Chapter 2

Main Components of
a Risk Management System (RMS)

Y. Raydugin. Project Risk Management: Essential Methods for Project Teams and Decision Makers. John Wiley & Sons Inc., New York, 2013
 Three Components of RMS
• Organizational framework and context
• Risk management process
• Risk management tools

The Project Risk Management Plan (RMP) is an all-important

document that provides a full description of the three
components of the project RMS.

Y. Raydugin. Project Risk Management: Essential Methods for Project

Teams and Decision Makers. John Wiley & Sons Inc., New York, 2013 2
 Organizational Framework and Context
• Project’s objectives and challenges
• Nature and origin of project’s uncertainty exposure
• Types of relevant uncertainty objects
• Integration of risk management with the other disciplines
• Risk responsibilities of project team members
• Types of risk activities
• Risk reporting

This is the most important component of the project RMS. It should

fully define the other two components.

Y. Raydugin. Project Risk Management: Essential Methods for Project

Teams and Decision Makers. John Wiley & Sons Inc., New York, 2013 3
Three Dimensions of Risk Management

Risk management cannot be a standalone discipline .

It should be fully integrated in these three dimensions (3D).

Y. Raydugin. Project Risk Management: Essential Methods for Project

Teams and Decision Makers. John Wiley & Sons Inc., New York, 2013 4
Risk Management Process

This risk management process

is universal and relevant to any
uncertainty object. However, it
could be modified to better
reflect an object’s nature and
organizational framework.

Y. Raydugin. Project Risk Management: Essential Methods for Project

Teams and Decision Makers. John Wiley & Sons Inc., New York, 2013 5
 Risk Management Tools
• Risk database software packages (risk registers)
• Software packages for probabilistic cost and schedule
risk analysis (Monte Carlo tools)
• Additional models to assess particular uncertainty
objects

Imposing tools without adequate understanding of

uncertainty objects, the organizational framework, or the
risk management process is detrimental to any
project risk management system.

Y. Raydugin. Project Risk Management: Essential Methods for Project

Teams and Decision Makers. John Wiley & Sons Inc., New York, 2013 6