Sunday, June 3, 2007

Chapter 5 Risk Management Ideas

All projects are new because it has never been built before. So, it is very risky business. How can the project manager handle the risk? The project manager should follow three main steps.
First, systematically find the sources of risk in the project.
Second, develop strategies for reducing risk in each case, for example, changes in assignment of responsibility, lines of communication, the scope of the project, etc.
Third, monitor the effects of the strategies the project manager developed on the project.
Then, how to identify the risks? There are two ways to involve the team. One is brainstorming sessions and the other is interviewing. Another way to identify the risks without involving the team is to use a risk profile that
-The profiles are industry-specific.
-They are organization-specific.
-They address both product and management risks.
-They predict the magnitude of each risk.
How to reduce risk?
First, accept the risk which means you understand the risk, its consequences, and probability, and you choose to do nothing about it. A common strategy is that if the risk occurs, the project team will react. As long as the consequences are cheaper than the cure, this strategy makes sense.
Second, avoid the risk by choosing not to do part of the project. But avoiding risks on projects can have low return.
Third, monitor the risk and prepare contingency plans.
Fourth, transfer the risk by purchasing insurance or an expert to do the work or to use a contract for service.
Fifth, mitigate the risk which means “work hard at reducing the risk.” Mitigation covers nearly all the actions the project team can take to overcome risks from the project environment.
How to control the risk?
You need to monitor risks and choose measurements that will indicate the risk’s severity and probability. Keep a record, or log. When update a log you should make sure there is someone responsible for every risk, rank risks by severity and probability, routinely update the status of the risk.

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