Project Risk Management includes the processes concerned with identifying, analyzing, and responding to project risk. It includes maximizing the results of positive events and minimizing the consequences of adverse events.
From A Guide to the Project Management Body of Knowledge, Project Management Institute.
Prepare the project base plan. This is often in the form of a work breakdown structure (WBS) or an activity network diagram.
For each activity consider what risk events* affect the activity's cost, completion time, or asset performance.
Estimate probability and impact on the project for each risk event. You may want to prioritize these for first attention.
Brainstorm to develop candidate actions that, if implemented, will positively affect probability and/or impact of the risk event.
Estimate the adjustment to probability and/or impact on the uncertainty if candidate actions are implemented.
Estimate the cost of implementing candidate actions.
Prioritize the candidate actions based upon expected value cost improvement.
Implement those risk mitigation actions that are cost-risk-effective.
Monitor events and action implementations. Maintain the inventory record of risks and actions.
After completion, reassemble the project team and post-analyze the
*By event we usually mean a yes-no discrete chance event that, if it happens, causes an added cost, time, or performance impairment. "Good" risks are—for lack of a better name—often called opportunities. Model parameters that are merely variable are usually called uncertainties, and each is represented as a single probability distribution. These, too, may be managed similar to the procedure outlined above.
Training and assistance by John Schuyler
Risk and Decision Analysis in Projects, 2nd Edition book by John Schuyler, 2001, Project Management Institute
Copyright © 1999-2012 by John R. Schuyler. All rights reserved.