Understand Risk and Issue Management in the Context of Project Management

Question 1

Explain Each Stage in A Risk Management Process (such as identification, analysis, response, and closure)

Answer 1

• Risk management is a process that allows individual risk events and overall risk to be understood and managed proactively, optimising success by minimising threats and maximising opportunities
• The purpose of risk management is to ensure that risks are proactively identified, assessed and managed in order that the project has a greater likelihood of achieving its objectives within the agreed constraints.
• The APM PRAM process has five key phases:
  1. Initiate: Definition of the project and focusing the risk management process to fit the needs of this project
  2. Identify: What are the risks?
  3. Assess: How significant is each risk in terms of its probability of occurrence and its impact should it occur?
  4. Plan responses: What can be done to manage the risk? Who is best placed to monitor the risk and carry out the response action?
  5. Implement responses: Carry out the agreed actions, update project documentation and continually monitor and mitigate risk.
• Manage the process relates to activities that integrate the previous five steps through continuous review of the risk management plan, identifying new risk, assessing new and reassessing existing risks, planning and re-planning responses and learning the lessons from responses implemented.

Question 2

Initiate

Answer 2

• The purpose of the ‘Initiate’ phase is to determine how risk will be managed on this project.
• This may entail the creation of a Risk Management Plan that documents this process.
• The two main activities carried out during this phase are:

1. Define Project: ensure the team and other relevant stakeholders have a firm understanding of the project’s objectives, scope and other relevant
   constraints. Without this understanding it is unlikely that the risk management process can be appropriately tailored to the project’s specific requirements.
2. Focus Risk Management Process: the objectives of the risk management process must now be documented to ensure that it is correctly applied to this project. Factors to consider include the size, complexity and strategic significance of the project.

Question 3

Identify

Answer 3

• Risk identification typically involves the project manager, team members, customers, subject matter experts and other relevant stakeholders.

Question 4

Assess

Answer 4

• The risks should be qualitatively assessed to determine the applicable probability of each risk occurring and the possible impact on any of the project objectives (e.g. time, cost, quality, safety etc.) should it occur.

Question 5

Plan Responses

Answer 5

• Risk responses will generally fall into one of four categories for threats or opportunities

Question 6

Implement Responses

Answer 6

• The ‘Implement Responses’ phase ensures that risk response actions have been undertaken and have achieved the desired outcome.
• Risk owners should be held accountable for the outcome of each assigned risk

Question 7

Explain Proactive and Reactive Responses to Risk

Answer 7

• Proactive Risk Management : Actions that address perceived hazard/risk occurrence before it actually occurs.
• Reactive Risk Management: Actions in response to hazard/risk occurrence.

Question 8

Explain the benefits of Risk Management

Answer 8

• Enables better informed and more credible plans, schedules and budgets Increased chance of project success
• Leads to the use of the most suitable type of contract
• Allows a more meaningful assessment and justification of contingencies
• Discourages acceptance of financially unsound projects
• Generates metrics for use on future projects
• Enables an objective comparison of alternatives
• Identifies and allocates responsibility to the best risk owner
• Improves corporate experience and general communication
• Leads to a common understanding and improved team spirit
• Helps distinguish between good luck/good management and bad luck/bad management
• Helps develop staff competency and ability to assess risk
• Focuses project management attention on the real and most important issues

Question 9

Explain the Key Aspects of Issue Management

Answer 9

Issue Management Process will help you to:

• Identify and record issues clearly
• Use Issue Forms to document issues properly
• Determine the impact of each issue
• Prioritise issues and report on their status
• Review all issues and decide on a course of action
• Take the steps needed to resolve issues quickly