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Sample Risk Management Plan - Part 1: Introduction and Background

Published: November 15, 2011

Updated: November 17, 2011

Sample Risk Management Plan

This hub presents the first component of the a risk management plan for a project to introduce Internet sales to a fictitious company named A&D High Tech. A&D High Tech is a manufacturing organization that specializes in the Personal Computer (PC) market (Jeffrey, 2009). The complete plan includes six sections, each section contained in a dedicated hub. Those six sections comprise the following:


Section 1: Background

A&D High Tech made the strategic decision to integrate Internet sales with the current marketing efforts, which traditionally focused on retail outlets. This strategic initiative was spurred by decreasing margins, a desire to expand sales to the national market, and increased competition. Customers increasingly used cost as the determining factor when deciding whether to buy products from A&D or not; the company's products ere therefore becoming commodities (Jeffrey, 2009).

Matt Webb, the CIO, received authorization to move forward with the project to create an online store. Webb made the decision to build the application in-house based on the results of analysis that demonstrated the possibility that purchasing Off-The-Shelf (OTS) software includes hidden risks because OTS software would require customization. OTS software would also only meet approximately 60% of A&D’s functional requirements (Jeffrey, 2009).

Webb assigned Eric Robertson to spearhead the initiative as the project manager with a team of five other cross-functional team-members. Robertson developed a strategy for project completion. However, Eric was to take a 30-day leave of absence early in the project planning phase and Chris Johnson was assigned to take over the project management functions. Chris had a very short time to learn the background details of the project and one of the constraints was that the project be completed in time for the Christmas holiday shopping season.

1.1 Plan Introduction

The goals of the project are to increase revenue by enabling sales on a national level, while maintaining the friendly level of customer service that the company is so proud of. The business requirements for the online store encompass the scope controlling the organization’s retail operations and include “new orders, add-on orders, order amends, order status, and lead capture with the following capabilities” (Jeffrey, 2009):

  • Configuration and pricing
  • Delivery date based on standard lead times
  • Real-time payment processing
  • 100 percent validation of required data
  • Collection of prospect data about customers
  • Integration to back-end (ERP) for manufacturing and order management
    (p. 4)

The project team has completed the planning components for the project, which define the objectives of the project and include the following:

  • Business requirements
  • Process flows
  • Technical architecture requirements
  • Simple prototype of the system
  • Work Breakdown Structure (WBS)
  • Effort estimates for the tasks in the WBS
  • Identification and assignment of resources
  • Schedule with task dependencies and proper resource allocation
    (p. 4)

The project goals statement for this project is expressed as follows: The goals for this project are to implement an Internet-based online storefront at the home office of A&D High Tech to increase sales on a national level and regain market share and an edge on the competition by Christmas.

From a risk perspective, there is the distinct possibility that any of the planning components may be in error. As presented by Jeffrey (2009), prior to May 26, 2003, Robertson had compiled the Work Breakdown Structure, complete with estimates for the tasks. However, internal developers were not available so a contracting company,

Geneva, was contracted to staff the developer positions. As of May 26, 2009, Geneva had not identified specific resources needed for the project so the scheduling component, time estimates assigned to the WBS, and cost estimates may be at risk. There is also the possibility that the assumptions used to formulate other components may be invalid and for this reason each component should be analyzed to identify risk and develop mitigation strategies.

1.2 Company Background

A&D High Tech came into existence in 1988 when, as presented by Jeffery (2009), founder Ted Walter opened the company’s first store in Lincoln, Nebraska. Moving into the industry with a product line of custom computer products established the company as a leader in the regional market of the Personal Computer (PC) industry. Sales neared $400 million in the year 2000 following 10 years of steady growth.

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Contributing to the rapid growth in revenue were the founders commitment to friendly customer service and a product line that was first to market in the PC industry. Tedlived in the Midwest and understood that friendly service was a major component of the region’s culture. Therefore friendly customer service also became a component of the A&D organizational culture.

A&D implemented an Enterprise Resource Planning (ERP) system in 1999 to streamline the order-entry process and reduce customer callbacks. The inefficiency of the previous paper-based order entry system resulted in a customer call-back rate of 30%. Using the ERP system reduced the callback rate to less than 1%, which was more efficient than the rate of the closest competitor, that averaged 5%.

In 2001, given the successful implementation of ERP, A&D decided to further invest to improve its systems in handling the supply chain, payment process, customer relationship management (CRM), and order management. A series of technology initiatives were launched. A&D saw immediate benefits in reduced costs, as well as a significant return on investment on its supply chain and data warehousing projects. (Jeffrey, 2009).

1.3 Risk Planning

Risk identification is a necessary component of any risk management plan. For this particular project, the following strategies demonstrate appropriate methods to identify risk:

  • Documentation reviews are an important component of risk identification. Barkley (2004) specified the WBS as the key document for identifying risk. Other documentation to review for this project may include reviews of past projects where the development tasks were contracted out. “During the examination, the Risk Analyst and stakeholder representatives look for conflicting or ambiguous statements, assumptions, and differences between current capabilities and perceived needs” (Administration for Children and Families, 2005).
  • Information gathering techniques would help discover information regarding the past project successes and failures of the contracting company, Geneva. Information obtained directly from Geneva and that obtained from other sources such as Internet searches would be considered.
  • Interviewing key stakeholders including the CEO, VP of Sales, CIO, and project participants could reveal key risk parameters.
  • Assumption analysis of the assumptions made in the preparation of time and cost estimates could uncover risk parameters associated with the time and cost estimates.
  • Brainstorming and the Delphi technique would readily uncover the risk concerns of key stakeholders within the organization.
Table 1: Objectives and Risk Parameters

Table 1: Objectives and Risk Parameters

The ultimate project risk would be the total failure of the project. Not quite as severe, but still consequential risks, would be that the project finish over budget or behind schedule. Using the above identification techniques should help identify the risk parameters so they can be successfully mitigated, thus avoiding the ultimate risk.

Each of the above identification methods should uncover risk parameters associated with the goals and objectives of the Internet Sales Project. See Table 1: Objectives and Risk Parameters, for an analysis of the risk parameters as related to the project objectives.

Dumbledore's Risk Management Series

Continue to Section 2: Charter, Scope, and WBS


Administration for Children and Families (2005). Risk management plan. IT Planning and Management – Additional Resources. Available from

Barkley, B., T. (2004). Chapter 4 – Demystifying risk: Using the PMI PMBOK. Project Risk Management. New York, NY: McGraw-Hill Professional.

Jeffery, M. (2007). A & D high tech (A): Managing projects for success. Project Risk Assessment and Control (pp. 1–16). New York, NY: McGraw-Hill.

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