Projects do not usually come without problems risk management is therefore one of the key aspects of managing successful projects. But what is a risk? You can define a risk as something that if it occurs can have an impact on your project. Its important to remember that a risk is something that hasn’t happened yet – when it does it becomes an issue.
While Risk management utilizes many of a project team – it is usually the project manager that co-ordinates the task – where a steering board is present – risks can be escalated where senior stakeholder involvement is required to reduce the probability or impact (for further information check out this project management guide).
Risk management requires a number of activities:
1/ Risk identification
Risk identification often starts prior to project approval – at this stage it may only be a summary of risks and be the result of a brainstorm but these risks help the decision makers identify the chances of the project succeeding – these risks can then be managed via the projects formal risk management process.
You might consider a workshop with your projects key stakeholders to help identify risks that could impact it – at this stage don’t dismiss anything – capture all your risks.
Be aware that there are some general risks that apply to all projects – for example resource constraints (resources available to the project) is a common risk that needs to be managed.
2/ Risk Analysis
Once you’ve captured your risks you’ll need to assess them and consider their impact on your project this is usually done by assessing their
• Probability of occurrence
By measuring the probability and impact you’ll be able to weight your risks and then apply an appropriate level of resource to manage them. The best method for this is to apply a scoring system for example 1 to 10 where 1 is low and 10 is high.
3/ Risk Mitigation and avoidance
Once you’ve identified your risks you can do a number of things about them
1/ Mitigate – this requires actions to be placed to lower either the impact or probability
2/ Avoidance – this requires actions to be placed that focus on the cause and remove the risk
3/ Acceptance – Accepting the risk means that you have analyzed the risk but can’t (or don’t want to) either mitigate or avoid it.
4/ Risk tracking
Once you’ve identified and assessed your risks you’ll need to regularly review them – to do this you’ll need to track them – there are various formal packages that you can use to track and manage risks – often a suitably constructed spreadsheet is upto the task – the important thing about risk tracking is:
• Regular formal (and documented) risk reviews
• Following up actions for mitigation and avoidance
• Escalation to your project steering committee as required
Risk management is an integral part of managing projects – constructing a risk plan should be one of the first steps that you carry out when establishing a project. Without successful management of the your projects risks you jeopardize its success and increase the probability of increasing your costs and timescales.