Concepts
Evaluating risks identified by stakeholders and incorporating them in the risk management plan is a critical step. This practice not only ensures that the project delivers value but also safeguards against potential setbacks caused by unforeseen challenges that may crop up during the project lifespan.
Understandably so, every project comes with its inherent risks, and ignoring them can be detrimental to the overall success of the program. Therefore, understanding how to effectively manage these risks can be the distinguishing factor between success and failure.
Identifying Risks
Identifying risks in a program involves being proactive in predicting potential uncertainties that can adversely affect the program. For this to be effective, an organization needs to involve stakeholders, including sponsors, in this process. Stakeholders have unique insights and perspectives about what could go wrong in a program, hence they play a crucial role in risk identification.
Evaluating Identified Risks
After identifying the risks, it is essential to evaluate each one based on the probability of its occurrence and the severity of its impact. Some risks may cause a minor disturbance to the program, while others could lead to catastrophe. A systematic evaluation may involve scoring the risks using a risk matrix.
For instance, in our sample risk matrix below, the severity of impact is indicated on one axis while probability of occurrence is on the other:
| High Impact | Medium Impact | Low Impact | |
|---|---|---|---|
| High Probability | Risk A | Risk B | Risk C |
| Medium Probability | Risk D | Risk E | Risk F |
| Low Probability | Risk G | Risk H | Risk I |
The risks with high probability and high impact (in this case, Risk A) should be given priority during risk response planning.
Incorporating Stakeholders’ Risks into Risk Management Plan
The information from the risk evaluation is then incorporated into the risk management plan. This involves designing strategies on how to handle these risks, whether to mitigate, avoid, transfer, or accept them. Practices like risk avoidance, reduction, sharing, and retention are included in this plan.
Stakeholders play a vital role here too. Since different stakeholders might perceive risks in different ways, bringing everyone on the same page about the potential risks and their management is a crucial task for the program manager.
Review and Monitor
Once the risk management plan is in place, regular review and monitoring of this plan are necessary to accommodate any changes in the program environment. Continuous monitoring helps in detecting any gaps in the current plan, allowing you to update your plan on an ongoing basis.
In conclusion, identifying risks from stakeholders, including sponsors, evaluating these risks, and incorporating them into the risk management plan are key Program Management Professional (PgMP) activities. Active stakeholder engagement throughout the program lifecycle can effectively help mitigate any potential risks before they interfere with the program goals.
This approach might not eradicate all potential risks, but it can help brace your program for uncertainties, increasing the chances of successfully achieving your program objectives.
Answer the Questions in Comment Section
True or False: The Program Management Professional (PgMP) should not consider the risks identified by stakeholders.
- Answer: False
Explanation: As a PgMP, it’s vital to acknowledge and incorporate the observed risks by all stakeholders, including sponsors, in risk management planning.
The role of a Program Management Professional (PgMP) does not involve:
- a) Identifying risks
- b) Evaluating risks
- c) Ignoring risks
- d) Managing risks
- Answer: c) Ignoring Risks
Explanation: Ignoring risks is not a part of a Program Manager’s role, rather they should identify, evaluate, and manage risks meticulously.
True or False: The program risk management plan must always be amended to include risks identified by stakeholders.
- Answer: False
Explanation: While it’s essential to consider risks identified by stakeholders, it’s not necessary these risks will always require amendments to the program risk management plan.
In the context of program management, who can be stakeholders?
- a) Customers
- b) Team members
- c) Sponsors
- d) All of the above
- Answer: d) All of the above
Explanation: In program management, stakeholders can include anyone with an interest or stake in the project, including customers, team members, and sponsors.
True or False: It is unnecessary to evaluate risks identified by non-sponsoring stakeholders.
- Answer: False
Explanation: Risks identified by any stakeholder, whether they are sponsoring or not, should be evaluated seriously, as they can deeply impact the project’s success.
As a PgMP, dealing with risk primarily involves:
- a) Identifying risk
- b) Evaluating risk
- c) Creating a plan to respond to risk
- d) All of the above
- Answer: d) All of the above
Explanation: Risk management in program management involves identifying, assessing, and developing a response plan accordingly.
The Program Management Professional (PgMP) is solely responsible for identifying all risks.
- Answer: False
Explanation: While the PgMP plays a key role in risk identification, they are also reliant on input from stakeholders – including sponsors – to help identify potential risks.
Evaluating risks can aid in:
- a) Decision-making
- b) Reducing uncertainty
- c) Identifying potential problems ahead
- d) All of the above
- Answer: d) All of the above
Explanation: Evaluation of risks assists in decision-making, reduces uncertainties and helps forecast and manage possible future issues.
True or False: A stakeholder’s risk perception cannot influence the risk assessment process.
- Answer: False
Explanation: The risk perceptions of stakeholders can be highly influential in the risk assessment process.
Which of the following is least likely to be part of a program risk management plan?
- a) Risk identification
- b) Risk evaluation
- c) Risk ignoring
- d) Risk response planning
- Answer: c) Risk ignoring
Explanation: A risk management plan is about proactive management of risks instead of ignoring them. It includes identification, evaluation and planning of responses to potential risks.
True or False: During risk evaluation, the likelihood and impact of a risk should be considered.
- Answer: True
Explanation: In risk evaluation, the possibilities of the risk happening and the potential consequences are both crucial aspects to consider.
What does the risk identification process primarily rely on?
- a) Assumptions
- b) Facts
- c) Stakeholder input
- d) All of the above
- Answer: d) All of the above
Explanation: Risk identification is based on certain assumptions, accurate facts and input from stakeholders.
Great insights on integrating stakeholder-identified risks into the program risk management plan!
I found that continuous engagement with sponsors helps in early identification of potential risks.
How often should the risk management plan be reviewed during the program lifecycle?
Thanks, this post was very helpful!
Make sure to prioritize risks based on their potential impact on the program.
Can anyone share experiences on handling conflicting risk inputs from different stakeholders?
Incorporating feedback from all stakeholders ensures a more comprehensive risk management plan.
The blog missed out on the importance of having a risk management software.