1. Risk Management is an important step in a project or for an organisation. Risk management is the process of identifying the potential risks before they occur. It is an integral part of the governance and good management. Every project face risks some are expected while some are unexpected. These risks may cause the projects to incur extra cost or may even lead to its closure. Risk management plan helps the project managers to be prepared for the unexpected risks, minimising the impact of the expected risks, and thus reducing the costs involved in the risks.
Risk management is the part of the planning phase of a project. By doing this, the managers make contingency plans for the identified risks which would impact the project in terms of cost, scope, budget, or time.
2. A risk management plan is a document which describes the approach of the management to manage the risks. The key components of risk management plan are:
Roles and Responsibilities: This defines the lead, support and members and the responsibilities of the everyone involved in the risk management plan. It is important to establish the roles and responsibilities of the personnel involved in the risk management plan.
Timing: this refers to the times that that risk management process was performed. For results to have an impact on the decisions, the risk management process should be performed very often.
Thresholds: is a tool to measure the degree of uncertainty and the level of impact of the risk. It sets a certain value that the risk would be accepted by the organisation or not.
Communication: it is the exchange of information with the mere objective of ensuring that the understanding of the risk is improved, which would affect the perception of the risk, and equipping people to act appropriately in response to an identified risk. A strong communication is the foundation of the risk management.
Tracking and Auditing: it is the examination and documentation of the effectiveness of responses to deal with the identification of the risk and their causes for understanding the effectiveness of the risk management process. It is important to conduct risk audit for the development of the management of the risk.
3. The 10 principles of risk management are:
Product or Service
4. Evaluation of the risks helps in determining the significance of the risks and helps in deciding whether an action is required for reducing or mitigating the risk. They can be evaluated by considering the consequence and probability of each risk. Sensitivity analysis is used for prioritising the risk; it helps in determining the potential impact of the risk on the project.
5. The following concepts are explained in brief:
Risk Responsibilities: it is the responsibility of the risk manager to communicate the risk policies and procedures for an organisation. The responsibility of the risk manager is to ensure that the risks are identified, evaluated, and their mitigation strategies are developed in time.
Risk Register: risk register is a risk management tool which is used for identifying the potential risks in an organisation, which can cause the derailment of the project outcomes.
Risk Criteria: standards which represent a view, of which risks are acceptable, unacceptable, or need to be reduced for optimum functioning of a project.
Risk Classification: it is determination of risk being preferred, standard or sub-standard on the basis of underwriting or risk evaluation process.
6. Strategy that can be used for ensuring participatory arrangements are established and maintained with employees and their representatives within a small business.
A task group should be set up for overseeing the design of participative arrangements
Ideas should be encouraged from all the group members and employees of the organisations
Draft roles, responsibilities, structures, and timelines
Seek feedback from the stakeholders and management of the business
Develop documentation and procedure requirements, for example, forms.
Train the employees
Review policies and procedures, for accommodating changes according to the needs and requirements of the employees
7. The main purpose of AS/NZS/ISO 31000:2009 is to provide a common approach in support of the standards dealing with specific risks and/or sectors, and does not replace those standards.
Some similarities between AS/NS/ISO 31000:2009 and risk management plan are as follows:
a) it provides guidelines on risk management.
b) it is used by all the organisations: private and public enterprise, irrespective of the industry or sector.
c) it is applied throughout the life of the business organisation.
d) is used for all types of risks irrespective of their nature, or consequences.
8. Steps in developing risk management plan are as follows:
Identify the risk
Analyse the risk
Evaluate the risk
Treat the risk
Monitor and review the risk
9. Methods which can be used to consult with employees to review effectiveness of the risk management plan are as follows:
Through staff meetings and communication.
Through Feedback forms
Through E-mails, newsletters or other written communication methods
Through establishment of employer/employee (and employee representative) committees
Regular performance and training reviews
10. The stakeholders are included in the determining the objectives of the risk management because they help in understanding the different causes of the risks, help in identifying the risks that the project may have, and also help in development of the risk mitigation strategies.
11. Two methods that can help a project manager to keep up-to-date to any risk probabilities beforehand are:
Continuous monitoring of the progress of the project
Regular tracking of the risks
Making report after completion of the project for identification of the risks, their causes and effects; so that it can be taken care of in another project.
12. Two key components of risk management plan are as follows:
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