Understanding the Risk Management Process

Risk management is a process which could be best described as being systematic. Risk management must never be taken lightly by any organization. It is designed to deal with risks that may occur in regards to any aspect of a project.

While risk management is crucially important, there are a number of additional things that project teams can do to ensure their projects are completed properly and safely. Risk management can be broken down into a number of different steps, and the first of these steps is to take the time to assess the risks that a project faces.

By assessing the risks, you are essentially taking the time to think of the things that could go wrong. Once you have an understanding of all the risks that a project faces, you will next need to prioritize them.

By prioritizing the risks, you will essentially take the time to figure out which risks are the most important, in other words, you will rate the risk by how dangerous they are, as well as the probability of the risk actually occurring. Risk priority numbers will generally be used to determine the amount of risk the organization faces.

Once this step has been completed, the next step is to take the time to handle the abatement actions. To do this, you will need to take the time to plan and put in place the actions which are needed to lower the impact or the chance of the risk actually occurring. There are a number of different techniques that can be used within the field of risk management.

The techniques will often differ based on the manner in which the risks have been analyzed. For instance, the risk could be evaluated or ranked dependent on the severity, as well as the probability of occurrence. Both effects analysis and failure mode may also be used for the purpose of analyzing and measuring risk.

No matter how you look at it, the fact remains that the risk management process is very important when it comes to managing a project in the proper manner. There are often times when the risk management process must be repeated multiple times throughout the life cycle for a given project. The project team must study the risks and then prioritize them.

How Teams Use Risk Management

The team which is working on the project will typically take the time to carry out risk management tasks and record the things that it learned from the project. What this means is that many of the things which have been learned from past projects will need to be used in future projects.

While this takes up an enormous amount of effort, the time and money which is wasted could be saved if a certain process was available which allowed the things learned from any given project to be distributed to other projects. This process is described by a Japanese word called yokoten. In basically translates into "one place to another," meaning that information from one project is immediately transferred to other projects. This transfer of data can prove to be quite valuable.

One way in which knowledge can be transferred from one project to another is simply to make use of documents such as FMEA or even the risk sheets. However, these methods can prove to be tedious and they come with a number of problems.

The problem with this method is that it requires an enormous amount of effort, because the new project will need to analyze the risk management document from all the projects which have been completed. There is also the issue of time. Sharing the information with all the concurrent projects can prove to be very challenging. Then there is the location issue. If the projects are being conducted in different locations, sharing information can be quite challenging.

How Projects are Shared

Having said that, it is important to come up with a database tool that is automated, one that can share information seamlessly between projects, regardless of the location, time, or related factors.

When it comes to sharing knowledge within the field of risk management, one thing you have to keep in mind is that the information transfer may be horizontal or vertical, meaning that the info can be passed from projects which are finished to new projects, or they can be shared between projects which are actually concurrent.