What is PMBOK® Guide’s Project Risk Management Process?
Nothing | Zilch | Nada | Zero
That’s impossible! PMBOK® Guide contains globally recognized Standard for Project Management. Surely the Guide would define a Project Risk Management Process.
Let me state something that belies common wisdom.
PMBOK® Guide does not define a Project Risk Management Process.
Before I explain this, let us understand the meanings of a Standard and a Process. Let us look at some standard definitions.
A level of quality or attainment.
A series of actions or steps taken in order to achieve a particular end.
In simple terms we can say that a Standard is used as a basis of comparison or judgement. On the other hand a Process is a sequence of actions carried out in a definite manner.
PMBOK® Guide contains globally recognized Standard. It does not define a Project Risk Management Process (PRMP). In fact, it does not define any process or methodology.
PMBOK® Guide, however, defines 6 atomic Processes for conducting Risk Management. But the Guide is silent on how these processes are to be performed in a Project. The Guide neither defines the sequence among these Processes nor provides a mandate to perform them. The Guide just says that Project Team should perform these processes to enhance the chance of success of their project.
You should read Page 48 of PMBOK® Guide 5th edition to understand the definition & explanation of a process.
Why does everyone talk about PMBOK® Guide’s Project Risk Management Process?
Frankly I don’t know the answer for this. In fact, I have also seen many project management books and literature that describe so called PMBOK® Guide’s Project Risk Management process. The irony of the situation is that you can even hear some ridiculous terms like “PMP Risk Management”, “PMBOK Risk Management” and what not. I think, whatever the source of study might be, you should ignore these fallacious terms.
In my opinion it is important to learn a subject using correct terminology. In our case it is important to distinguish between a Process and set of 6 processes. The distinction may sound academic but it is important; especially if you are preparing for the PMP® Exam. So don’t get caught by “PMBOK Risk Management” or “PMP Risk Management”.
Let us define a PRMP that is based on PMBOK® Guide’s 6 process. But before that let us quickly define Risk.
Project “Risk” has same meaning as English “Risk”. It signifies “possibility”, “chance” or a “potential”. A Risk is something that has not yet happened but is likely to happen in future. Project Management goes a step of English meaning and says that a Risk can be either positive (Opportunity) or negative (Threat). As per PMBOK Guide® there is a Probability and Impact associated with every Risk.
You should read What is Project Risk to understand the definition and characteristics of a Risk in detail.
Project Risk Management Process (PRMP)
Let us now define a simple PRMP. While defining we will also learn about Project Risk Management as whole. We will also understand how our process is related to the 6 processes defined in PMBOK® Guide. This will help you in preparing for PMP® Exam as well.
Let us assume that we have to Manage Risks for a Project. Let us define an Approach to manage project risks. A simple approach is depicted in the following diagram.
This simple approach is our PRMP. Let us understand the approach/process in detail.
I – Plan
The process would start with Planning for Risk Management (RM). This will include planing for[custom_list icon=”arrow-circle-right” iconcolor=”#5e9c19″]
- List of RM Activities
- Responsibilities associated RM Activities
- Budget allocated for RM Activities
- Timing of RM Activities
- Communication and reporting for RM Activities
II – Identify
Next step would be to Identify Risks for the project and make a list of them. This will also include[custom_list icon=”arrow-circle-right” iconcolor=”#5e9c19″]
- Identify Risk Characteristics
- Identify Symptoms, Root Causes and Triggers
- Describe Impact on Project Objectives
- Write detailed Risk Statements
III – Analyze & Prioritize
Next logical step would be to Analyze all the listed Risks and Prioritize them for future action. This will include[custom_list icon=”arrow-circle-right” iconcolor=”#5e9c19″]
- Analysis of Probability of each Risk
- Analysis of Impact of each Risk
- Analysis of Urgency of each Risk
- Prioritization of each Risk
IV – Strategize
Next logical step would be to Plan Risk Responses for Prioritized Risks. This will include[custom_list icon=”arrow-circle-right” iconcolor=”#5e9c19″]
V – Monitor & Control
Next logical step would be to Monitor & Control the Identified Risks. Since Risks are uncertain and they are likely to happen in future, Monitoring & Controlling should be done continuously. In addition the preceding 4 steps should be performed regularly and continuously as new Risks may come. This will include[custom_list icon=”arrow-circle-right” iconcolor=”#5e9c19″]
- Monitoring all identified Risks
- Controlling the Risks through Planned & Unplanned Responses
- Evaluating the Risk Process Effectiveness
PMBOK® Guide and Project Risk Management Process
We have now covered “PMBOK Risk Management”…er… I mean a simple PRMP. Let us draw a parallel between PMBOK® Guide’s 6 atomic processes and our PRMP.[custom_list icon=”plus-circle” iconcolor=”#5e9c19″]
- Step I is equivalent to Process 11.1 (Plan Risk Management)
- Step II is equivalent to Process 11.2 (Identify Risks)
- Step III is part of Process 11.3 (Perform Qualitative Risk Analysis) and Process 11.4 (Perform Quantitative Risk Analysis).
- Step IV is equivalent to Process 11.5 (Plan Risk Responses)
- Step V is equivalent to Process 11.6 (Control Risks)
Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net