The project risk management plan is a formal document used to initiate and control the risk management process and required for identifying, analyzing, and mitigating risks and threats to current project. The project risk management plan determines actions and activities to plan risk responses and monitor the project.
The idea of the project risk management plan is to help project participants obtain better project results in terms of time, cost, scope and performance. The project risk management plan is intended for ensuring that:
- All project risks are identified with reference to both potential consequences they represent and the likelihood of values required for decision-making.
- Individual risks relative to priority setting and resource allocation are assessed and understood.
- Strategies and policies for treating project risks are developed and implemented to address all the existing opportunities for risk mitigation.
- Cost-effectiveness is taken into account while treating project risks.
Successful implementation and realization of the project risk management plan results in the following:
- Improved planning, prioritization and decision making.
- More efficient allocation of both human and financial resources.
- Minimization of unexpected outcomes and prevention of serious financial losses.
- Increased probability of successful project plan realization in terms of time, scope and cost.
The project risk management plan is a mix of all the plans developed on earlier stages of a project. To create such a plan, the project manager together with the project team needs to use the project scope statement, the cost management plan, the schedule management plan, and the communications management plan. By means of group meetings and discussions, the project manager collects, filters out, and analyzes information in order to build the project risk management plan considering existing environmental factors. The project team helps collect and analyze necessary information.
One of the most effective ways to address and manage risks is to develop and implement risk management standards that provide guidance on reducing the impact of usual and extreme risk events. If a project comes up on a regular basis, the project manager can use risk management standards.