Methodology essay paper

Methodology

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PORTFOLIO RISK MANAGEMENT PROCESS

Introduction
KRMC follows a risk management process that manages project, program, portfolio, and observatory risk. For a general overview of KRMC’s risk management process, click here. This document discusses Portfolio risk management only. For a more detailed look at the complete risk management system at KRMC, see KRMC Risk Management on the Project Management Knowledge Base. Methodology
Portfolio risk is defined here as the potential for loss due to uncertainty at the KRMC Portfolio level. The potential for Portfolio risk is found by assessing the Portfolio’s strategic objectives using the categories of strategic, operational, financial, and compliance.
There are two levels of risk:
• Strategic risk- risks identified at the portfolio level.
• Tactical risk- risks identified by management process or escalated from the portfolio component.
Process
Portfolio risk management includes:
• Risk identification
• Risk Assessment Methodology
• Risk Mitigation Plan and Execution
• Risk Monitoring
• Contingency Plan and Execution
• Closing Risks
Same process as both project and program risks but more focused on the strategic objectives of the Portfolio. To kick-off the Portfolio risk management process, the Portfolio leader will review the Portfolio’s strategic objectives with the Portfolio department leaders and create a risk management plan. The plan will specify what actions the Portfolio leader will take for risk management. Next, the Portfolio leader will start the risk identification process.
Risk Identification

Portfolio risk identification can occur through several activities. Portfolio leaders can brainstorm potential risks against the list of Portfolio strategic objectives, review the Portfolio’s program and project risks registers; and perform a Portfolio risk identification and assessment process. Risks identified should be documented in a Portfolio risk register, template found here. Methodology
Risk Assessment
Once the risks are identified, they need to be assessed and rated. Risks are evaluated on a scale of one to five for impact and likelihood. The Portfolio leader will complete the impact and likelihood columns in the risk register in collaboration with Portfolio department heads. The following risk tolerances provide guidance on completing the ratings. Tolerances should be adjusted for the Portfolio objectives.

Impact
4-5 (High)
Strategic vision will not be met
Operational impact will include a stop or near stop of some functionality
Financial loss will be nn% of budget
Compliance – noncompliance will exist

3 (Moderate)
Strategic vision will be partially met Methodology
Operational impact will include a slow down or inability to perform some functionality without workarounds
Financial loss will be nn% of budget
Compliance – noncompliance is likely

1-2 (Low)
Strategic vision will be met
Operational loss is manageable
Financial loss will be less than 1% of budget
Compliance – noncompliance is probable but can be mitigated

Likelihood

4-5 (High)
Realization of this risk is inevitable. Risk mitigation is weak and there is minimal to no effective contingency plan.

3 (Moderate)
Realization of the risk is likely. Risk mitigation does not cover all areas of the risk and contingency plans are inadequate.

1-2 (Low)
Realization of the risk is unlikely but still possible. Mitigation plan is strong, contingency plan is effective.

Internal Risk Control
The Portfolio risk register includes a column for internal risk controls. These controls are organizational processes or procedures that are part of the organizational operations or culture but not program or project specific. If any applicable internal controls exist, add the description to the risk register and rank its effectiveness. Effectiveness is rated on a scale of one to five with one being most effective and five having minimal effect.

Planning and Implementing Risk response

Mitigation Plan
Risk mitigation planning is the process of developing options and actions to enhance opportunities and reduce threats to project objectives. A mitigation plan attempts to decrease the chance of a risk occurring or decrease the impact of the risk if it occurs. It is implemented in advance.

Contingency Plan
A contingency plan in project management is defined as an actionable plan that is to be enacted if an identified risk becomes a reality. A contingency plan explains the steps to take after the identified risk occurs, in order to reduce impact. The Project Management Institute (PMI) defines contingency planning as, “involv[ing] defining action steps to be taken if an identified risk event should occur.” Contingency plans are not only put in place to anticipate when things go wrong — they can also be created to take advantage of strategic opportunities. If a risk is realized in the Portfolio leader will ensure that the appropriate contingency plan is activated. The exact steps will depend on the contingency plan.

Risk Monitoring
The Portfolio leader will review the Portfolio risk register on a quarterly basis with the Portfolio department leaders. At those meetings, the members will discuss the effectiveness of the mitigation and contingency plans and adjust the risk register, if necessary.
The Portfolio leader is also responsible to roll up all medium and high Portfolio risks to the KRMC EPMO Director for the organizational risk register, as requested. The KRMC EPMO Director will decide which risks are appropriate for the organizational risk register.

Closing Risks
Once a risk is mitigated or realized it will remain in the risk register but moved the closed status. Closing a risk is a formal process to which information on the risk being closed is documented.