Overview Everybody has learned how to accept risk since childhood days. Our parents have taught us not to touch hot pot or drink hot drink but when we do, we felt the pain and never repeat the same mistake. This is a simple process of accepting the risks and changes in our daily activities. As we grow, we have articulated the process and apply risk management principles of accepting the risk if the benefit outweighs the cost, making risk decisions at right levels, and not to accept unnecessary risks. These principles were adopted by the Department of the Navy in their operational risk management program in mishap reduction and prevention (Navy Safety Center, n.d.).
Risk Management One key document that a program manager needs to prepare is the risk management plan. Risk management may be simply defined as the process of managing the risk to an acceptable level consistent with the project’s goal. The first step in the process is the identification of risk wherein the project manager evaluates the cause and effects of the risks associated to the project. Once the risks are identified, the project manager will need to assess the risks in relation to its probability and severity. This process will assist in the decision making in accepting the risk or responding to risks and what actions are needed to bring the risk to acceptable and manageable level. Accepting and avoiding is the most cost effective method in risk management. Mitigating and transferring normally will include cost study that will be critical in the decision making process. Controlling is the last step in risk management wherein the project manager monitors the operation to ensure effectiveness of the risk management plan against the project goals. With this, the project manager communicates with the workforce and in some cases, may have to revert back to the first step when a new risk