Reference no: EM132579810

Risk management plan is comprised of a set of procedures that are brought into execution whenever things go out of proportion in an industry expectedly. As far as the key components are concerned, the information under "Risk Management Planning" from opentextbc has explained the plan under different subheadings. Risk Identification secures a prominent place in key components of the plan. It consists of utilization of checklists for potent risks and investigating that those activities might take place during the desired project. The author gives an example of John, who categorized things that could go wrong and makes use of it as a guide to minimize his losses. Second comes risk evaluation, where each risk is thoroughly scrutinized for its likelihood of occurrence and the negative impact it could bring along. In the third phase, risk mitigation plan is prepared to cut down the losses it might cause by addressing the risk in different ways such as avoidance, sharing, transfer and reduction. Avoidance makes sense in connection to preventing risk from happening and sharing calls for certain actions that could minimize the damage to the projects. Getting insurance for the project or to accept the risk while keeping an eye over the different possibilities could also help.

There are six elements of a perfect risk management plan (Roseke, 2015). These include definitions, assumptions, risk breakdown structure, probability impact matrix, accuracy estimates and risk register as we go down the list. Definitions could be different for every risk depending on its likelihood of taking place, such as high, medium, low, etc. Assumptions are purely based on your good cognitive skills. Impact matrix and accuracy estimates help to figure out the impact the risk would have and the accurate losses it might inflict respectively. Finally, risk register includes the name and description of the risk. Probability is estimated in terms of values from 0 to 1 and impact is figured out in the form of dollar worth or numeric figures from 0 to 1. Risk is found as the product of probability and impact and fine risk management plan definitely has a priority checklist too to address the most potentially harmful risks first. Conclusively, a response plan sums up the risk management plan, which is designed for the top three deadly risks.