The objective of Risk Assessment is to rank the risks in terms of their harm inflicting potential. For risk assessment, initial every risk ought to be rated in 2 ways:
- The chance of a risk coming back true (denoted as r).
- The consequence of the issues related to that risk (denoted as s).
Based on these 2 factors, the priority of every risk is computed:
Where p is that the priority with that the danger should be handled, r is that the likelihood of the danger changing into true, and s is that the severity of harm caused thanks to the danger changing into true. If all known risks are prioritized, then the foremost probably and damaging risks are handled initial and a lot of comprehensive risk abatement procedures are designed for these risks.
After all the known risks of a project area unit assessed, plans should be created to contain the foremost damaging and also the possible risks. Completely different risks need different containment procedures. In fact, most risks need ingenuity on the part of the project manager in the attempt the danger.
There area unit 3 main ways to set up for risk containment:
- Avoid the Risk:
This might take many forms like discussing with the client to alter the necessities to scale back the scope of the work, giving incentives to the engineers to avoid the danger of personnel turnover, etc.
- Transfer the Risk:
This strategy involves obtaining the risky part developed by a 3rd party, shopping for insurance cowl, etc.
- Risk Reduction:
This involves coming up with ways to contain the harm because of risk. as an example, if there’s a risk that some key personnel may leave, a new achievement is also planned.
To choose between the various ways of handling risk, the project manager should take into account the price of handling the danger and also the corresponding reduction of risk. For this, the danger leverage of the various risks is often computed.
Risk leverage is that the distinction in risk exposure divided by the price of reducing the danger. Formally,
Risk Leverage = (risk exposure before reduction – risk exposure once reduction) / (cost of reduction)
Risk Related to Schedule Slippage:
Even though there square measure 3 broad ways to handle any risk, however still risk handling needs loads of ingenuity on the part of a project manager. As associate degree example, it will be thought-about the choices offered to contain a crucial style of risk that happens in several computer codes comes – that of schedule slippage. Risks concerning schedule slippage arise primarily thanks to the intangible nature of computer code. Therefore, these will be proscribed by increasing the visibility of the product.
Visibility of a product will be redoubled by manufacturing relevant documents throughout the event method where meaty associate degreed obtaining these documents reviewed by an applicable team. Milestones ought to be placed at regular intervals through a computer code engineering method to supply a manager with the regular indication of progress. Completion of a section of the event method before followed needn’t be the sole milestone. each section will be counteracted to reasonable-sized tasks and milestones will be scheduled for these tasks too.
A milestone is reached, once documentation made as a part of a computer code engineering task is made and gets with success reviewed. Milestones needn’t be placed for each activity. associate degree approximate rule of thumb is to line a milestone each ten to fifteen days.