So let's talk about risk management.
Risk management is about identifying risks and then making contingencies and managing those risks in
the five risk management ways.
So you're going to want to prioritize the risks and to do this.
You can work out the risk cost and prioritize on a numerical figure.
The risk cost is the probability of that risk happen then.
And times the impact that that risk would have if it does happen.
So then you get you apply a numerical value to each of those and then you get the risk cost with the
higher risk costs being the risks that are going to have a big impact or maybe a high probability of
actually happening.
You can look and find risks by doing the what if methodology.
That basically means just asking what if to all your work packages within the program or projects.
What if our suppliers don't deliver to the quality expected.
What if our suppliers deliver late.
What if the economy goes down.
What if prices fluctuate with products and services that we're buying in.
What is the the value of our currency reduces compared to the currency that we're buying all those kind
of what ifs.
You basically ask as many as you can and you'll tease out the risks and you can put and put them on
to the risk register.
So once you've understood the risks and had a real good go at finding all the risks you've got to make
sure that you understand that there's some unknown unknowns there's always some unknowns that will come
up throughout the work.
And that will cause a problem.
You can't capture every single risk unfortunately.
But when they do come up you've got to make sure that you work out the risk cost immediately and work
out mitigating action to contain that risk as soon as possible.
This is an idea to a lot of margin for unplanned events a margin in time or margin in your budget so
that you can cover those risks and make sure that your resources are fairly flexible so you can redeploy
resources at a moment's notice in order to contain a risk that does actually come out of the blue.
So let's take a look at the five ways to manage risk and then we'll have a look at risk reporting in
the raid system which has risks assumptions issues and dependencies
so the five ways to manage risk include the first one being accept the risk.
So this is really good for small risks and low cost risks.
It basically means that you're going to accept the risk because you don't actually have that much of
an impact or detrimental impacts to the program.
It might actually be take more effort to mitigate that risk then just if the risk occurs.
So for those you could actually just accept the risk the next one the second one is to avoid the risk.
So this is for the complete opposite of those types of risk.
This is for the ones that are really big.
You can have a really big impact on the program.
The ones that you can't afford to happen.
So what you're going to do is completely avoid the risk and this means changing your plan so that there's
no chance of that risk happening thirdly transferring the risk.
So it's also a strategy to actually transfer the management of that risk to another party.
For example if you've got a third party software developer you might identify the risk of the software
not being produced to the quality standard that's needed.
While you might want to transfer the management that risk to the software development so and the software
developer will actually be responsible for the quality of the software that they produce and you'll
have reports and move them on a regular basis and you might actually set up in the contract.
The quality standards that they need to deliver to and if they don't deliver to that then there might
be some financial buyback to to offset that.
This is where insurance is another example you might want to actually ensure something in case a risk
occurs.
So that if the risk does occur at least you've got some financial and finance comes back in from the
insurance
fourthly you might want to mitigate the risk.
And this is one of the more popular ones.
So mitigating is basically limiting the impact of the risk if it does occur.
For example if you've got a new product that's about to launch and is totally cutting edge and you have
to make a certain number of sales and in the first month you might identify that there's a risk that
the sales team aren't able to meet their sales targets that they've been set because they don't understand
the product its benefits and its features.
So to mitigate that risk what you could do is offer sales training to the sales team before the products
launched by giving them a view of the early access to the prototypes or a pre released demo versions
of the products and give them the sales training around that which gives them the best possible chance
to understand the product so that they're better able to sell it.
Now there's always going to be some of the sales staff that aren't able to meet their targets.
But what you've done is you've mitigated it by reducing the chance of the sales team not being able
to meet their targets and then finally the fifth one is to exploit the risk not all risks are bad news.
Sometimes that could be a risk.
That's a positive thing.
For example your product is so popular you can't fulfill the orders.
You're unable to meet the demand.
So you might identify this as a risk and then have a contingency where you have an ability to scale
up production.
If you do need to meet excess demand.