Risks are unavoidable in any project. But those can be managed to some extent. As this project is a pilot project, thus there will be more risks associated to it. Risk management process for this project will be more important and critical.
Risk management is a step by step process. It should be started as early as possible in a project. Then risk management process goes in parallel to the actual project development process. Risks can come out any time during a project development process. So, risk management process is needed to be carried out continuously. A typical risk management process will have five steps.
The first step is risk identification. It helps in identifying risks so the problems can be understood. Risk identification is needed to be done as early as possible and in later stages, this step should be carried out frequently during the life cycle of the project.
In the next step after risk identification, the identified risks are needed to be analyzed and prioritized. This is called risk analysis step. In this step, the data and estimations gathered from the risk identification step, will be prioritized and used for making decisions. It helps in committing resources to different operations for managing important risks according to the prioritization. There are many process, tools and techniques for risk analysis. All these can be categorized into two categories. Those are qualitative risk analysis and quantitative risk analysis. In qualitative risk analysis different characteristics of a risk are considered and the risk is analyzed and prioritized based on that. On the other hand, quantitative risk analysis depends on some application of probability theory. It considers likelihood of occurrence of the risk and possible impacts of the risks. Possible impacts are mapped to equivalent monetary value and is multiplied to the likelihood. Based on the results, priorities are set to the risks. (Carroll, 2012)
Next step is risk planning. In this step results from the risk analysis phase will be used for formulating strategies, actions, change requests etc. After planning the risks, the risks will be scheduled to ensure the approval of the plans. These plans are then incorporated into daily activities of the project management process and related infrastructure.