What is risk management and project scope statement?
The main purpose of risk management is to identify, access and control the risks that alter the functional behavior of the project. The objective behind this risk management is to decrease the causes of negative events on the project so that project will be delivered that satisfies the customer requirements. In order to manage the risk, a risk management plan is developed for the identification and migration of risks. It is quite important to develop risk management plan in all organizations as risks adversely affect the functionality of the projects. It is also possible that risk in the project alters the budget, schedule scope and quality of the project which may also lead to the failure of project. The risk management is important to increase the probability of positive events and to reduce the occurrence of negative events in projects. IN addition to this project scope management is also an important aspect of project as it is developed to ensure that project include the desired functionality. Along with this, scope management plan is used to identify what requirements are required and are not required in the project. Basically, scope of the project is defined as the features and functionalities that characterizes a project.
Risk management processes
There are six project management processes namely plan risk management, identify risk, qualitative risk analysis, quantitative risk analysis, risk plan response, monitor and control risk.
- Plan risk management- This is the first process of risk management in which project manager analysis and make decision to implement risk management plan in order to minimize the impact of risk on the project’s functionality. Thus, risk management plan is developed in the initiation phase of the project management in order to reduce the impact of risk on the project. In risk management plan the risks associated with schedule, cost, quality, scope, resource and customer satisfaction are analyzed to ensure that the risks will be mitigated timely so that project will meet the requirement of the project.
- Risk identification process- In this process the risks are identified by using risk identification tools and techniques. In risk identification process, the risks that have high probability of occurrence are identified by using information gathering process. The risks are identified by using SWOT analysis, check list Analysis and assumption analysis and project manager develops a risks mitigation plan after identifying risks.
- Qualitative and qualitative risks analysis- In this process, project manager access impact and likelihood of identified risk and develops a probability and impact Metrix. After development of risk Metrix, project manager categorizes the risks on the basis of its impact and influence on the project. While in case of qualitative risks analysis, project manager and its development team gather data by using decision tree analysis, sensitivity analysis, expert judgment
- Plan risk response- Project manager develops a risks response plan in which he tries to eliminate the risks before they happen. In short, by designing risks response plan project manager can efficiently decrease the impact of risk on the project. Along with this, he also develops a contingency plan and fallback plan in which he plans what to do if risk happens.
- Monitor and control risks plan- In this phase, project manager develops a risk mitigation plan by using appropriate tools and techniques. He also develops a risk breakdown structure (RBS) in order to reduce the impact of risk so that the actual functionality of the project will not get affected in any case.