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Risk Management: A Seven-Step Approach
A risk management process does not have to be complicated or time consuming to be effective. By following a simple, tested, proven approach that involves seven or fewer steps at the beginning of each project, your team can reduce surprises and be better prepared to respond when they do occur.
Some experts say a strong risk management process can decrease problems on a project by as much as 90 percent. In combination with solid project management practices — having a well-defined scope, incorporating input from the appropriate stakeholders, following a good change management process, and keeping open the lines of communication — a good risk management process is critical in cutting down on surprises, or unexpected project risks. Such a process can also help with problem resolution when changes occur, because now those changes are anticipated and actions have already been reviewed and approved, avoiding knee jerk reactions.
Defining "Risk"
Before one can embark on a risk management process, one must have a solid understanding of some key definitions. Project risks as defined from a PMI perspective are, at their core, unknown events. These events can be positive or negative, so that the word "risk" is inherently neutral. That said, most of the time and focus is spent handling negative project risks, or "threats," rather than …
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