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5 Critical Things you should do to manage Risk in Project Management

January 17, 2020

Risk management is and should be an integrative part of project management. It’s so crucial, many companies will throw in a few questions during an interview with a potential new project manager. They want to make sure he or she has got their ducks in a row when it comes to avoiding risks that can have massive consequences to a business.  

The reason for this is very clear: Projects always have an element of uncertainty. You may be able to ‘wing it’ when things go haywire now and then, but it’s guaranteed there will be times when you will have no such luck. Dealing with that risk in a proactive way will help you deliver the project on time and on budget and with the quality requirements your client had in mind, even in the event when things don’t go as planned. 

We have 5 critical things you should be doing lined up that will help you nail your projects time and time again

It’s all about consistency. 

Risk assessment should be part of your project management process-always. Crossing your fingers and hoping that nothing bad will occur is not a strategy your clients will like to hear about. It’s false confidence and at some stage it will come and haunt you. 

So to avoid this, include risk management in the default agenda of project meetings and be part of day-to-day operations. It will avoid the situation where something goes wrong, and somebody on the team actually knew about the risk but failed to communicate it with the project manager. 

Identify risk early in the process

Putting your finger on the risks involved in the project at an early stage demands that you look at the project with an open mind. 

The first place to get any feedback on any risks that might be associated with the project are team members, contractors or experts that have more experience with the kind of project you are dealing with. 

The second source of feedback on risk management is the paperwork that comes with a project. Read it with an open mind, scouting for anything that might put spanners in the woodwork. 

It’s unlikely you’ll be able to identify every single risk under the sun. But combining the ‘people’ with ‘paper’ source will catch a good chunk of what you may be facing. 

Analyze and prioritize 

Things don’t stop with the identification of risk during a project. After you identify the risk, you also ‘manage’ it in the appropriate way. It doesn’t need any explanation that to respond appropriately to the risk, you need to understand it. What would be the effect for a risk to occur? What would it do to the budget, the timeline, and the scope?  What would be the lead-up and the cues before the risk eventuates? What are the causes? Are there any factors that could increase or decrease the risk?

Once the risk has been analyzed from all angles, it is time to prioritize. How likely is it for the risk to occur, and what would be the impact? It speaks for itself that high likelihood-high impact risk should get a lot more attention than low likelihood-low impact risk. 

Plan risk responses

A next step is to implement a risk response. While all the previous steps where a preparation in managing the risk, this is where you can make a difference in the outcome. 

In short, you can respond to a risk in three basic ways: eliminate, minimize, or accept.  While it would be wonderful to eliminate the risk, most times, you will have to work with minimizing. Accepting the risk is only an option if the risk is low impact-low likelihood or the resolution is very, very costly. 

It is important to mention that walking away from a project because of the nature of the risk involved is sometimes a wise decision. 

Who is responsible? 

Identifying risk and having a plan on how to manage it is all fine and dandy, but when push comes to shove, somebody will have to take responsibility. If you leave it out in the open, nobody will feel invested in tracking and keeping everybody on their toes. The trick is to put a name next to the risk. Who’s head is on the chopping block if things aren’t followed-up as they should. 

But there is also financial ownership. Who will open their wallets when things go wrong? Getting these things clarified at the start of the project can make all the difference in the end-result and avoid unnecessary squabbles or even court-cases.  

The bottom-line? 

There is no such thing as a risk-free project. But diving into your project fully aware of the risks involved can prevent a small hick-up from turning into a full-blown catastrophe.

Make sure you acknowledge the risk, have a plan, handle it and monitor it and your business will do well on it. It’s a promise.