Important Terms - Plan Risk Responses

The Plan Risk Responses process was fairly complicated and is extremely vital in successful risk management in our Project. So, before we move on to the next topic and start looking at the outputs of the process, let us quickly cover the important terms we learnt in this section. 

The purpose of this chapter is to prevent or rather avoid any confusion or misunderstanding to anyone who is reading this series because some of these terms may be quite confusing. 

Risk Triggers: 

• Are warning signs or symptoms
• Provide a warning that  a risk is about to occur
• Provides a heads-up to the risk management team to handle the risk
• Tells the team when to execute the risk response or contingency plan

Residual Risk

• Those risks that are expected to remain after the planned responses have been executed
• May include risks that have been accepted

Trivia: 

Even when a risk is accepted or placed in a watchlist, we must never forget them. They can be considered residual risks and must be handled as and when required.

Secondary Risks

• Those risks that emerge as a direct result of implementing a planned risk response
• It is not the same as a new risk that may be uncovered during the project’s life 

Fallback Plan

• Is planned in advance 
• Is used/implemented when the original planned risk response proves ineffective
• Is typically the “Plan B” in common lingo
• Is created typically for very high priority/impact risks to minimize impact in case the original plan fails
• Is created also for cases where we are not too confident about the response that has been formulated or about the impact of a risk 

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Next: Introduction - Outputs of the Plan Risk Responses Process

Section Summary - Understanding Risk Management

In this section we have learnt about the basics of Risk Management that will be useful on our journey towards the PMI’s Risk Management Professional Certification.
Let us summarize what have learnt so far:

• A Risk is an uncertain event or condition that if it occurs, has a positive or negative effect on a projects objectives
• Risk Management is the act of increasing the probability and impact of positive events & decreasing the probability and impact of adverse events within a project
• The goal of risk management is to identify the risks within the project and develop a response to either reduce the impact or the probability of a negative risk. If the risk is a positive risk (opportunity) then the goal is to increase the probability and impact of the same.
• The PMBOK Guide covers the Risk Management knowledge area extensively and it is the basis on which our preparation for the RMP Certification is going to proceed
• The Risk Management Plan and the Risk Register are two important documents that are vital to efficient Risk Management
• The Environment in which the Project is executed can have a direct influence on the Project and can be a source of risks for the project. These environmental factors can be grouped into two “Internal” and “External” factors.
• The Project Organizational Structure is one of the vital Internal Factors that affects a Project. An organization can be of 3 types – Functional, Projectized or Matrix. A Matrix Organization in turn can be either a weak matrix, a balanced matrix or a strong matrix
• An Issue is something that is occurring now in the present and is currently being dealt with
• Risk Triggers are signs or indications that is risk event is about to occur or has already occurred. They are also known as Risk Symptoms or Warning Signs
• Pure risk is a type of risk that can result only in losses
• The purpose of Risk Categorization is to systematically identify risks in a consistent manner and organize them so that they can be managed better
• Uncertainty refers to the lack of knowledge of future events whether these events are positive or negative to the project.
• In almost all cases, a risk is taken in pursuit of some kind of benefit
• Part of managing risk is, knowing when to accept a risk.
• The Standard 5 Step approach to managing project risk is widely used to manage project risks and we will use it too. The 5 steps in it are:

o Risk Management Planning
o Information Gathering & Risk Identification
o Risk Assessment & analysis
o Risk Response Planning
o Plan Execution

Prev: Five Step Approach to Risk Management

Next: Risk Management Plan - An Intro

Important Risk Related Definitions

In the previous chapter we learnt about the Project Environmental Factors that may affect our project. Before we go any further, let us stop for a moment and take a look at some of the important definitions that we will be using henceforth throughout this series on the Risk Management Professional certification exam prep.

We may have some of these definitions already in the previous chapters. But, they are still here for the sake of completeness so that we cover all these important terms in one place.

Risk – A Risk is an uncertain event or condition that, if it occurs, has a positive or negative effect on the projects objectives

Issue – An Issue is something that is occurring now in the present. You know about it and it is being dealt with. An Issue is a threat that has already materialized. They are kept track of using an Issue Log.

Risk Event – A Risk Event is the description of a scenario that may occur if the risk were to materialize

Risk Triggers – Risk Triggers are signs or indications that a risk event is about to occur or has already occurred. These are also known as Risk Symptoms or Warning Signs.

Risk Management Plan – The Risk Management Plan is the document that describes how the risk management processes will be carried out in our project. It describes how risk management will be planned; risks will be identified, analyzed & prioritized, responded, monitored and controlled.

Risk Register – The Risk Register is a document that contains all the identified risks, the results of risk analysis, the proposed risk responses and the current status of each of the identified risks

Risk Breakdown Structure – The Risk Breakdown Structure (Or RBS) is a hierarchical breakdown of risks organized by risk categories or impact

Probability – The term Probability refers to the chances that a risk may occur

Impact – The term Impact refers to the effect that a particular risk event will have on our project if it occurs

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Next: Types of Risks