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A Risk Management Plan That Actually Works

August 14 2010

Just to have a risk management plan is not enough. It must properly address the risks and their impact on the project. This is done by having a plan that addresses the key issues associated with risk management.

From small business to large, municipalities to the federal government, they all have one thing in common and that is a risk management plan in place, to deal with this necessary activity that is just a part of doing business. The main difference between all of these institutions and their plans are the depth at which their plan is developed and how actively they are used.

For each industry, whether it is governmental or business orientated, there is a risk management plan. Each one has to address the specific risks that are associated with that type of business. There are known risks, along with variable and random risks, which are different in each sector in the business world.

To manage this necessary but complex issue, there are risk management plan software programs in use. These programs that are being used help the personnel assigned to take care of the risks that are associated with the particular type of business they are in.

The issues that must be addressed in a risk management plan are the identification of the risks, along with their probability and severity of their impact on the business or project. With this information, the next step can proceed which is the assessment of the risks.

The assessment portion of the risk management plan is where the probability of the risk impacting the project is weighed against the severity of the impact. When this is done on every conceivable risk associated with the project, then they can be properly prioritized.

With the risks prioritized properly, the process of mitigating their impact can commence. Not all of the risks that have been identified can be totally mitigated away along with their impact on the project. In most cases, the negative impact of the risks can be decreased to an acceptable level.

This is the main focus of a risk management plan, to keep the project on course by managing the risks and not necessarily removing them all or their impact.