An Effective Risk Plan

10 December 2010

The development of an effective risk plan is now a fundamental ingredient for a business and its project to succeed in the turbulent economic times the world economy is in. No longer can the risks that could influence or stop a business revenue streams be taken for granted.

The development of a risk plan is different for each company and each project within a company. There are some basic elements to creating such a plan, but the risk themselves are generally different for each one.The fastest way to start developing a risk plan is to use a template to help the user, as a guide through the different steps that will be necessary to have a comprehensive plan. The identification of all possible risks is the first step. This is very important because this is the foundation that the rest of the plan will rely on for it to be successful.Once every possible risk that might impact a project has been identified, no matter how small or least likely to have an impact, the evaluation of their impact potential can take place. Each one should be placed on a scale from 1 to 10 in the risk plan.With these two points of data on each risk already assigned, then the prioritizing of the way each risk will be mitigated should be done. This part of the risk plan has to consider not only the likelihood of the risk impacting the project, but also the level of impact, and the cost of deterring the risk from impacting the project. A well thought out risk plan will have more than one alternative to mitigating the different risks that might be encountered. In some cases, project managers might find that the cure of reducing the risk might be more costly than the impact of the risk itself. This is when insurance, to cover the cost of the risk’s impact, should be considered.

A good risk plan is essential to keep a project on track and profitable. But by no means at all is it a simple task to complete. Good planning and preparation is needed to give it a chance of success.