Concepts
Risk management is an integral aspect of effective program management. It involves the identification, analysis, and handling of potential risks that could adversely affect the successful achievement of program objectives. The Program Management Professional (PgMP) exam emphasizes the importance of regular risk evaluation concerning both new and existing risks that could impact strategic objectives.
In this context, the governance board’s role is critical. As program managers, conducting regular risk evaluations and presenting updated risk management plans to the governance board for approval is a strategic prerequisite for ensuring successful program outcomes.
1. New Risks Evaluation
New risks arise with every change in the environment where the program operates. Evaluation of these risks is critical before they become real threats. The process includes risk identification, risk analysis, and developing risk response strategies.
- Risk identification: Here, program managers should identify potential risks that could impact the agenda. They can apply numerous risk identification techniques such as scenario analysis, expert judgment and brainstorm construction.
- Risk analysis: After identifying potential risks, a program manager should analyze their potential impact on the overall program by using probability and impact matrix.
- Risk response strategies: Based on the risk analysis, program managers should develop response strategies. This could involve risk avoidance, risk sharing, risk reduction, or risk acceptance.
2. Existing Risks Evaluation
Over time, existing risks may either escalate or decline. Regularly assessing these risks is essential to gauge their current state and to devise appropriate strategies accordingly. The process is similar to new risk evaluation and includes risk identification, risk analysis, and risk response strategies.
3. Communicating Risk Evaluation to the Governance Board
Communicating the risk evaluation outcomes effectively to the governance board is crucial. The governance board reviews these plans, ensures they align with the organization’s risk tolerance and strategic objectives, and provides the final approval.
An example of such communication could look like:
| Identified Risk | Risk Analysis (Probability x Impact) | Response Strategy |
|---|---|---|
| Risk A | High | Risk Avoidance |
| Risk B | Medium | Risk Reduction |
| Risk C | Low | Risk Acceptance |
In conclusion, in order to achieve the strategic objectives efficiently, regular risk evaluation is essential. As a program manager preparing for the PgMP exam, make sure you understand the importance of identifying new and existing risks, analyzing their potential impacts, developing appropriate response strategies, and effectively communicating these plans for governance board approval. In this context, regular assessments and updates are optimal practices, enabling swift response to changing risk landscapes, contributing significantly towards successful program outcomes.
Answer the Questions in Comment Section
True or False: The process of regularly evaluating new and existing risks related to strategic objectives is fundamental for risk management in program management.
- True
- False
Answer: True
Explanation: The process of regularly evaluating risks is crucial in keeping the risk management plan up to date. This thorough evaluation helps in making informed decisions and mitigating risks proactively.
Who typically approves the updated risk management plan in a corporate setting?
- a) The Program Manager
- b) The Governance Board
- c) The Program Team
- d) The Project Stakeholder
Answer: b) The Governance Board
Explanation: The governance board is responsible for overseeing the governance process and providing approvals for updated risk management plans.
What is the primary reason for regularly evaluating new and existing risks?
- a) to update the project schedule
- b) to update the risk management plan
- c) to redesign the program
- d) to recruit new team members
Answer: b) to update the risk management plan
Explanation: Regularly evaluating new and existing risks primarily helps in updating the risk management plan, which aids in proactive risk mitigations.
Multiple Select: Which are important factors to consider while updating the risk management plan?
- a) Assessing the impact of the risk
- b) Frequency of the risk occurring
- c) Strategic objectives of the program
- d) Current team capacity
Answer: a) Assessing the impact of the risk, b) Frequency of the risk occurring, c) Strategic objectives of the program
Explanation: Understanding the potential impact, possible frequency, and how the risk relates to strategic objectives is crucial while updating a risk management plan.
True or False: The program manager is solely responsible for risk management in program management.
- True
- False
Answer: False
Explanation: While the program manager plays a key role in risk management, it’s a collaborative process involving the entire team, stakeholders, and the governance board.
What is the goal of evaluating risks that impact strategic objectives?
- a) Reduce cost
- b) Improve performance
- c) Deliver projects on time
- d) All of the above
Answer: d) All of the above
Explanation: The goal of evaluating risks is to ensure effective risk mitigation strategies, which enables cost reduction, improved performance, and timely delivery of projects.
True or False: The risk management plan is a static document that once created, doesn’t need any further updating.
- True
- False
Answer: False
Explanation: The risk management plan is a dynamic document that needs regular updating based on the new and existing risks evaluated.
What’s the frequency of evaluating new and existing risks?
- a) Once a year
- b) Twice a year
- c) Quarterly
- d) Continuous process
Answer: d) Continuous process
Explanation: Evaluating risks is a continuous process in program management, with regular updates as and when new risks are identified or existing risks evolve.
What should be done if a new risk that impacts strategic objectives is identified?
- a) Update the risk management plan
- b) Ignore the risk
- c) Inform the governance board
- d) a) and c)
Answer: d) a) and c)
Explanation: If a new risk is identified, the risk management plan needs to be updated, and the governance board should be informed to decide on the plan’s approval.
True or False: One of the primary objectives of the PgMP exam is to evaluate candidates’ ability to manage risks impacting strategic objectives.
- True
- False
Answer: True
Explanation: The PgMP exam is designed to test a candidate’s ability to manage entire programs – including the capability to identify, assess and mitigate risks impacting strategic objectives.
This blog post is incredibly insightful. Regularly evaluating risks is crucial for any strategic objective.
Does anyone have any tips on specific tools for risk evaluation in program management?
Great post! It emphasizes the importance of aligning risk management plans with strategic objectives.
How often should we re-evaluate our existing risks?
Thanks for the information!
What are the key components that should be included in an updated risk management plan for governance board approval?
I feel this blog post could have gone deeper into specific methodologies for risk evaluation.
Appreciate the blog post!