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What does risk management include?

In companies, risk management deals with all activities concerning risks, including new opportunities in an enhanced comprehension of the notion.

Risk management - what does it involve?


Therefore, when planning a project you should ask yourself the following questions:

  • What can go wrong in my project?
  • Where do I need to be particularly careful? Where are the dangers and what kind of dangers are watching me?
  • Are there any experiences or problems that already occurred?

After an intensively collecting all possible risks, it is necessary to rate them by the following factors:

  • Probability of occurrence
  • Impact on costs caused by the risk

You can see all risks structered in risk matrix.

risk matrix

In risk management, all risks are added, rated and sorted accordingly in a coordinate system (see matrix) probability and impact.

The further to the right and up the risk is sorted in the matrix, the higher is the impact and undesired probability. To keep the risks in a project as low as possible, it is necessary to develop a strategy with respective measures to keep the impact (and thus possible costs) as low as possible. The subject of risk management therefore includes far more than just identifying risks in project planning, but also their probability of occurrence and the impact on costs. In addition, you can subsume the strategy to be derived and implementation under risk management.

Risk management explained in five easy steps:

KLUSA Enterprise

  1. Creation of a risk matrix (Administration)
  2. Identifying risks
  3. Rating according to probability of occurrence and impact on costs (and time)
  4. Develop strategy and measures
  5. Communicate the risk situation in the project to all involved persons

Usually these steps can be done manually using a spreadsheet. Sophisticated project management software already includes substantial risk management in the standard functional range.

Advantages of the risk and opportunities management with KLUSA

Entering and rating of risks

  • Entering standard project risks or technical risks according to the FMEA method
  • Entering the probability of occurrence and impact
  • Assigning the risks to work packages and milestones
  • Continuous change of risk rating and status as well as other attributes
  • Regular recording of risks in project reports

Alternative view of opportunities

  • Identification of opportunities as positive risks
  • Rating and documentation of opportunities according to impact and probability
  • Assigning measures, responsibilities and costs
  • Specific transfer of the potential as opportunities by the project management

Enhancement by changes and defects

  • Considering and introducing an additional risk management
  • Understanding of changes (e.g. as a preliminary stage to a change request that requires approval) and defects (as occurred risks)
  • Classification of venture types
  • Additional approval status for all types of ventures possible

Standard project risks

  • Standard project risks with category, probability and impact class
  • Additional tracking of the status, impact on time, costs and probability in pecent
  • Calculation of risk priority number and risk class

Technical risks according to the FMEA method

  • Enhancing technical risks according to the FMEA method (failure mode and effects analysis) to include the attributes severity, probability of occurrence and  detection
  • Integration of these attributes on a company-specific scale as well as calculation of the risk priority number (essential criterion for the rating according to the FMEA methodology)
  • Standardized parameters for the description of the risk

Risk measures

  • Definition of measures to minimize or avoid risk/venture
  • Assigning a responsible
  • Providing an unlimited number of measures for each risk/venture
  • Definition of a time frame
  • E-mail notifications for project management and other stakeholders

Risk evaluation with a risk matrix

  • The matrix shows the degree of probability that the risk/venture will occur in relation to the impact of the risk/venture on the respective project
  • Graphical presentation of the risks/ventures in various charts and dashboards
  • Comprehensive overview for the project manager and the management

Risks in multi-project management

  • Overview of all risks/ventures that are managed and reported in the context of all projects of the organization
  • Cross-project sorting and filtering of risks/ventures according to priority indicators or other attributes
  • Quick, simple, but comprehensive overview of the measures to minimize and prevent risks/ventures

For further information see data sheet KLUSA Risk management.