Ten Reasons to Trash your Risk Management Plan
Do you have a Risk Management Plan (RMP)? If you do not, then this article is not for you. If you are managing a project of any size and you have not developed a Risk Management Plan, then your project is most likely already in trouble.
If your answer is yes, then you may want to continue reading this article. Many people talk about and also attempt to develop a Risk Management Plan but either give up on it or place the effort in the low-priority to-do list. Others have a risk plan that does not actually provide the guidance and value that is needed to be effective.
Because the maker of the RMP did not give it the attention it deserves, it is usually thrown together without any real in-depth research, just to say that it was done. Like the son that was told to clean his room. When his mother checked it, the room was cleaned. But she later discovered that everything was piled high in the closet, out of sight and out of mind. It is important for the project manager and team to view the plan as something that can provide lifelong project value. All too often, project teams develop a Risk Management Plan because everyone says they should. It may be part of a methodology or a requirement within a Project Management Office (PMO) and is given cursory attention, something like punching a ticket or checking something on a list. Or they may have just passed the Project Management Professional (PMP) exam and know they need to have an RMP. So they do one! Why? To report that they have one and they can now tick that off of their checklist.
So, if you have an RMP, I give you my top ten reasons why you should trash that plan. Take a look at these and reflect on them.
Risk management is one of the nine knowledge areas of the Project Management Body of Knowledge (PMBOK®). Every management template includes an area to provide information about risk. Several books and articles have been written on the subject of risk management. Here are a few good books on risk management that you may want to read or add to your library:
- Risk Management, Rita Mulcahy
- The Practice Standards for Risk Management, PMI
- Project Management a Systems Approach, Harold Kerzner
From a global perspective, more organizations are putting emphasis on risk management to assist in reducing the number of reported project failures. A well-developed Risk Management Plan should mitigate the risk for project failure.
For example, listed in the table below are the results of a poll from our project management website, allPM.com. In that poll, we asked for the top five documents needed for project success.
As shown in the table above: The Risk Management Plan and Log is one of the top five documents needed for project success. Having a Risk Management Plan for your project is not optional; it is a necessity for the overall project success. The guideline and methodology we recommend for risk management is derived from the Project Management Body of Knowledge (PMBOK). In this article, we discuss some of the concepts regarding the creation and management of a Risk Management Plan.
Here are some ideas for creating and maintaining a good Risk Management Plan (RMP). You should start developing your Risk Management Plan during the early feasibility study. The RMP should be elaborated during the business case development process. Highlights of the RMP should be included in the development of the project description document and the project charter. The final RMP should be a part of the overall Project Management Plan.
A good Risk Management Plan and execution of that plan requires most of the team members to be involved. Collectively, the team will identify, analyze and develop the components of the Risk Management Plan.
A good outline of the PMBOK’s Risk Management Plan structure is shown in Figure 1.
I recommend a risk management plan be developed and acted on throughout the life of the project.
Here are the Top Ten Reasons to Trash Your Risk Management Plan
1. You should trash your RMP if you have not spent enough time or effort in developing the plan.
2. You should trash your RMP if your project is large and complex and you only spent a few hours developing the plan.
3. You should trash your RMP if the right people were not involved in creating the plan.
The project team can have the most brilliant people involved. However, if you missed a key stakeholder when identifying risk, you may have overlooked a key element in the plan that will cause the project to fail.
4. You should trash your RMP if the plan has been on the shelf for more than ten days.
A good plan must be reviewed on a regular basis. A Risk Management Plan should be reviewed every week and be a permanent part of every project management status meeting.
5. You should trash your RMP if you never talk about risk in your project meetings.
Every Project Manager (PM) should make it a part of their daily and weekly schedule to talk about risk. You cannot ignore this subject; the stakes are too high.
6. You should trash your RMP if your management only thinks of risk in terms of losing money.
Risk can be thought of as positive and negative. Management may need to be educated on the positive risk and how they can be managed.
7. You should trash your RMP if you have not done an exhaustive identification of all possible risks.
Rita Mulcahy, in her book, states that you should ID hundreds of risks in the early stage of your project. Not all risks will be part of the plan, but the exercise of finding and documenting as many as possible can benefit your project.
8. You should trash your RMP if you don’t know who to talk to about a risk.
There is a people side of risk management that we cannot ignore. Subject Matter Expert (SME), stakeholder and sponsors must engage in the conversation about risk.
Risk, issues and problems are discussed in the same context.
Risk and issues are different; they should be tracked and managed separately.
9. You should trash your RMP if a budget to handle risk is not established.
Your risk plan should be supported by a budget for risk response and contingencies. As PM, you limit your risk budget issues during the course of the project. The budget needs to be settled early in the project.
10. You should trash your RMP if you don’t know when to use quantitative methods to access the risk.
Risk Management may not include a quantitative analysis. Only in special circumstances will you need to invest the time and money in doing a quantitative analysis of your risk.
Are you doing risk management or are you just going through the motions? Risk management is just one of those things to do in your busy project environment. You know you need to do it right, but the urgency and priorities of other areas of the project do not allow you to allocate the time and resources to manage your risk properly. Therefore, you may want to trash your RMP and seriously do what’s necessary to manage the RMP correctly. I realize that it is hard to break away from day-to-day priorities. But if the RMP is done correctly, it will add value to your project. In the words of Nike, “Just Do It.” You will enjoy its benefits.
Don’t forget to leave your comments below.
George Bridges is a Director of Business Analysis with more than 25 years of experience in business systems analysis, business process modeling, operations research and Information Technology. George teaches business analysis and project management to hundreds of seminar and class participants every year. He has participated in the analysis and development of business systems for major corporations, such as Ford Motor Company, Unisys Corporations, and for a large church in the Metropolitan Detroit.
1 – Risk Management – Tricks of the Trade for Project Managers, Rita Mulcahy, 2003
2 – The Practice Standard for Risk Management, PMI
3 – Project Management – A Systems Approach, Dr. Harold Kerzner