5 Keys to Managing Project Risk

Risks happen - learn how to identify and plan for them in project management

If you’re familiar with BASE jumping, you know it’s not without risk. Any time you jump from a fixed location (your BASE: building, aerial, span (bridge), or earth (i.e. cliffs)), there’s no margin for error and everything has to be planned and accounted for.

While it’s slightly less life-and-death, project management is fraught with risk, too. There are countless things that can go wrong, and it’s up to you as a project manager to recognize the potential risks and – if they can’t be avoided – do everything you can to offset their effects on your projects.

What Increases the Amount of Risk on a Project?

There are a number of factors that come into play when it comes to predicting the amount of exposure your project has to risk. For example a risk management assessment should consider:

  • New Technology– If the project you are managing uses a new form of technology then there is a greater amount of risk that can surface on your project. New technology is great. New technology can reduce the amount of time it takes to do something, reduce the number of people that may need to work on a project, or automate previously manual tasks. New technology is even better once all the bugs are ironed out. If your company has an “early adopter” mindset and you are first in line to try something new, then you can anticipate a greater need for information risk management.
  • Low Experience Levels – Risk management and project management skills will come to the fore if the type of project you are working on is new to you or your organization. It’s not that you don’t have a team of skilled and talented people that are doing the work. It’s just that the type of project that is being worked on is new to your company and may push the envelope a bit. There is greater room for mistakes to be made or setbacks to surface.
  • Lapsed Time – If your risk management and project management plan was put together a considerable amount of time before the project kicked off, then you will also be exposing yourself to higher risk.There are many things that can come up between an original kickoff meeting and actually starting to work on a project.For example, something that seems to happen regularly these days is that one company is bought out by another company. If the project kickoff meeting was done prior to this buy-out and then six months pass before the project actually begins, your project will be at a greater amount of risk.
  • Long Projects – Longer projects (6+ months to years) are always going to be exposed to more risk by the fact that they are around that much longer.Quick, short projects that take weeks or a few months to complete can keep their momentum and trajectory pretty consistent.Long, complicated, and unwieldy projects that span large amounts of time open for the door for increased focus on risk management and project management.Simply put, there is more time and opportunity for something to go wrong. If you have the dubious distinction of working on a long project that is running 6 months behind with a team that has never implemented a brand new technology…then hold your breath. You might be getting ready to jump off the Eiffel Tower!

5 Steps to Keep Risk Management and Project Management Together

Risk Management and project management are joined at the hip. Risk management is arguably one of the more important disciplines of the project management profession. Why? Because, the goal of a project manager is to get a project done on time, in scope, and on budget, a risk management plan  is required.

The nemesis of every project manager is Risk. Risk exists to introduce elements into a project that can turn into Issues that will ensure a project is not done in time, is out of scope, and over budget. How can you prevent this from happening? Follow the five steps below to ensure your project completes successfully.

1. Risk Identification – Gather the team together to identify as many risks or things that could go wrong on your project as possible. Just have everyone call them out no matter how small, insignificant, or far-fetched a potential risk may seem. You’ll worry about categorizing them later.It is best to keep this running-list through a projector on the wall or on a whiteboard so everyone can see the list building.How do you know when you are done? When the momentum of risks that are called out begins to slow down and you begin to hear variations of similar risks.

Your role in this meeting is to dig deep and extract as many risks as possible. Don’t be content with just the obvious ones on the surface. Make sure everyone has thought long and hard about what could go wrong and brought those up.

2. Risk Categorization – Now that you have your list of risks properly identified, you need to begin to prioritize them as to how they will impact your project. The best way to do this is to look at two areas.First, what is the likelihood that this particular risk will occur? If it’s highly likely, then assign it a ‘1’, if it’s highly unlikely, then assign it a ‘3’.Next, determine what impact will this have on the project if it does occur. If the results would be devastating, give it a ‘1’. If the results would have minimal to no impact, give it a ‘3’.

3. Risk Mitigation – At this point you will have a prioritized list of risks that are likely to occur and those that could have the greatest negative impact on a project. Now you can start putting a mitigation plan in place to do everything possible to avert those risks, or to come up with a plan to deal with the risk if it does come to fruition.Start with those items that have a high probability of occurring and have the highest potential negative effect on the project.

4. Risk Monitoring – When you are dealing with risk management process and project management you do not have the luxury of “set it and forget it.” It’s not possible to put the initial list of risks together, prioritize them, and then walk away without thinking about them again.You must constantly monitor those aspects of the project that could possibly cause delays or make you miss your targets. A portion of your weekly status meeting should be devoted to discussing risks and risk mitigation strategies.

5. Risk Communication – Finally, keep anyone and everyone that could be affected by the risks on your project up to speed on where things stand. Let them know if circumstances changed that make the risk more likely to occur. Or, perhaps something is no longer considered a risk and it is taken off the list of things to worry about.

Risk communication is especially important if the risk occurs and has now converted into a full-blown issue. You need to let everyone involved know what is being done to make sure the project gets back on track.

Granted, project management does not hold the same perils as BASE jumping. But, it does allow for exciting rides nonetheless. It’s your job as a project manager to identify those areas that lend themselves to riskier projects and follow the 5 steps above to make them go away!

If you need help managing risk, our project management software can help you plan for every contingency. Start your free trial of ProjectManager.com today.

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