Develop the portfolio risk management plan, using governance risk guidelines, processes, and procedures and other organizational assets in order to capitalize on opportunities, and respond to risks.

The objective is not just about managing risks, but also ensuring that we are capitalizing on opportunities. This involves a plethora of factors, including governance risk guidelines, processes, procedures, and other organizational assets. Specifically, for those preparing for the Portfolio Management Professional (PfMP) exam, understanding how to develop a portfolio risk management plan using these resources is crucial.

1. Governance Risk Guidelines:

Governance risk refers to the potential that a company’s leaders fail to effectively manage the organization’s affairs, leading to a loss of investor confidence. These guidelines serve as a roadmap to assess, manage, and mitigate these risks.

To develop these guidelines, an understanding of industry standards, laws and regulations, market conditions, and the organization’s objectives is crucial. Analysis of past risk events in the organization as well as in the industry can also provide valuable input.

For instance, an organization may set out guidelines that mandate regular risk assessments and include specific procedures for high-risk ventures. These guidelines then become an integral part of the risk management plan.

2. Processes and Procedures:

Effective risk management plans also include well-structured processes and procedures. This involves risk identification processes, risk assessment processes, and risk response processes.

In risk identification, potential risks that could affect the portfolio’s overall performance are identified. Techniques such as SWOT analysis, brainstorming, expert judgment are useful in this regard.

Risk assessment, on the other hand, involves analyzing and prioritizing identified risks based on their potential impact and probability. This can be done through risk matrix, risk registers etc.

Risk response process involves developing strategies to address the risks, either by accepting, avoiding, transferring, or mitigating the risk.

3. Organizational Assets:

Organizational assets, both tangible and intangible, can be effectively leveraged in risk management. These could be enterprise environmental factors – like market conditions, cultural factors, or internal organizational policies. They could also be organizational process assets like historical information, lesson learned, risk registers etc.

For instance, historical data about portfolio performance, lessons learned from past risk response strategies can guide decision making and predict future risks.

4. Capitalizing on Opportunities:

Part of effective risk management is also exploiting potential opportunities. This requires a proactive approach in identifying, assessing, and responding to opportunities in the same way as risks.

For instance, a seemingly risky venture could potentially lead to high returns. The decision to invest could be based on past experience, market analysis and strategic alignment with organizational objectives.

5. Responding to Risks:

The responses to risks vary based on the type and intensity of risks. Common strategies include risk avoidance, risk mitigation, risk transfer and risk acceptance.

For instance, high probability, high impact risks could be avoided or transferred. However, low probability, low impact risks might be accepted by the organization.

In conclusion, developing a portfolio risk management plan involves an astute understanding of governance risk guidelines, standardized processes, procedures, and effective use of organizational assets. A successful plan not only mitigates potential risks but also capitalizes on inherent opportunities.

For those preparing for the Portfolio Management Professional (PfMP) exam, mastering these elements will not only enhance your understanding of portfolio risk management but also provide you with practical tools to excel in your portfolio management career.