Risk Management is an essential part of any project planning and execution process. And a crucial aspect of this process is monitoring and managing expired risks in a project. This article delves into this crucial aspect, specifically catering to those preparing for the PMI Risk Management Professional (PMI-RMP) exam.
1. Understanding Expired Risks
An expired risk refers to a risk event that was anticipated in the project but didn’t occur during its lifecycle or within the set time frame. Its occurrence probability is now zero. It’s worth noting that risks can expire due to changing project conditions, mitigation strategies or simply because they were only relevant during specific phases of the project.
2. The Importance of Monitoring Expired Risks
Continuous tracking of risks, including expired risks, is imperative for several reasons:
- Updating Risk Register: As a critical document, the risk register needs regular updating to reflect the current project risks. Removing expired risks helps maintain accuracy and relevancy.
- Resource Allocation: Risk management requires sufficient resources. Once risks expire, resources initially allocated to manage these risks can now be released or redirected.
- Learning Lessons: Expired risks can provide essential learning for future projects or phases.
3. Steps to Monitor Expired Risks
Step 1: Regular review of the risk register.
Step 2: Assess if the conditions that could lead to the risk occurrence have passed or changed.
Step 3: If a risk has indeed expired, mark it as such in the risk register.
Step 4: Document why the risk expired without occurrence (change in project conditions, effective risk mitigation, etc.)
Step 5: Review the measures that were in place to manage the risk. If applicable, consider using these strategies for managing other potential risks.
Step 6: Re-allocate resources as necessary.
4. Closing out Expired Risks
While ‘closing out’ is a term usually used in the context of closing a project, in risk management, it refers to updating the risk register to reflect the final status of the risks; if they occurred, their impact, if they didn’t occur, why not, and so on. Expired risks need to be closed out to free up resources, to update the status of risks and finally to capture lessons learnt for future reference.
For illustration:
| Risk ID | Risk Description | Risk Response Strategy | Status | Reason For status | Lessons Learnt |
|---|---|---|---|---|---|
| R1 | Risk of Vendor delay | Vendor Management; Back-up Vendors | Expired | Vendor was timely, Back-up not needed | Proactive vendor management is effective. |
5. Managing Risks: An Ongoing Process
Naturally, some risks will expire unnoticed while others will materialize, reminding the project team of their existence. The process of monitoring and closing out expired risks is a continuous one, sown into the very fabric of project management and intertwined with each phase.
In conclusion, monitoring and managing expired risks is an integral part of the risk management process. It ensures relevance and accuracy in risk management, optimizes resource allocation, provides crucial learning for future projects, and contributes to the success of current projects. By understanding and implementing this process, prospective PMI-RMPs will be well-equipped to tackle the risk management challenges posed in both the exam and their professional careers.
Practice Test
True or False: Once a risk expires, it never needs to be evaluated for recurrence.
a) True
b) False
Answer: b) False.
Explanation: Even for expired risks, there’s a possibility of recurrence, so periodic review and evaluation is necessary.
What happens to a risk once it has expired?
a) It is revisited daily
b) It is taken off the risk management plan
c) It is monitored quarterly
d) It is no longer a concern for the project
Answer: b) It is taken off the risk management plan
Explanation: Once a risk has expired, it should be removed from the plan to avoid confusion and mismanagement of resources.
True or False: Risks that are closed out should be documented.
a) True
b) False
Answer: a) True.
Explanation: Documenting closed out risks helps in avoiding repetition and provides lessons learned.
What is the correct order of the risk management process?
a) Identify, Analyze, Respond, Monitor/Control, Close out
b) Identify, Respond, Analyze, Monitor/Control, Close out
c) Analyze, Identify, Respond, Close out, Monitor/Control
Answer: a) Identify, Analyze, Respond, Monitor/Control, Close out.
Explanation: This is the basic order in risk management from identification to closing out.
True or False: The PMI-RMP exam focuses largely on risk identification, risk response planning, and risk analysis.
a) True
b) False
Answer: b) False.
Explanation: While these are important areas, the exam also focuses significantly on risk monitoring and control and closing out expired risks.
Which of the following is NOT a part of the risk closing process?
a) Evaluating action plans
b) Identifying new risks
c) Transferring ownership of risks
d) Updating the risk database
Answer: c) Transferring ownership of risks
Explanation: Ownership transfer typically happens during the risk response planning phase, not during the closing process.
True or False: During the close out phase of risk management, it is important to reassess the risk register.
a) True
b) False
Answer: a) True.
Explanation: Reevaluating the risk register is essential during the close out phase, in order to update and document changes.
True or False: Risks can expire but will never completely disappear.
a) True
b) False
Answer: a) True.
Explanation: Even after a risk has expired, there’s always a chance it can manifest itself again at a different stage of the project.
The stage of risk management where expired risks are assessed and removed from the risk log is called:
a) Risk Auditing
b) Risk Close Out
c) Risk Realization
d) Risk Identification
Answer: b) Risk Close Out
Explanation: The risk close out stage is where expired risks are assessed and removed, and final risk documentation is completed.
True or False: Effective risk management stops once the risks are expired.
a) True
b) False
Answer: b) False.
Explanation: Effective risk management is a continual, iterative process that includes the monitoring and review of expired risks.
Interview Questions
What is the process of monitoring risks in project management?
In project management, risk monitoring involves ongoing identification and monitoring of potential risks and strategies for managing them. It also includes tracking identified risks, monitoring residual risks, identifying new risks, and evaluating risk process effectiveness throughout the project.
What does ‘Close Out Expired Risks’ mean in risk management?
It means ending the monitoring and control process of a risk that is no longer pertinent because the risk event has passed or its probability or impact has reduced to an acceptable threshold.
What is the importance of closing out expired risks in project risk management?
Closing out expired risks is crucial because it helps focus the project’s energy, resources, and risk management efforts on current and potential risks. It reduces unnecessary complexity and improves the efficiency of the risk management process.
What is the part of risk closure in the risk management process?
In the risk management process, risk closure involves documenting the outcomes of risk responses, performing administrative closure of risk activities, and incorporating risk management lessons learned into the organization’s knowledge base.
What document helps manage the closure of expired risks?
The Risk Register helps manage the closure of expired risks. It documents all identified risks, including those that have expired, and is updated periodically throughout the project lifecycle.
What are some signs that a risk has expired?
Some signs of an expired risk include: the risk event has passed without occurrence, the project has surpassed the phase where the risk could have impacted, or changes in project or external conditions have reduced the risk’s probability or impact.
How does efficient risk monitoring contribute to closing out expired risks?
Efficient risk monitoring contributes by continually tracking and reviewing the probability and impact of risks. Once these become insignificant due to changes in project conditions, time frames, or successful risk responses, the risks can be closed out.
What is the risk owner’s role in closing out expired risks?
The risk owner monitors the assigned risk continuously, and when the risk has expired, they are responsible for communicating this update to the project team and updating the appropriate documentation, such as the Risk Register.
How can you ensure that no risk is prematurely marked as expired?
By maintaining diligent risk monitoring and control procedures, documented evidence of the risk’s expiry, and consensus among the risk management team to ensure that it’s appropriate to classify the risk as expired.
What is the impact of not closing out expired risks sufficiently on a project?
Not closing out expired risks can lead to wasted resources, increased project complexity, and decreased efficiency by addressing risks that are no longer relevant. Furthermore, it could distract the project team’s focus from other real, active risks.
What mechanism would you use to document lessons learned from closed-out risks?
The Lessons Learned Register is used to document lessons from closed-out risks. It typically includes information about the risk, its impact, the effectiveness of response strategies, etc. This knowledge can be leveraged for future projects or phases.
How does risk management improve as a result of closing out expired risks?
Closing out expired risks improves the risk management process by making it more efficient and targeted. It assists in resource allocation and allows the project team to concentrate on managing significant, active risks.
When in the project lifecycle should the process of closing out expired risks begin?
The process should be ongoing throughout the project’s lifecycle. Any identified risk that has passed or no longer poses a significant threat to the project’s objectives should be closed out when it is identified as having expired.
What changes might push a risk to an expired status?
Changes may include alterations in project scope, schedule, or resources, adjustments in project approach or technology, and external factors such as changing market conditions, legal requirements, or stakeholder influence.
As a project manager, how would you handle a risk that has been prematurely marked as expired?
The risk needs to be reassessed, its probability and impact reevaluated, and its status updated in the risk register. If needed, the risk response plan will be revised and communicated with the project team.
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