5 easy steps to understand the Risk Management System

Every business owner wants to be successful. But often they don’t success. There are lots of factors involve with this result. But Good risk management can help to increase the success rate. Risk management is one of the thing that can make difference between success and failure. During project lots of difficulties arise, for which we don’t prepare. If we can assess those difficulties and prepare our action plan to face those difficulties, we will have better chance to become successful. But there are some event occur for what we not prepare at all. These are risk and a good Risk management system deals with those uncertain events which does matter on our project. Many people think, risk management system is difficult. Some of other say it’s boring and doesn’t work in real life. But in our daily life we all are managing risk. During crossing the road or feeding our kids, we are always do risk management. It’s a since that is developing for a quite a long time. Here in this article I will tell you 5 easy steps to understand the Risk Management System..

Focused Key Words

  • Uncertainties
  • Risk
  • Threats
  • Opportunity

According to ISO 31000, risk is the “effect of uncertainty on objectives”

 

Step 1: Understand the delimitation of risk:

Risk management manages risk. So you need to understand what is Risk? There are lot of definition on risk. Here I will explain little bit so that you don’t have to memorize the definition but you can understand it by heart. Do you think Risk is definition of Uncertainty? Although its sound almost similar but there is difference. All Uncertainty is not risk but all risk are uncertain. For example: you are managing a project in Canada. You don’t know, will there any rain on Kazakhstan tomorrow which is uncertain to you. But you really don’t care about this uncertainty. So we can say “Risk is subset of uncertainty that matters”. Anything that not uncertain not a risk, it might be a problem, it might be an issue, it might be a barriers, requirement or something else but it’s not a risk, if it doesn’t matter it is not a risk either. But what do we know it matters? If it has impact on my object is a risk. In project we set some objects or goals and we concern the thing might affect those objectives. As world is full of uncertainties, we need to filter those only

  • Which one we need to know about?
  • Which one we need to be prepared for?
  • Which one need to be respond to proactively?

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Why you need project management? What type of tool you can use for Efficient Project management?

At the very beginning, I like to discuss little about what is Project management?

Definition from PMI:

Project Management is “The application of Knowledge, Skills, Tools and techniques to project activities to meet project requirement.”

Now I will discuss little bit more about the meaning of Knowledge, Skills, Tools and Techniques which are the major component of a project.

Knowledge:

What known particular field learned through Education:

Example: Each of us, who involve in project generally have some background Knowledge. Some of us Know about Health Care, some know Telecommunication, some other know Construction or Information technology or any green Project.

Skill :

  • Skill is Particular ability
  • Expertise
  • Ability to doing something well from talent, training and practice

Continue reading Why you need project management? What type of tool you can use for Efficient Project management?