Identify potential problems before they occur so that risk-handling activities can be planned and invoked as needed across the life of the product or project to mitigate adverse impacts on achieving objectives.
Establishes organizational expectations for defining a risk management strategy and identifying, analyzing, and mitigating risks.
Risk Management is a continuous, forward-looking process that is an important part of project management. Risk management should address issues that could endanger the achievement of critical objectives. A continuous risk management approach effectively anticipates and mitigates risks that can have a critical impact on a project.
Effective risk management includes early and aggressive risk identification through collaboration and the involvement of relevant stakeholders as described in the stakeholder involvement plan addressed in the Project Planning process. Strong leadership among all relevant stakeholders is needed to establish an environment for free and open disclosure and discussion of risk.
Risk management should consider both internal and external, as well as both technical and non-technical, sources of cost, schedule, performance, and other risks. Early and aggressive detection of risk is important because it is typically easier, less costly, and less disruptive to make changes and correct work efforts during the earlier, rather than the later, phases of the project.
For example, decisions related to product architecture are often made early before their impacts can be fully understood, and thus the risk implications of such choices should be carefully considered.
Industry standards can help when determining how to prevent or mitigate specific risks commonly found in a particular industry. Certain risks can be proactively managed or mitigated by reviewing industry best practices and lessons learned.
Risk management can be divided into the following parts:
Although the primary emphasis of the Risk Management process is on the project, these concepts can also be applied to manage organizational risks.
In Agile environments, some risk management activities are inherently embedded in the Agile method used. For example, some technical risks can be addressed by encouraging experimentation (early “failures”) or by executing a “spike” outside of the routine iteration. However, the Risk Management process encourages a more systematic approach to managing risks, both technical and non-technical. Such an approach can be integrated into Agile’s typical iteration and meeting rhythms; more specifically, during iteration planning, task estimating, and acceptance of tasks.
Organizations may choose to purchase a risk management process and procedures rather than develop them. Using the Causal Analysis and Resolution process, they can tailor the process to fit their organization.