How To Manage Project Risk
Watch this video to learn how to implement risk management tips for your projects and improve your rate of success.
Hi, I’m Devin Deen, Content Director here at projectmanager.com. Hi. Thank you for joining me in today’s whiteboard session, where I’m going to take you through the steps in bringing together your risk register. Now, the first thing you need to do is get your risk list together. Many project managers simply email out to their project team and ask their project team members to send them things they think might go wrong on the project, in terms of a risk to the project.
But what I like to do is actually get the entire project team together, some of your clients’ representatives on the project, and perhaps some other vendors who might be integrating with your project. Get them all in the room together and do a risk identification session. In that risk identification session, what you’re trying to do is elicit from every single team member, from the most senior architect down to the most junior tester or developer, the items that they think might go wrong in the project, in terms of scope, time, cost, and quality.
Where are the sticky points where the project schedule can come unraveled?
Where are the functional components where quality might be an issue? You want to bring and amass that sort of collective hive of information, wisdom and experience together in that risk identification session, and tease out from each of them, their personal opinion about where things can go wrong.
This is incredibly important to starting off your project on the right foot and very vital to ensuring the degree of quality your project will deliver and the likelihood of delivering on the time frames. What I like to do is give little post-it notes to all the project team members, maybe color code them in terms of if it’s a time risk, if it’s a resourcing risk, if it’s a budgetary risk or a scope functionality risk, give them different colors for each of those.
Then step through the phases of the project or step through the different components of the project, and get those team members to write down what that risk item is and put it up on some butcher paper that I have sort of pasted along the walls. That way I can quickly collect their wisdom and experience, and things that they think might go wrong. Take them away from that meeting and then plot all those items in a risk register.
Now once I have those items identified in a risk register, I and some of my other project team members can have a follow-on session to actually assign the likelihood of the impact of what that risk item might be. You don’t need to get into the details of that likelihood or impact. Keep it really simple. A degree of likelihood being low, medium, or high and an impact also being a low, medium, or high.
Once you’ve assigned likelihood and impact to those risks, then you can start developing your mitigation techniques. Now in the interest of time, what you want to do is start from the high likelihood and high impact risks. Develop mitigation techniques for each of those items. Then follow on to the medium likelihood/medium impact, medium likelihood/high impact, you get where I’m going here.
Start with your most likely, highest impact risk and work down to your least likely, lowest impact risk to actually develop those mitigation strategies. Obviously, the high impact/high likelihood risks are going to have more thoroughly developed mitigation techniques than those that may not happen. Spend the time wisely. Make sure though that you’ve got all mitigation techniques for the risks that you have on your risk register.
Once you’ve developed those mitigation techniques, then it’s pretty important to then quantify the cost of what that mitigation technique might be and also quantify the impact in terms of the dollar amount of that risk happening, what that cost impact might be to the project. As an example, a mitigation technique to a particular outcome of a project might require you to go out and, let’s say buy insurance.
So let’s say that you are doing an event and you’re doing it in the middle of winter where it’s likely to have inclement weather. You might want to go buy insurance for cover in having to run that event on a different time. Or get some additional budget for running that event a second time in the case of inclement weather.
The impact of having to run that event on a different time might be an impact to your budget. Also, it might have an impact to your schedule because you might have to reschedule the resources. Make sure you get all that quantified in terms of a dollar amount, and plot that in the risk register.
Now, you think once you’ve gone through all these steps in getting your risks together and identified at the start of the project that you’re done. Think again. You want to go back and do all these steps again and revisit them at least weekly. In your project meetings, make sure you bring that risk register out. Assess if there are any new risks that are coming up from the project team. Or look at those risks and maybe change the likelihood of occurrence or the impact as they come out.
The risk register isn’t something that gets put away after you start the project. It’s something that you need to look at every week and make sure that you’ve got your project team on the ball from preventing those risks from happening. Because if those risks actually happen and become issues, they’re certainly going to cost you a lot more time, money, potentially quality, and certainly a lot more frustration on your project.
For a handy example of what a project risk register might look like, you can find one on the projectmanager.com website. Simply go to the homepage. In the middle of the homepage you’ll see a Features tab. Click on that and on the left-hand side of your screen a navigation pane will open up which has Risks and Issues listed on there about partway down. Click on Risks and Issues and up will pop an image of a risk register and some descriptions about what you might want to use that risk register for.
For more project management whiteboard sessions and all your project manager needs, come see us at projectmanager.com.