Explain three key benefits of risk management for projects

Question 1

Explain three key benefits of risk management for projects

Answer 1

• Informed and reliable plans and estimates
• Defined roles and responsibilities
• Greater accuracy in assessing risks and contingencies

Question 2

Informed and reliable plans and estimates

Answer 2

The output of informed and reliable plans and estimates is a key benefit of risk management. When time, cost and resource estimates have been assigned for the project tasks, risk management is introduced to identify risk factors and to assign tolerances or contingency to the risks. The result is a better-informed report of the project tasks and the associated budgets and schedules to come.

Question 3

Defined roles and responsibilities 1

Answer 3

Defined roles and responsibilities are a key benefit of risk management because a formal process will define and clarify the responsibilities of those involved.

Question 4

Defined roles and responsibilities 2

Answer 4

The process should state who is responsible for items such as updating the risk log/register, who will run the risk workshops, who will allocate owners etc. This means that the project team is clear about the expected roles and responsibilities and will avoid overlooking key aspects.

Question 5

Defined roles and responsibilities 3

Answer 5

With defined roles and responsibilities, a project team will also avoid repeated work, and respond effectively to risks and opportunities.

Question 6

Greater accuracy in assessing risks and contingencies 1

Answer 6

A key benefit of risk management is greater accuracy in assessing risks and contingencies.

Question 7

Greater accuracy in assessing risks and contingencies 2

Answer 7

Risk management can more accurately identify and measure the amount of contingency necessary to give an acceptable confidence level. The project manager can assign a contingency fund to the key areas of risk.

Question 8

Greater accuracy in assessing risks and contingencies 3

Answer 8

The contingency budget will be assigned to the relevant plan so that when the risk occurs, the funding is readily available. This approach is proactive rather than reactive.