Project Management Guide

Risk Management Planning is the process of developing an approach and executing risk management activities for a project. Inputs to Project Risk Management Planning: The inputs to Risk Management Planning include:

1. Environmental factors
2. Organizational process assets
3. Project Scope Statement
4. Project management plan

Project Risk Management Planning Tools and Techniques: Meetings for planning and analysis are the primary tools for creating the Risk Management Plan, which is the output of this process. One of the ways that a project team can begin to define the types and sources of risk events is to create a Risk Breakdown Structure (RBS).

The Risk Breakdown Structure is one way to identify risks in a structured manner. It assists the team in conducting a systematic review of risks and development of responses to risks.

The Risk Management Plan can include a Probability and/or Impact Matrix for organizing the information that will be used during the Risk Identification process to prioritize and quantify risks, and it may in some cases show opportunities for the project as well. Common information in the matrix includes numerical and/or descriptive definitions of impact, negative and positive, and the probability of occurrence. The combination of probability and impact determines whether a risk is rated high, moderate, or low. These descriptors are rank ordered in a relative scale. Numerical scales can also be used.

Outputs of Risk Management Planning: The Risk Management Plan should describe the entire risk management process, including auditing of the process. It should also define the content and format of the Risk Register, reporting, and risk tracking.

1. Methodology Describes how risk management will be done on the project
2. Roles and responsibilities Defines the risk management team and their responsibilities for risk management activities
3. Budgeting Assigns budget for risk management activities to be included into the project cost baseline (project budget)
4. Timing Specifies when and how often the risk management activities appear in the project schedule
5. Risk categories Defines types and sources of risks to guide the Risk Identification process
6. Definitions Operational definitions for the project team to use to ensure consistency in the assessment of risks and opportunities
7. Probability and Impact Matrix Specific combinations of impact and probability, which lead to risk ratings such as high, medium, or low
8. Revised thresholds Revised or validated descriptions that trigger taking action; scope, quality, cost, and time thresholds may be different from each other
9. Reporting formats How to communicate risk activities and their results
10. Tracking How to document risk monitoring and management activities

The Risk Management Plan will be used throughout the life cycle of the project. As the team moves through the subsequent Risk Management Processes, the plan will be revised, updated, and improved.