This document details potential risks, their impacts, mitigation strategies, and contingency plans. It thus guides project leaders and their teams in tackling obstacles that may compromise project objectives, budget, and timeline.
Gearing up for the Project Management Institute Risk Management Professional (PMI-RMP) exam requires a deep understanding of how to compile such a plan. A robust risk management plan is a compilation of numerous key artifacts or resources bridging the gaps between risk identification and mitigation.
1. Risk Management Strategy
This framework sets the direction for the risk management process within a project. It typically includes risk appetite, thresholds, processes, roles, and responsibilities, along with the tools and techniques that will be used to manage risks.
2. Risk Register
This comprehensive document records details about identified risks, their causes, impacts, possible responses, and owners. It’s a working tool updated throughout the project lifecycle.
3. Risk Breakdown Structure (RBS)
An RBS serves as a comprehensive, hierarchical decomposition of risks, categorized by risk sources or areas of the project most affected. It helps in risk identification, categorization, and response strategy formulation.
4. Probability and Impact Matrix
Risk’s significance is a result of the combination of its probability of occurrence and the resulting impact if it did occur. A Probability and Impact Matrix is therefore a grid for mapping the probability of each risk’s happening and its impact on project objectives, if it does.
5. Risk Reports
These reports communicate risks and their management state to stakeholders. It may include a list of top risks, a summary of risks by category, and an overview of risk response strategies.
6. Lessons Learned
A ‘lessons learned’ document or repository encapsulates the knowledge and experience gained from managing risks in previous projects. This information serves as a intuitive resource for risk identification, analysis, and response formulation in upcoming projects.
7. Checklists
Risk checklists, based on historical data from past projects or standard industry checklists, can guide risk identification. The main drawback of checklists is that they may limit thinking to listed items only.
8. Project Management Plan
This important document outlines how the project will be executed, monitored, controlled, and closed. A Project Management Plan can also affect project risks and, hence, should be thoroughly reviewed during risk planning.
9. Stakeholder Register
The Stakeholder Register lists everyone involved in the project and their roles. This resource contributes to risk management by identifying individuals or groups that may considerably affect or get affected by the project’s outcome.
10. Cost and Schedule Forecasts
The impact of potential risks on project cost and schedule can be determined using forecasting. Project teams must therefore consider these forecasts while compiling a risk management plan.
These key resources/artifacts, well-structured and articulated, serve as a strong backbone for an effective risk management plan. It’s essential to keep updating and refining these resources as the project progresses, flexibly adapting to any changing project, or environmental dynamics.
Artifacts aren’t meaningful unless adequately put into practice towards ensuring a smooth-sailing, risk-optimized project journey, seen as an integral learning and preparation component for successfully championing the PMI-RMP exam.
Practice Test
True or False? The risk management plan should not include a methodology to identify risks.
- False.
Answer: False.
Explanation: The risk management plan should definitely include a methodology or process to identify risks as it forms a crucial part of the overall risk management strategy.
Which of the following is NOT a key artifact/resource required to compile a risk management plan?
- a. Budget estimates
- b. Stakeholder register
- c. Crime statistics of the project area
- d. Risk categories
Answer: c. Crime statistics of the project area.
Explanation: The other options are directly involved in the preparation of a risk management plan, while crime statistics may not necessarily be relevant to the project risk.
Multiple Select: Which of the following are key resources used to compile a risk management plan?
- a. Risk Breakdown Structure (RBS)
- b. Risk Management Information System (RMIS)
- c. Human Resources Plan
- d. Risk report
Answer: a. Risk Breakdown Structure (RBS), b. Risk Management Information System (RMIS), d. Risk report.
Explanation: These resources are crucial for identifying, assessing and prioritizing risks during the compilation of the risk management plan.
True or False? Definitions of risk probability and impact are needed for the risk management plan.
- True.
Answer: True.
Explanation: Clarifying risk probability and impact helps in incorporating a concept of magnitude of risk into the risk management plan thus ensuring appropriate allocation of resources.
Who among the following stakeholders would NOT be a key resource to help compile a risk management plan?
- a. Customers
- b. Competitors
- c. Vendors
- d. Team members
Answer: b. Competitors.
Explanation: While input from customers, vendors, and team members would be valuable, competitors are not typically considered a resource for internal planning.
True or False? Risk Categories are not included in a risk management plan.
- False
Answer: False
Explanation: Risk categories provide a structured way to break down, analyze and identify sources of risk and are important components of a risk management plan.
Which of the following should not be included in a risk management plan?
- a. Risk identification approach
- b. Risk quantification tools and techniques
- c. Risk response strategies
- d. Team’s lunch menu
Answer: d. Team’s lunch menu
Explanation: The risk management plan concerns itself with risk-related matters. The team’s lunch menu has no significance in this respect.
Multiple Select: Key artifacts required to create a risk management plan would include:
- a. Budget proposals
- b. Risk tolerance of stakeholders
- c. Risk breakdown structure
- d. Project communication plan
Answer: b. Risk tolerance of stakeholders, c. Risk breakdown structure, d. Project communication plan
Explanation: These documents provide crucial insight into managing risks in the project – identifying them, understanding stakeholder acceptance level, and communicating the risks properly.
True or False? Risks are only identified once during the project lifecycle.
- False.
Answer: False.
Explanation: Risks are identified throughout the project lifecycle, which allows for continuous monitoring and responses to changes.
Which of the following is not a standard part of a risk management plan?
- a. Risk categories
- b. Past project data
- c. Risk triggering event
- d. Shopping list of the project manager
Answer: d. Shopping list of the project manager
Explanation: A shopping list is not relevant to project risk management plans. The other components give necessary insights into the risk landscape.
Interview Questions
What is a preliminary document analysis in risk management context?
A preliminary document analysis is the initial review and evaluation of project documents to identify potential risk. This includes assessing application files, business cases, agreements, etc. It is a step of the risk identification process.
Which sources are typically used in a preliminary document analysis?
Common sources in a preliminary document analysis include business cases, contracts, project plans, required resources, project calendars, and various reports.
How can project scope statement assist in preliminary document analysis?
A project scope statement can help identify potential risks associated with the project’s requirements, constraints, assumptions, and exclusions which can be very insightful in a preliminary document analysis.
How can lessons learned from previous projects aid in doing the preliminary document analysis?
Lessons learned documents can provide a wealth of knowledge about what risks have occurred in the past and how they were handled, which can be used to identify probable risks in ongoing and future projects.
Why is it important to include all team members, including stakeholders, in the preliminary document analysis?
Including everyone ensures that all perspectives are taken into account, making the risk identification process more comprehensive and robust.
What are potential risks commonly identified during a preliminary document analysis?
Some common risks include changes to project timelines, resources not being available as planned, scope creep, technology failures, and unforeseen project costs.
How can preliminary document analysis help plan for future risks?
By identifying potential risks early on in the project, teams can develop strategies to prevent, mitigate the impact, or prepare for these risks should they arise.
What role does a project management plan play in a preliminary document analysis?
A project management plan provides a roadmap of the project scope, schedule, and costs, which can be used to identify potential risks that could negatively impact the project.
How can the Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis be used in preliminary document analysis?
SWOT analysis can help identify the internal strengths and weaknesses and the external opportunities and threats of the project, contributing to the risk identification process.
How does the preliminary document analysis contribute to risk management?
Preliminary document analysis supports risk management by identifying potential risks early on, enabling the project team to take a proactive approach in dealing with potential project risks.
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