Business Continuity Disaster Recovery Project Management OPM3 Risk Assessment Training

Do you have Risk Reserves to mitigate identified and unknown risks on your project? The better question may be "Do you know what Risk Reserves are and how to use them in preparing the budget for your Business Continuity project?" Sometimes referred to as "Management Reserves", this is a sum of money that is set aside specifically to handle known and unknown risk events within a project. You can think of this as "self insurance" for your project.

In a Business Continuity project, you need to think about Risk on two levels. The first level is within the project itself. Risks like these may include such things as personnel changes, equipment failures that can cause schedule and deliverable slippage, price increases for leased equipment used for testing, just to name a few.

The second level you need to consider are risks your Business Continuity project uncovers. For example: You may have determined that a communications failure would have a devastating effect on your company both financially and from a customer satisfaction standpoint.

In both cases, the way you calculate your risk reserves is the same. Take the probability of the event, multiply it times the impact (dollars) to come up with a total event impact. You do this for each identified risk. For each event use a percentage (usually 10%) of the total event impact for your risk reserves.

The amount set aside will not cover the actual cost of an event. Hopefully you have done things in your project to mitigate/avoid some of the risks altogether. If you sum all of the Risk Reserves together, subtract out the costs for the events that occurred , it should work out to be pretty close.