Risk management involves identifying, analyzing, developing a response strategy to risks, and monitoring the response in a bid to ensure an uninterrupted and smooth end-to-end project completion. The Project Management Institute Risk Management Professional (PMI-RMP) exam tests a candidate’s ability to handle risk management aspects in project execution effectively. Let’s take a closer look at two crucial aspects: monitoring risk response and documenting residual risk.
1. Monitoring Risk Response
Risk response is a planned action or series of actions to minimize the impact of an identified risk on the project. Monitoring risk response involves a continuous evaluation and adjustment of the response strategy to mitigate the identified risks.
Monitoring risk responses should consider the following:
- The effectiveness of agreed-upon risk response plans
- The risk environment (context) for changes necessitating reviews of the risk response plans.
- Risk-related changes in the overall project plan.
An example is a construction project where the identified risk is the possibility of bad weather conditions halting work. In response, an alternative indoor task is planned. Over time, this response is monitored, and if the weather remains adverse for an extended period, the response plan might need to be adjusted to include procuring weather-resistant construction equipment.
2. Documenting Residual Risk
Residual risk is the risk that remains after risk response strategies have been implemented. Proper documentation of residual risk provides the project team with an understanding of remaining risks, their impact, and likelihood, and offers a valuable reference point for future decision-making.
Some aspects to consider while documenting residual risks include:
- Description: Clear, simple, and concise explanations of the risk.
- Nature of the residual risk: Is it your regular risk or a “non-routine” risk that requires a unique response?
- Impact: Analysis of residual risk’s possible consequence on the project.
- Probability: The likelihood of the risk event occurring even after response strategy implementation.
- Actions: A contingency plan that should be executed if the residual risk occurs.
Let’s consider an IT project to implement a new organizational software. An identified risk could be that employees might resist change and not adapt to the new software. The project team decides to host training sessions to mitigate this risk. The residual risk that remains, even after training, might be that not all employees become proficient in the new software, posing operational challenges. This residual risk will then be clearly documented for monitoring and planning subsequent actions, if necessary.
Table: Residual Risk Documentation
| Residual Risk | Impact | Probability | Actions |
|---|---|---|---|
| Employees not becoming proficient at new software after training | Operational disruption; decrease in process efficiency | Medium-Low | Refresher training; providing a 24/7 IT support system |
To summarize, both monitoring risk response and documenting residual risks are vital components of risk management in PMI-RMP. These processes are ongoing and evolving, driven by project changes and the operational environment. Attention to these details ensures that the project remains resilient and achieves its objectives despite the risks encountered along the way.
Practice Test
True or False: Monitor risk response is a process in risk management that involves tracking identified risks, monitoring residual risks, and executing risk response plans.
Answer: True
Explanation: Monitoring risk response is indeed a process in risk management and it includes different activities such as tracking identified risks, executing response plans, and monitoring residual risks.
The residual risk is the risk that remains after all risk response strategies have been implemented. True or False?
Answer: True
Explanation: Residual risk refers to the remaining level of risk after risk response strategies have been executed.
What does PMI-RMP stand for?
- a) Project Management Institute- Risk Management Professional
- b) Project Management Implementation- Risk Mitigation Professional
- c) Project Measurement Institute- Risk Management Professional
Answer: a) Project Management Institute- Risk Management Professional
Explanation: PMI-RMP stands for Project Management Institute- Risk Management Professional. This is a certification that validates a professional’s skills and experience in handling project risks.
What is not part of the Monitor Risk Response process?
- a) Implementing risk response plans
- b) Risk identification
- c) Tracking identified risks
- d) Evaluating effectiveness of risk response
Answer: b) Risk identification
Explanation: Risk identification is not part of the Monitor Risk Response process. It is, in fact, part of the Identify Risks process.
True or False: Documenting residual risk helps to maintain a record for future reference and decision making.
Answer: True
Explanation: Documenting residual risk is an important aspect of risk management as it provides a record of the risks that exist after risk response has been implemented. This information can be used in future decision making.
The ____________ is the primary output of the monitor risk response process.
- a) Risk Register
- b) Project Schedule
- c) Budget Report
- d) Risk Report
Answer: d) Risk Report
Explanation: The Risk Report is a document where all the identified risks, responses and ongoing monitoring activities are recorded.
True or False: The PMI-RMP exam only covers quantitative risk analysis.
Answer: False
Explanation: The PMI-RMP exam covers both qualitative and quantitative risk analysis, along with other aspects of risk management.
Which risk strategy seeks to eliminate the threats or protect the project from its impact?
- a) Mitigate
- b) Transfer
- c) Avoid
- d) Accept
Answer: c) Avoid
Explanation: Avoidance risk strategy seeks to eliminate the threat or to protect the project from its impact by changing the project plan.
True or False: Monitoring risk response and documenting residual risks are continuous processes.
Answer: True
Explanation: Both monitoring risk response and documenting residual risks are continuous processes that occur as long as the project continues.
PMI-RMP certification is targeted at professionals with ___________ in specialized role of project risk management.
- a) 5-10 years
- b) less than a year
- c) 1-3 years
- d) 3-5 years
Answer: d) 3-5 years
Explanation: PMI-RMP certification is targeted at professionals who have a minimum of 3-5 years of experience in the specialized role of project risk management.
True or False: PMI Risk Management Professional (PMI-RMP) enhances risk management skills in project management.
Answer: True
Explanation: PMI-RMP is designed to validate the applicant’s skills and knowledge in risk management processes and it plays a crucial role in enhancing one’s ability in handling project risks, which includes monitoring risk response and documenting residual risks.
Interview Questions
What is a risk response?
A risk response is a measure or action taken to either enhance opportunities or reduce threats to the project’s objectives.
What does residual risk mean?
Residual risk refers to the threats that remain after all of the risk response measures have been implemented.
What is the purpose of monitoring risk responses?
Monitoring risk responses is aimed at ensuring that the implemented risk responses are effective in managing uncertainty and providing the capability to mitigate the impact of risk events when they occur.
How is risk response effectiveness evaluated?
Risk response effectiveness is usually evaluated by comparing the expected risk event outcomes, in terms of cost, time, and performance objectives, with the actual outcomes after the risk responses have been implemented.
What documents are commonly used to record residual risk?
The Residual Risk Assessment Form and the Risk Register are typically used to document residual risks.
During which phase of the risk management process is residual risk evaluated?
Residual risk is typically evaluated during the Monitor Risks process.
What is the risk register?
A risk register is a document that contains information about identified risks, including their descriptions, root causes, identified responses, and status of those responses.
What are some common risk responses?
The four common risk responses are avoid, transfer, mitigate, and accept.
What is the main objective of documenting residual risk?
The main objective is to keep a record of risks that remain after implementing risk responses. This helps in future planning and improving risk management processes.
Is it important to update the risk register during the risk monitoring process?
Yes, it’s crucial to update the risk register during the risk monitoring process because it contains vital information about the status of risks and potential changes to them over time.
What is the difference between residual risk and secondary risk?
While residual risk refers to the risk that remains after implementing risk responses, secondary risk is a new risk that arises as a direct result of implementing a risk response.
How can a project manager ensure that risks are properly monitored?
The project manager can ensure that risks are properly monitored by conducting regular risk reviews, updating risk registers, reassessing risks, and ensuring implemented risk responses are effective.
Can residual risk be completely eliminated?
No, residual risk can not be completely eliminated. There will always be some level of unknown risks or uncertainty in any project.
What is the role of a Risk Management Professional (RMP) in managing residual risks?
An RMP identifies, assesses, and plans for residual risks. They are responsible for monitoring the effectiveness of responses to these risks and making necessary adjustments to manage these remaining risks effectively.
How does documenting residual risks contribute to the overall project success?
Documenting residual risks helps to create an awareness of risks that haven’t been completely eliminated. This allows for continued monitoring and planning, which can reduce the potential impact of these risks on the project, thereby contributing to overall project success.
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