- For any project you might manage, there will be risks. Risk management is all about figuring out what these could be before they happen so that you can manage them proactively, mitigate them and deal with them effectively. In this video, we'll discuss the risk context and events. And after that, we'll move on to project risk analysis in management or PRAM, in some depth. Before you can manage risk, you need to understand the risk context, which could be influenced by the external environment, the industry you're in, stakeholders and the organization's attitude. The last is especially important. For instance, maybe your organization is risk averse, risk neutral, or even risk seeking. Their attitude will in many ways define how risk is viewed and dealt with, so it's important to know what it is. Okay, so the risk context sets the scenes for your organization's approach to dealing with risk. But what exactly is a risk event? The APM defines a risk event as an uncertain event or set of circumstances that would, if occurred, have an effect on the achievement of one or more objectives. All projects contain risks, but some of these could result in opportunities while others could result in threats. To know which one you are dealing with, describe your risk in terms of a cause that could trigger an event, which is where the area of uncertainty is and the possible effects it might have. This will help you to manage your risk because you will have identified, assessed and proactively dealt with them. Let's go into more detail around exactly how you can do this by discussing the APMs project risk analysis and management process, PRAM. Each of the five steps in the process have quite a lot of detail in them. I won't cover them all here, make sure you read through the resources for this section to make sure that you understand PRAM as well as you need to. PRAM is a five step process with a sixth step that happens consistently throughout the process. The five steps are initiate, identify, assess, plan responses, and implement responses. While the ongoing activity is to manage these processes. The managed process activity, will review the effectiveness of each step, as well as ensuring the processes is implemented correctly. In the initiate phase, you'll define how risk will be managed on a project and document this in the risk management plan, which will form part of the PMP. To do this you need to make sure that the project and its scope have been clearly defined. Otherwise you won't be able to identify potential risks for it. There are other factors that will impact the risk management plan, like the project size, complexity and it's strategic importance. You'll also need to think about your organizations risk attitude and the risk appetite at this point. Next it's time to identify risks. To do this properly make sure that you consult with your team, customers, subject matter experts and any other stakeholders to get their insights. There are lots of different techniques you can use to identify risks, and I'll just mention them here, but again, you can get a clearer breakdown of them all in the resources we've provided. Techniques include assumption analysis, constraints analysis, checklists, prompt lists, brainstorm workshops, interviews, and SWOT. I recommend using a few different techniques to get the most comprehensive view of the risks. Once you've done this, you'll need to record the identified risks in a risk register, which should include a description of each risk, the detail of the risk response and the risk owner. Let's move on now to phase three, assess. During this phase, you'll need to try and qualitatively assess the risks and figure out just how likely they are to happen and what the impact will be if they do. A useful tool for you and your organization at this point is the probability and impact grid, which you can use to plot the likelihood and impact of any threat in comparison with another. Now that you've assessed the risks to the project, it's time to plan your responses. These could either be proactive responses that are planned responses to address the impact or likelihood of the risk happening, or reactive responses, which basically means that there's nothing you can do presently and you'll have to deal with the risk should it happen. Risks might present threats or opportunities, so plan accordingly. Last up it's time to implement the risk management plan. To do this the risk management process should be regularly reviewed to ensure its effectiveness. There will be a few hard and soft benefits when you do this successfully. Hard benefits that might need to be more tangible and easier to quantify, while soft benefits may revolve around the people side of risk management and the development of more mature risk management approach. Benefits might include things like discouraging the acceptance of financially unsound projects or creating more credible plans, schedules, and budgets. And that's it for this video. Effective risk management will help you mitigate threats to your projects and take advantage of opportunities. In this video we've discussed risk management, as well as the five step PRAM process, which you can use to deal with any risks your project might be susceptible to.