There is an old saying: “Time is money.” There couldn’t be a truer statement, especially in the corporate world, and if you’re in the business of saving time and money, then you should know the value of risk management. In this Tech Republic article, author Frank Ohlhorst discusses how managing risk can lead to significant savings in both time and money.
Understanding Risk Management
Risk management is an essential part of ensuring project success. By anticipating risks, a project manager is able to adjust the budget, schedule, and resources accordingly to then appropriately handle uncertainties if and when they happen. There are four components of risk management, and once we understand these, only then can we execute risk management to its fullest potential.
- Risk Avoidance. This is a technique that seeks whether a practice involves any level of risk. If so, action is taken to discontinue the practice and/or find alternatives.
- Risk Prevention/Mitigation. To mitigate a risk means to reduce the probability of the risk impacting the project.
- Risk Retention. This is a risk that a business is willing to take and the level of tolerance it will accept of the risk impacting the project.
- Risk Transfer. When transferring risks, risk is given to another entity for reasons that include budget constraints, assigned duties or infrastructure/process ownership. An example would be buying insurance, thus transferring risk to the insurer.
“Knowing the components that make up risk management helps managers determine what the most important element of risk is, and that is knowing what risks exists. That takes a methodological approach of inventorying risk. A process that requires comprehensive tool sets that automate discovery, organization and reporting. Nowhere is that more important than in the IT realm, where complexity, as well as intricate relationships prove to be abundant.”
Read the full article here: http://www.techrepublic.com/article/save-money-by-managing-it-risk/