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Risk management plan
Short answer
A risk management plan describes how risk activities will be structured, including methodology, roles, budgeting, timing, risk categories, probability and impact definitions, a probability-impact matrix, stakeholder tolerances, and reporting formats. It does not contain individual responses; those are in the risk register.
What do you mean by a risk management plan?
A risk management plan is a component of the project management plan that describes how risk management activities will be structured and performed in the project. It is the output of Plan Risk Management. It does not contain individual risk responses; those are recorded in the risk register.
Contents
| Element | Description |
|---|---|
| Methodology | Approaches, tools and data sources used |
| Roles and responsibilities | Risk owners, team, who approves |
| Budgeting | Funds for risk activities and contingency reserve |
| Timing | When and how often risk processes are performed |
| Risk categories | Often shown as a Risk Breakdown Structure (RBS) |
| Definitions of probability and impact | Scales (very low to very high) for each objective |
| Probability and impact matrix | Rating of risks as low, moderate or high |
| Stakeholder risk tolerances | Thresholds of stakeholders |
| Reporting formats | How risk results are documented and communicated |
| Tracking | How risk activities are recorded and audited |
Risk breakdown structure (example)
Project risk
|-- Technical: requirements, technology, quality
|-- External: vendors, regulation, market
|-- Organisational: funding, resources, priorities
|-- Project management: estimating, planning, control
Inputs and tools
Inputs: project scope statement, cost management plan, schedule management plan, communications management plan, EEF and OPA. Tools: planning meetings and analysis involving the project manager, team, sponsors and stakeholders.
Importance
- Defines a systematic way to manage risk.
- Ensures the level, type and visibility of risk management suit the project's size and importance.
- Allocates resources and responsibilities.
- Establishes a common understanding of risk ratings.
Example: A plan for an e-governance project sets a risk review at every fortnightly meeting, defines "high impact" as a delay of over 4 weeks or a cost increase of over 10%, and allocates 8% of the budget as contingency.
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