Risk is an unexpected impact on your project, which can be positive or negative, but if you don’t have a risk culture in your organization you’ll not be able to either take advantage or mitigate that risk if it shows up in the project. Learn the importance of having a risk culture and how to build on in your organization.
What Is Risk Culture?
Risk culture is simply an organization’s employee’s awareness, attitudes and behaviors towards risk and how they’ll manage it. An organization that has a risk culture simply means they’re prepared for identifying, managing and mitigating risks as issues arise in their work. Having a risk management plan won’t reduce risk, but can reduce its negative impact on an organization.
Part of any risk culture is the use of project management software to deal with issues as they show up in projects. ProjectManager is award-winning project management software with risk management features that help users to identify, manage and track project risks until they’re resolved. Add and track risks from the risk view, which can be customized to show priority, impact, likelihood and more on risk cards. A color-coded risk matrix makes it easy to see how to respond to risks. Use our tool to prevent unexpected impacts on cost, scope and delivery.
Managing risk is a staple of project management, but do you have a risk culture in your organization? Leadership coach Susanne Madsen explains how and why you need to build a risk culture with your team.
Video: Risk Culture Overview
Susanne defines risk culture as made up of a three-point cycle: the team’s attitude and behavior towards risk, but also an organization’s culture towards the team’s attitude and behavior. A good risk culture, she notes, means the team is aware of how much risk it can afford to take and acts accordingly.
Building a risk management culture is important because the more a team is part of the risk culture, the more they’re invested in the project.
To manage a positive risk culture at your organization, you want to embed risk management into every aspect of your company. What this does is systematically improve the health and productivity of the institution.
How to Build a Risk Culture in Your Organization
Risk culture doesn’t develop without an intentional effort to create one. Organizations have to incorporate risk management into their planning, execution and evaluation. Follow these four steps to build a risk culture in your organization.
1. Define The Risk Appetite of Your Organization
Risk appetite is the amount of risk that is acceptable to an organization as it works towards achieving its goals and objectives. Once that is determined, then an organization can start to figure out how much of its time and resources should be spent on reducing risk.
2. Implement a Risk Management Process Throughout Your Organization
The risk management process is how risk is identified, monitored and managed to minimize its negative impact. Those risks can range from weather to cyberattacks. Here are the basic steps to take in a risk management process.
- Risk identification: The first step is to identify project risks by looking at historical data, talking to experts and using experience to target those issues most likely to occur over the life cycle of the project.
- Risk analysis: Next, one must analyze that risk in terms of its impact on the project and its likelihood of happening. These will determine one’s response.
- Risk response planning: The risk response is the actions that’ll be taken to either take advantage of positive risk or mitigate negative risk, including who on the team will own that process.
- Risk prioritization: Every risk must have a priority attached to it. If the risk shows up as an issue, the priority determines whether it’ll be dealt with quickly or if it can wait.
- Risk mitigation: Finally, risk mitigation defines the process of reducing the risk exposure and minimizing its impact on the project. Risk mitigation involves that action taken on the previous steps.
3. Use Risk Management Tools
There are many tools that can be used to help manage risk. An organization with a risk culture will have at least the following risk management tools.
- Risk register: This is a table of project risks that are used to track those risks when they appear as issues in a project. A risk register includes priority level, mitigation strategies and more.
- Risk matrix: This is used to assess risk by considering its impact on the project and the likelihood of it happening.
- Project management tools: This applies to the planning and execution of your risk management, which can use such project management tools as Gantt charts, kanban boards, dashboards and more.
4. Offer Risk Management Training for Your Team
The best way to mitigate risk is to be prepared. This includes having your team trained on risk management. Having teams trained in risk management will increase their risk awareness, improve their risk response, show that the company is committed to safeguarding the team and its work, and creates a deeper connection between management support of their teams.
Risk Management Templates
Creating a risk culture can be one of the most important initiatives taken up by an organization. An investment in project management software is important, but if the organization isn’t ready for that upgrade, it can still apply risk management through the use of risk management templates. ProjectManager is more than award-winning project management software, it’s also an online hub for free project management templates for Excel and Word. Download these free risk management templates today.
When a risk becomes an actual issue, you’ll need our free risk tracker template for Excel to capture its impact, response and more. You can also note who is the owner of the risk and the level of the risk.
The free risk matrix template for Excel is ideal to map the severity and likelihood of a risk. Place the risk on the color-coded matrix to see if it’s an insignificant to severe risk and the likelihood of it happening, from rare to almost certain.