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The goal of a risk response plan is to develop options and actions which enables a business to sufficiently face threats that may limit the probability of a project’s success as well as opportunities that may enhance the accomplishment of the project objectives. In project management, a risk owner is always a person who is responsible for the appropriate management of specific risks (Stanford University, 2019). There may exist different people who directly or indirectly contribute to the management activities through collaboration. However, the risk owner is ultimately accountable for the management and control of the identified risk, and the personnel should have the know-how of dealing with threats and have the authority to implement risk control actions. To be appointed as a risk owner, one must have excellent knowledge of the identified risk (Lavanya & Malarvizhi,2008). A particular threat may be falling within a personal sphere of activities, but it is mandatory for the personnel to have the required authority to use the resources in the risk management process for them to be a risk owner. The risk owner must be competent in delegating tasks to other people who will undertake different activities in the risk management process.
Risk owner duties
The risk owner has the onus of mitigating risk and resolving apprehensions about the identified threat. In the risk response plan, the risk owner has the mandate to identify risk controls. Moreover, the risk owner should deploy and operate response strategies and actions. The risk owner is also tasked with the role of defining the identified avoidance strategies. Also, in the risk response plan, the risk owner has the task of identifying recommendations necessary for effective mitigation (University of Oregon, 2018). After the identification of the risk management action, the risk owner should define the metrics of measuring risk management performance. Afterwards, the implementation, the risk owner has to monitor and evaluate the overall risk mitigation process. In all these responsibilities, the risk owner should provide feedback to the management about the progress of the risk management.
Project assessment and management activities
In conducting project risk assessment and management, the project manager can always follow the below steps. In the first step, the project manager should identify the risks that the project is exposed to then record them on a risk register. Risk identification can be made through brainstorming or writing. Besides, the manager can involve other experts or personnel in the management process to help with risk identification (Rodrigues-da-Silva & Crispim, 2014). Next, the manager should analyze every identified risks and detail how they may affect the project. Analyzing risk is very complex, and it requires critical and analytical skills. The following step includes the prioritization of the analyzed threats. Risks are not equal; therefore, the manager needs to assess the risks to determine the resources required for their mitigation; some risks may be acceptable. The project manager should sort the risks based on their magnitude.
In the next step, the project manager is required to assign risks to risk owners who are tasked with the mandate of overseeing the prioritized risks. It involves giving people the responsibility to control the risks. Then the next stage would be to respond to the risk. In this step, the project manager would separate the risks as either positive or negative and determine how to mitigate them or take advantage of them sufficiently. Some of the approaches that a project manager can employ to respond to risk include risk acceptance, mitigation, risk transfer, and or risk sharing (Rodrigues-da-Silva & Crispim, 2014. Monitoring the implemented initiatives would be the last stage a manager should oversee in the risk management process. The process entails examining the progress of every risk management initiative adopted in the step above.
Type of Risks in project management
Risks that affect the project management can arise from market conditions, legal environment associated with the project, operational factors, environmental conditions, management, project strategy, and cost and schedule of the project. Market risk entailed in the project management involves threats that originate from factors that affect the general financial market performance where the project is run (Project management risk, 2018). These risks can only be hedged against but cannot be eradicated. Example of market risks includes currency risk, which involves appreciation and depreciation of the currency; it leads to translational and transactional risks. Another market is the interest rate risk; this is a threat brought about by the falling and rising of the interest rate. Next category of risk originates from the legal environment of the business. These are fears that emerge from the regulatory obligations. Some of the legal risks within the project management are compliance risks, contract risk, and regulatory risks (project management risk, 2019). Contract risk occurs when there is a probability of failure in the agreement performance while regulatory risks emerge due to new laws directly or indirectly affecting projects operation.
Other risks emerge from environmental hazards. Climate change is one of the most significant environmental threat that can adversely affect the operation of a project. For instance, heavy rainfalls which last for a long time may affect project performance. Besides, floods and earthquakes may as well interfere with the performance of the project as they may lead to the destruction of properties and as a result, make a company incur high costs. Next, are risks associated with costs. Cost risks are an increase in the expenses in the project processes. Some of the risks under this category are scope creep and poor cost estimation. Scope creep is an uncontrollable expansion of project scope while poor estimation entails wrong cost anticipations (project management risk, 2018). Some risks may also result from management and administrative support. Management risks are menaces that are directly caused or associated with the executive staffs who have the mandate of controlling the project. Some of the management and executive support risks involves management disengagement, stakeholders’ conflict, and management turnover, which may lead to skill deficiency in the management process.
Additionally, risk can emerge from the strategy of a project; these are threats that arise from the poor decisions or unsuccessful plans pursued by the project management. Examples of strategy risks include marketing risks; this is the adoption of poor marketing channels which may not be consistent with the project goals. Another strategy risk is technology risk, which is the probability of technology failure to disrupt the overall process. Another area with a lot of risks is project operation. Project operation risks emerge from poor implementations of activities and methods problems (project management risk, 2018). Distribution risks and production risks are some of the operational risks that are likely to be experienced in project management. Distribution risks are threats associated with the distribution channels, while production risk is the probability that the yield would be lower than the projected output. It is significant to note that most of these risks enhance cost uncertainties within the project.
Risk in week 1
Some of the risks which were evident in the week one project included market risks, scheduling risks, and environmental risk. In handling scheduling risks, tools such as the Gantt charts and RACI matrix, which entails responsibilities, accountabilities, Consulting, and Information were used to eliminate the risk, and the uncertainty was avoided. However, it could have also been useful if the project management used Work breakdown structures. Market risks was also a key concern in the project; this risk was avoided through mitigation. The business adopted hedging strategies to reduce the impact of the risks.
Nevertheless, the business ought to have transferred the risk to a third party like insurance company which covers projects against market risk. Next was environmental hazards which the project managers had no control over and alternatively accepted. As much as it is challenging to find a third party for environmental hazards, the manager ought to have looked for one.
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