Risk Response and Regular Reporting
5. Develop a risk response plan
While the above steps are a critical part of risk management, the process won't be complete if you don't have a risk response plan. Risk response refers to the actual steps that you'll take to mitigate risks and ensure the success of your project. There are generally 4 procedures that are involved when implementing a risk response plan: risk acceptance, avoiding, transferring, or mitigating. A risk can be accepted if its effect on the project will be negligible. This means understanding that such threats are likely to happen and carrying out the project in recognition of those risks.
You may also choose to avoid a risk entirely. With this response, you will essentially plan and implement the project in a manner that you avoid coming across the risk. The third response, transferring, occurs when the risk cannot be realistically avoided. The risk is thereby transferred to another party, such as an insurance company.
In exchange for premiums, insurers accept certain types of risk and provide coverage/compensation in the event that those risks were to occur. The fourth response, mitigation, refers to minimizing the effects of potential risk on your project. This means understanding all potential causes or factors that surround this risk and developing compensatory mechanisms to minimize project disruption.
The actionable steps described above will form the basis of your risk response plan. You can see how, by understanding your risk environment, you can develop more effective responses to ensure that your project runs smoothly.
6. Regular reporting
After the development of a risk response plan, it helps to follow up on the process and determine how effective your actions actually are. This can be done via continuous reporting, where you regularly track risk occurrence and the type of response that was implemented. Was this response effective? Is your project still on course for completion? What could have been done better?
These questions can be answered by keeping detailed records of the risk management process and how it influenced the success of your project. Furthermore, such insights can be used during future projects so as to improve on your risk response techniques.