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What is Risk Management

September 15 2010

Just what is risk management and how should it be applied to my business is the question every project manger must ask and then answer. The reason is because without a plan for this part of a project, unforeseen obstacles could delay or end the hopes of your project from being a success.

To define, what is risk management, a manager must first have a project plan started, this way the correct risks can be identified that might interfere with the project. Even in the same industry, every project will have common risks and specific risks that will only impact their project. Knowing specifically what risks need to be managed is important.

The procedure to knowing what is risk management first takes a documented plan on the different issues that need to be addressed. In this plan must first be the process for properly identifying the different risks that may have an impact on your project. For this to occur, you must know what you are looking for.

The next level of what is risk management contains categorizing and analyzing the different risks that have been identified. Not every risk that is known will have the same level of impact on the project. Likewise the probability of each risk impacting your project will also vary. By determining the impact level and probability of each risk and documenting them, a propriety list can be created.

Proceeding to the next level of what is risk management is where the person who will be responsible for the mitigation of the different risks is assigned. Not every risk can be mitigated so as part of the plan there must be a strategy in handling them. One of the things that must be determined is the cost of mitigating a risk. There are a few instances where mitigation is more costly to a project than just letting the risk impact the project. Knowing this is part of properly reducing the damage a risk will bring to a project.

These are the basics of what is risk management. For every project, a risk management plan must be devised and tailored for it because no two projects are exactly alike.