Risk Plan

Risk Plan

04 November 2010

A well devised risk plan is a necessary component to keeping a project on track during its execution phase. This is a document that has to be created before the final decision to go ahead with a project commences.

The reason the risk plan has to be created so far in advance is the possible consequences that could result from a risk that involves its impact with your project. Some risks can be managed while others can bring a project to a screeching halt.

The breakdown of a risk plan begins with the proper identification of all possible risks that might come in contact with your project. No matter the size of the risk, it should be identified and documented. The next step that has to be documented is the level of impact each identified risk may have on the project.

Once all the risks and their impact potential have been documented, a risk plan will proceed to prioritize each risk according to impact level and probability of impact. This is the part where being prepared can save the project from an unnecessary delay.

The next section in a well prepared risk plan is the mitigation of the risks on the correct order. The ones with the highest level of impact, along with large impact damage potential, need to be mitigated as much as possible.  It is not always possible to totally get rid of all the damage a risk might inflict on a project. The more damage can be reduced, the better and beneficial it will be to the project.

One aspect of a risk plan that is not preferred, but needs to be considered, is the purchase of insurance for a risk. With insurance, the risk will still impact the project, but the monetary loss will be compensated for by the insurance.

The main reason a risk plan must be created and approved before the project commences is to identify if any risk will have a greater impact than is monetarily worth mitigating. Some projects fold when hit by a risk because the solution to the risk is more costly than the risk.