks helps to
ensure strong identification.
2. Develop a checklist. Every business is different, and you are best
suited to develop a checklist for yours. That being said, we have
developed a generic one.
3. Look at Assumptions. Every project operates under a set of
assumptions. The business climate, client willingness, customer
attitudes, etc. which, together, result in the creation of the
project. What are the assumptions, and what happens if they change
mid-project?
4. Previous Project Experience. Many project based organizations
have similar projects in their past history. What types of issues did
they experience? On a related note, if there is no lessons learned
database within the organization, maybe it’s time to start one.
5. Expert judgment. Although I left this one for last, it can’t be
understated. A subject matter expert will be able to identify most of
the risks and know what to do about them.

Obviously, it is not possible to list all project risks. Although you should
endeavour to identify the most important ones, you cannot predict everything
and your stakeholders do not expect you to. Sometimes the project manager
must react to unexpected events during the execution of a project – this cannot
be eliminated. But I can assure you the stakeholders of your project will
appreciate the time and effort given to the identification of risks.

On the other hand, you can go overboard and list too many risks. This is easy to
do once you get going and start brainstorming about airplanes crashing into
your office. I suggest that you should stick to risks that have a 5-10% (1 in 20-
ish) chance of happening. If it’s lower than that, you might have too big of a
list.

There are four possible responses to risk events:

1. Avoid. Eliminate the threat. For example, change the scope of the
project, spin off a certain business unit, or change the objectives that
the risk event is threatening.
2. Transfer. Off-load the risk to a third party. For example, buy
insurance, issue a performance bond, or change the contract from a
lump sum to a unit price (or vice versa).
3. Mitigate. Reduce the probability or impact of the risk event. For
example, cover the project area to prevent work stoppages due to
inclement weather, or purchase materials in advance to ensure they
can be returned without threatening the project completion date.
4. Accept. Sometimes there is no other alternative than to proceed with
the project and accept the risk. But producing documentation,
holding meetings, and communicating the risk with stakeholders can
go a long ways toward minimizing the damage.