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All About An Effective Risk Management System
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Do you wonder why your projects get delayed despite a risk management system? This article tells you the reasons in detail and shows you the right way to an effective risk management process. Read on in order to discover how to deal with risks and uncertainties that are likely to impact your project’s success.Risk Management System: It’s a proactive approach rather than reactive
Risk management system is an easy yet effective process of identifying, quantifying, analyzing and responding to risk factors throughout the life of a project and in the best interest of its goal and objectives. An effective risk management system simply means taking control over possible future events which must be very proactive, not reactive. For an instance:
A project activity in a particular network needs a new technology to be developed. The time given to them is just six months for the activity. However, the techies think that a nine-month time is more feasible. If the project manager is proactive instead of reactive, his or her team will develop a contingency plan right away. This way, they develop solutions before the life of a project is likely to come to an end. On the other hand, if the manager is reactive, then the team under him or her does everything but not what they should do in order to reduce future uncertainty and risk factors.
The biggest motto of an effective risk management system, therefore, is to reduce the risk related to unseen future events and mitigate the magnitude of those rises.
Benefits of Risk Management Systems
Apart from identifying the risk, risk management systems have been developed to do more. They must quantify the risk and foresee the effect on the project. The outcome of the system is either acceptable or unacceptable. Now, this acceptability or non-acceptability of a risk is generally dependent on the tolerance level of risk for the manager responsible. Risk management when set up as a continuous, disciplined process of problem identification and resolution, smoothly supplements other systems: organization, planning, budgeting and cost control. Organizational shock and surprises go down because this system is more proactive than reactive.
Risk Management: Continuity Matters
Consistency is essential in risk management too.
Risk management is a continuous process. Once the team along with the manager identifies the possible risks that might impact the success of a project, they must figure out the ones that are most likely to occur. This process is based upon past experience- the probability of occurrence, gut feel, lessons already learned and historical data archive.
The most critical point is that risk management system must be taken as a continuous process and as such must not be done only at the start of a project but all through the life span of a project. If a project is estimated to last for three months, risk assessment must be done at the end of month 1 and month 2. New risks, at every stage of a project, will be identified, quantified, managed and recorded for future reference.
Risk Response, is the most important aspect of risk management system
Planning for risk response generally includes:
• Avoidance: Eliminating a specific threat, usually by eliminating the cause.
• Mitigation: Reducing the expected monetary value of a risk event by reducing the probability of occurrence.
• Acceptance: Accepting the consequences of the risk. This is often accomplished by developing a contingency plan.
The Bottom Line-
By developing a contingency plan, the risk management team brings in a problem solving process. The end result is simply the best plan that can be put in place on moment’s notice.
Risk management systems engage a problem solving process and help you get a contingency plan. This is the plan that helps you reduce the negative effect of risks related to the future series of events in the context of a project. However, to be dead sure of your system’s effectiveness take professional help.
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