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Importance of Risk Management must be Understood

October 10 2011

The importance of risk management must be understood by those involved with a project. This is one of the project’s documents a project manger wishes they would never have to use, but glad they have it when it is needed.

With the importance of risk management being known, then the next step of a project manager is to have a project risk plan documented and in place so it can help to mitigate any risk that could impact the project. This can easily be done with a project management template.

With the right template in hand, the importance of risk management will become clear for those that might have had their doubts. By first listing all possible risks that could possible impact the project, the knowledge of their existence is now apparent. The next step in emphasizing the impact potential of the risks will clear any remaining doubt on just why this plan is so important.

The next step of why the importance of risk management is so critical is prioritizing the risks according to their impact potential and possible damage they can inflict on your project. This will allow you to decide on which of the risks you should prepare for when your project begins its execution phase of its project lifecycle.

For the rest of the project team, the importance of risk management will become apparent when one of the identified risks impact the project. With a plan in place, the mitigation of the risk can occur immediately. This will allow for a smoother transition thru this period with little to no confusion by the project team members. Leadership requires planning and handling a risk appropriately is part of being a leader.

The importance of risk management when they impact a project does not always have to mean it is mitigated physically. There are some risks that cannot be handled in that fashion. This is the reason for insurance. Insurance on the monetary impact damage of a risk is a great way to mitigate the risk negative effect on the budget. By reducing the monetary loss of the risk, the project can still be on budget and be considered a success.