There are many examples of projects that have been altered by issues that have occurred and the successes or failures in the responses that project managers countered with to deal with the situation. Project risk management is a critical component of the project planning process, as well as the overall lifecycle of an undertaking. Risks must be continually assessed and deliberated in order to determine the best course of action for the project and the organization as a whole. The risk management process must be completed throughout the lifecycle of the project with the purpose of identifying, analyzing, and determining a proper response that adheres to the strategic goals of the organization.
Risk Management
As with many areas of business, …show more content…
The plan is the system in which all risks are detected, categorized, controlled, managed, supported, and communicated throughout the undertaking (PMI, 2013). The first step of the risk management process is to identify and classify potential risks that may impair the completion of a project. One tool that is utilized by many project managers is the use of a risk breakdown structure (RBS). The RBS is used in conjunction with the WBS to assist in various sources in which risks may occur throughout the endeavor within a hierarchal format (PMI, 2013). Appendix B illustrates an example of a RBS diagram outlining the potential risk for a project and the areas of impact in which the issue may occur. Another tool that is useful in identifying potential risks is the use of a cause and effect diagram. The cause and effect diagram lists potential risks and the sources of the potential risk in a fishbone diagram format. Appendix F provides an example of a cause and effect diagram. Both of these processes are usually completed by the project team along with input from various stakeholders to comprehensively identify potential risks for the …show more content…
The quantitative process exercises probability and mathematical assessments to arrange the risks by variability and incidence (Dearfield et al., 2014). Tools that are useful in this process utilize sensitivity analysis (which the results are placed into a tornado diagram), and a decision tree diagram. The tornado diagram documents the results of the sensitivity analysis with both the positive and negative variables (PMI, 2013). This analysis is used to study the variations of the objectives of the endeavor compared with the uncertain components of the project (PMI, 2013). Appendix E offers an example of potential risks within an undertaking with the monetary outcome of the issues occurring. The decision tree diagram illustrates decision alternatives and outcomes when difficult decisions must be made with uncertainties and high costs are involved (Vaidyanathan, 2013). Appendix G shows a decision tree that can be applied to make a decision on software options. The use of both qualitative and quantitative approaches provide a comprehensive approach in identifying potential risks for a
Risk Management
As with many areas of business, …show more content…
The plan is the system in which all risks are detected, categorized, controlled, managed, supported, and communicated throughout the undertaking (PMI, 2013). The first step of the risk management process is to identify and classify potential risks that may impair the completion of a project. One tool that is utilized by many project managers is the use of a risk breakdown structure (RBS). The RBS is used in conjunction with the WBS to assist in various sources in which risks may occur throughout the endeavor within a hierarchal format (PMI, 2013). Appendix B illustrates an example of a RBS diagram outlining the potential risk for a project and the areas of impact in which the issue may occur. Another tool that is useful in identifying potential risks is the use of a cause and effect diagram. The cause and effect diagram lists potential risks and the sources of the potential risk in a fishbone diagram format. Appendix F provides an example of a cause and effect diagram. Both of these processes are usually completed by the project team along with input from various stakeholders to comprehensively identify potential risks for the …show more content…
The quantitative process exercises probability and mathematical assessments to arrange the risks by variability and incidence (Dearfield et al., 2014). Tools that are useful in this process utilize sensitivity analysis (which the results are placed into a tornado diagram), and a decision tree diagram. The tornado diagram documents the results of the sensitivity analysis with both the positive and negative variables (PMI, 2013). This analysis is used to study the variations of the objectives of the endeavor compared with the uncertain components of the project (PMI, 2013). Appendix E offers an example of potential risks within an undertaking with the monetary outcome of the issues occurring. The decision tree diagram illustrates decision alternatives and outcomes when difficult decisions must be made with uncertainties and high costs are involved (Vaidyanathan, 2013). Appendix G shows a decision tree that can be applied to make a decision on software options. The use of both qualitative and quantitative approaches provide a comprehensive approach in identifying potential risks for a