Risk Management Plan: 5 Essential Strategies

Every business is full of uncertainties and having a risk management plan is an imperative. Five keys that can strengthen your plan: This article from Designveloper reveals five critical strategies that can strengthen your plan based on the latest statistics and authoritative reports. We go into particular examples in order to help the reader grasp the difficult topic of risk management. Let us walk with you through this to help protect your business from certain risks. Keep reading for a practical approach to key risk management strategies.

Understanding a Risk Management Plan

Let’s discuss further the notion of the risk management plan. This is an important part of any business strategy. It describes how risks to capital and earnings of an organization can be identified, evaluated and managed. These threats or risks could come in the form of financial insecurity, legal issues, poor strategic decisions, accidents, and natural disasters among others.

Take the example of a tech company. They outlined potential risks in their plan like the leakage of data and stealing of intellectual property. This allowed them to develop strategies to deal with these risks in a way that saved the company from possible losses of capital and brand.

Moving on to the next point, risk management plan is not a universal one. It should be applicable to the needs and situation of each organization. For example, a risk management plan for a construction company would be significantly different from the one for a software development company.

It is essential to involve all stakeholders in creating a risk management strategy. This helps in the identification and mitigation of all potential threats. It also promotes risk awareness at the workplace.

Definition and explanation of what a risk management plan is

Let’s delve into the heart of our topic: the risk management plan. This plan is more of a strategic roadmap that labels, evaluates, and manages the threats to the capital, earnings, and operations of an organization. It is a protection against financial insecurities, legal liabilities, supply chain risks, natural disasters, and even PR scandals.

First, let’s see some latest numbers. In the past five years, a surprising 77% of companies faced operational surprises due to unidentifiable risks. In addition, 61% of companies’ enterprise risk management (ERM) programs are five years old or less. These numbers emphasize the need for a strong risk management plan.

One example would be that of a company with supply chain risk. The PwC Pulse Survey says that 43% of the companies were highly worried about the supply chain risks that would affect their company’s growth in 2023. Proper risk management plan would help reduce such risks and enable the business to continue and grow.

A risk management plan is not a static document. It grows with the organization and its environment. For instance, cybercrime remains a growing threat with 58% of risk executives identifying it among the top-five risks. An adaptive risk management plan would include approaches to deal with such new challenges.

5 Key Strategies of a Risk Management Plan

This section will give detailed information on the tactics that are the center stone for the efficient risk management plan.

Recent statistics indicate that diversification across asset classes and geographies served as the most popular risk management strategy among institutional investors globally in 2020. This approach was used by 84% of respondents from the Asia-Pacific region.

As an example, think of a multinational enterprise with units in different countries. Diversification can mitigate geopolitical threats that will seriously impact 74% of risk managers’ activities in the next 12 months.

In addition, the global RMS market size should amount to $35.9 billion by 2032. This expansion highlights the rising significance of strategic risk management plans in the modern dynamic business world.

Risk identification

Let’s kick off our journey with the first strategy of a risk management plan: Risk Identification. This approach is the basis of any risk management plan. It’s the identification of possible risks that can have a negative effect on the operation of an organization.

The recent statistics show that 77% of the companies were victims of operation surprises in the past five years caused by unidentified risks. This stresses how much identification of the risk plays in preventing such surprises.

For example, think of a global company that is functioning in several countries. Such a corporation is potentially at great risk from geopolitical risks. This process would allow an early detection of such risks, and, therefore, an efficient mitigation plan could be developed by the corporate entity.

Risk identification is not a practicing once activity. It is an ongoing process that must develop along with the constantly changing risk landscape. For instance, cybercrime is a developing hazard, and about 58% of risk executives consider it one of the top five risks. Dynamic risk identification would include approaches to discovering such evolving risks.

Risk assessment

As an integral part of every risk management plan, risk assessment is a process of identification, assessment, and ranking of possible risks, which may affect operations of an organization. Now, let us get into the details.

Recent statistics have shown that at least 52% of cybersecurity experts have noticed an increase of attacks in the year that has gone by. Nevertheless, less than one in ten (8%) of organizations do cyber risk assessments monthly, and only two in five (40%) do it annually. This information highlights the need for frequent risk assessments in a risk management plan.

The tools that are commonly utilized in risk assessment include the risk matrix, decision tree, failure modes and effects analysis (FMEA), and the bowtie model. These instruments enable us to define and assess risk severity.

For example, think of a local store. Theft would be categorized as high risk and high impact in the risk matrix. The shop would be able to adopt preventive measures such as installing security cameras to minimize this threat.

Remember that a good risk assessment does not just list the risks but also specifies ways to reduce them. It should be an ongoing activity, one that is done frequently to address new risks and organization changes.

Risk prioritization

Risk prioritization is one of the central strategies of a risk management plan. It is the process of prioritizing the potential risks in terms of risk severance or possible impact to the organization. Let us dive into this deeper.

Risk prioritization comprises many elements such as risk attitude, risk sensitivity, and resource availability. For instance, risk-tolerant and risk-averse organizations prioritize risks in a different manner from each other.

Think of a software development company. They may consider compliance with new laws as a high-risk area because this may lead to heavy fines and reputational damage. Conversely, a manufacturing firm may place a high importance on supply chain risk because of the possibility of delay in production.

It should be noted that risk prioritization is a continuous process. It’s a dynamic process that should be reviewed periodically to accommodate the changes in the organization and its environment.

Risk mitigation

Risk mitigation is an important element of every risk management plan. It centers on the creation and execution of plans aimed at minimizing the probability or severity of known threats. Now, let us take a closer look at this subject.

There are four common risk mitigation strategies: dodging, minimize, transference, and acceptance. The choice of each strategy is made depending on the risk’s nature and the risk tolerance of the organization.

To illustrate, a software company might employ the avoidance strategy towards a data breaches related risk. This may include deploying strong cyber security measures and carrying out routine security audits.

However, a reduction strategy could be applied to supply chain risks by a manufacturing company. For example, this might include multi-sourcing or holding a buffer stock.

Risk monitoring and review

The final, yet continuous, strategy in a risk management plan is risk monitoring and review. It is the procedure of following known risks, tracking residual risks, identifying new risks, and assessing risk process efficacy during the project life cycle. Let’s explore it further.

Risk monitoring and review uses a number of approaches (risk assessment, risk audits, technical performance measurement, reserve analysis, and status meetings). These methods make it possible to trace the identified risks and assess how efficient the risk process is.

Consider a construction company. They can also utilize risk audits to supervise the working of safety measures that have been taken on the construction site. The safety measure is ineffective during the audit, the company may carry out immediate action to control the risk.

The Risk Management Plan We Implement at Designveloper

As a top software development company in Vietnam, we’ve had a chance to witness how risk management can change the course of a project.

We consider our risk management plan to be more than a theoretical model; it’s a resource that we’ve developed as a result of more than a decade of practice. We have dealt with more than 190 projects in the last nine years, and each project has brought something new in terms of risk management in software development.

Specific techniques for risk management

Successful risk management is the key to project success. By using a mix of technology and skill at Designveloper, we have an efficient control of time which is a crucial factor of our risk management plan.

Leveraging technology for efficiency

We make use of strong tools like Jira and Trello to monitor project progress and plan well. These instruments allow you to see workflows and economize time through automation of routine actions. A study conducted by Capterra has shown that organizations which use project management software finish their projects 28% quicker. The result of integrating these tools is the focus of our teams on their tasks and deadlines, which ultimately reduces the possibility of project delays.

Prioritizing tasks effectively

Our team knows that prioritization is critical. We prioritize the completion of critical activities to prevent choke points. An open communication within the team is crucial, particularly if priorities change or client expectations alter. This strategy reduces idle time and effort, guaranteeing that the work done the second time is minimal. A PMI report points out that 37% of projects fail because of undefined priorities. Effective prioritization helps Designveloper to avoid this risk.

Flexible task allocation

Another approach we use is flexibility in task assignment. The selection of tasks is always for team members to do, and a project manager can reallocate the work, if any. This plan makes it possible to concentrate on the most important jobs and provide necessary funds and staff. For example, in a web development project we have had recently, our flexible approach enabled us to quickly allocate resources and meet the client’s deadline without sacrificing quality.

Automation of repetitive tasks

Automation is the key component of our risk management plan. By automating the boring and tedious tasks, we release valuable time for our team to be devoted to more important issues of the project. Introducing automation is not only a means of achieving increased productivity but also of diminishing the possibility of human error to occur.

Continuous improvement and feedback

Continuous improvement is one of the final foundation stones of our risk management strategy. We often evaluate our processes and implement feedback to increase our productivity. Utilizing this iterative methodology, we are able to anticipate the risks and to respond to new challenges promptly.

To sum up, the risk management plan of Designveloper represents a combination of sophisticated tools, efficient prioritization, flexible task distribution, automation and ongoing improvement. These approaches guarantee that we handle time effectively and produce quality projects, preventing possible risks. With the use of these approaches, we remain the benchmark for web and software development in Vietnam.

Budgeting and time management tools

Efficiency in managing budgets and time is key in any risk management plan. In Designveloper, we applied the progressive method for leading estimations and management of project deadlines and budgets precisely.

Analogous estimation for new projects

For new projects we use analogous estimation. The historical parameter method includes using historical records to determine the duration and the resources required for the project. When the clients provide us with their requirements, our estimation team works closely with them to decompose the project into the list of features. We have created an extensive library of historical data from projects. This library assists us in making precise evaluation of the time, cost and resources for each feature.

For instance, in one of the recent projects, we applied analogous estimation and, as a result, we were able to predict the development timeline very precisely. Such methods not only allowed for time saving, but also redefined the client expectations with respect to our potential. 

Planning poker for agile/scrum projects

We use Planning Poker for Agile and SCRUM projects for time estimation. It is decided in the planning meetings that the whole project team estimates all tasks to be finished in the sprint. Each member gives a story point value that reflects the effort needed. The estimates are then discussed and agreed upon by the team. This approach guarantees that all team participants comprehensively know the amount of work and are able to schedule their tasks properly.

Planning Poker is popular amongst Agile teams because of its collaborative characteristic. As an example, in the last two-week sprint, our team played Planning Poker and managed to estimate and do all tasks within time. This method strengthens teamwork and guarantees reasonable time predictions.

Blending historical data and team perspectives

Through the integration of historical data with the knowledge of the team, we produce precise project estimates. With this double approach, we are able to control clients’ expectations and project risks efficiently. We have comprehensive expertise in web and software development which makes our estimates more exact.

Estimation efficiency and accuracy

Our estimation processes should be efficient and accurate. The McKinsey survey reported that organizations that employ structured estimation techniques have a 10% increase in successful project rate . We keep polishing our estimation methods at Designveloper in order to achieve deadlines and stay within the budget.

To summarize, our risk management plan has strong budgeting and time management features. Through the methods of analogous estimation and Planning Poker, we achieve precise and swift project estimates. These approaches enable us to control the risks and execute flawless projects to affirm the company’s name as one of the best web and software development companies of Vietnam.

Conclusion

At Designveloper, we believe in transparency and partnership in the development process in which clients are involved in every stage. Through the combination of historical data and team perspectives, we are able to develop reliable estimates and to manage expectations successfully.

A risk management plan is crucial in today’s fast-paced business environment to remain competitive and offer value to clients. Designveloper can be considered as a risk-averse company, and our strategies aimed at risk management bear a manifestation of our drive in ensuring projects’ success.

Learn more about how our customized risk management plans will help your project to prosper and contact Designveloper today. Allow us to collaborate with you in overcoming possible hurdles and realizing your business targets in an effective way. Designveloper is trustworthy for your risk management requirements; you will know the difference in a short time.