Any discussion of project risks needs to mention that all projects have risks; the very nature of a project is not “business-as-usual” it is something new and different – and that will always pose some measure of risk. What is important is to accept that there will be risks but recognize that they need to be managed in such a way that they are minimized. Projects where risks are actively managed and controlled are more likely to be a success.
Managing risks effectively has a number of aims:
- To prevent risks happening, where possible, that pose a threat to delivering a successful project outcome.
- To mitigate risks that cannot be avoided by planning the most appropriate response.
- To act upon risks that might present positive opportunities. This is viewing risk from a different perspective one that does not always assume risks are bad for a project.
Activities designed to reduce project risks are an integral part of project management but one of the biggest hurdles to overcome in managing risks is identifying what those risks are. Sometimes it is impossible to know in advance about certain types of risks for instance if the project involves cutting-edge technology then the risks might be entirely unknown. But there are also some risks that are common in many projects or risks that certain people may be aware of but they are not communicated to the project manager or team.
One way, therefore, to reduce risks is to seek out as much information as possible that might identify a risk. This can be done through tried and tested methods such as brain-storming, story-boarding or interviewing individuals from all parts of the affected business.
Once you have documented the identifiable risks you will then be in a much better position to prevent them or mitigate them; and if you manage those well then any unforeseen risks are likely to have a lesser impact on the overall project. There are 4 essential steps to reducing risk: documenting, prioritising, avoiding and mitigating.
Step 1: Documenting
Document each risk in detail, including the potential effect and possible response to mitigate the risk, then assign a team member to each risk. Keep this risk log updated throughout the project.
Step 2: Prioritising
Prioritisation of risks should use a combination of how likely the risk is to occur and the effect on the schedule or budget. Cleary certain risks may be very unlikely to occur but could have an extremely serious effect on budget and/or schedule or even on your ability to complete the project. Others may be very likely to occur but require no more than dipping into a contingency fund to resolve the issue.
The detailed, prioritised list of all the known risks needs to be communicated to the team members, stakeholders and anyone else involved in the project. By doing this
Step 3: Avoiding
you will enable your team to work towards avoiding these risks if a team is not made aware of what could go wrong then they will not work towards avoiding it.
It is impossible to avoid unknown risks so just concentrate efforts on the known risks.
Step 4: Mitigating
Before any potential risks have occurred it will benefit the process to consider what the best solution to the problem would be, should it occur. You can also decide for each individual risk whether to try and implement the solution, if resources allow, or simply accept there is a problem but defer any solution to a later date possibly after the final product has been delivered depending on the severity of the problem. If the decision is to resolve the problem then ensure the solution is fully implemented otherwise you will have just wasted your time.
Effectively managing risk, as already mentioned, is part of a project manager’s role and helps ensure more successful projects. However, risk management should never be such an onerous task that it takes significant resources away from the other aspects of project management.