The concept of risk is an inherent part of any project you might come up with, and most managing projects training programmes will emphasise the importance of managing these risks, in order to maximise the chances of a project being successful. In this article, we examine 10 steps that can be taken to manage risks within your next project.
1. Adopt a Risk Management Strategy
As Bart Jutte points out in an article for ProjectSmart, a crucial component of effective risk management is to actually embed it within your project. Indeed, the first step to achieving success in this area is simply to acknowledge the importance of risk management and create a strategy for managing and responding to risks. Crucially, however, risk management should not be tacked on; it must be a fundamental part of the project itself.
2. Identify Risks Within Your Project
Once you have accepted the need for risk management, you need to get to work on actually identifying the various risks that are included within your project. This is not a job for the project manager alone, so you need to speak to your team. Someone with business skills might be able to spot different risks from someone with contract management training. Collaborate, identify risks, and make sure they are all documented.
3. Carry Out a Full Risk Analysis
Upon creating your list of project risks, it is likely you will have certain assumptions or beliefs about them. However, you need to challenge these assumptions by delving deeper and analysing each risk individually. Consult with people who are likely to have a good understanding of each risk – including those outside your business – and try to anticipate things like the cost of dealing with the risk vs. the cost of ignoring the risk.
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4. Consider Your Positive Risks As Well
When most people think of a ‘risk’, they immediately think of something negative, or something that should be avoided. Yet, in reality, there are both negative and positive risks within most projects. In many ways, positive risks can be viewed as opportunities, but they should still be covered by your risk management strategy. One of the most obvious examples here would be the potential risk of acquiring more customers than you initially expected. This is good – in theory – but it is also something that needs to be managed, so that customers are adequately supported.
5. Be Clear on Where Responsibility Lies
Creating a list of risks is one thing, but actually managing risk within project management also means assigning ownership to each risk. In simple terms, this means determining who is responsible for each risk, and why. Ownership should not simply be delegated evenly – responsibility should be allocated based on who is best suited to deal with it. For instance, someone with contract management training will be needed to manage contractual risks.
6. Attempt to Anticipate Likelihood
For every single risk you have identified as part of your risk management strategy, you need to give consideration to likelihood. Some risks might be extremely unlikely to amount to much, while other risks could be almost certain to lead to consequences. You need to be as clear as possible on this, so for each risk, try to come up with a concise and reasoned judgement on its likelihood, then make sure this judgement is documented.
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7. Think About a Risk’s Potential Impact
Next, you need to think about each risk you have identified and consider what its potential impact could be on the project. There is a huge difference between a risk that is likely to derail the entire project, and a risk that might potentially delay completion, or make completion slightly more difficult. Once you are clear on the potential impact of a risk, you are better equipped to actually take action, in whatever form that might be.
8. Create a Comprehensive Risk Priority List
It goes without saying that not all risks are created equal. Some might be unlikely to occur, but might have devastating potential consequences, while others could be much more likely, but far less harmful. By weighing up likelihood and potential impact in conjunction with one another, you should be able to create a priority list, so you know which risks are most critical, and which can take more of a back seat.
9. Respond to the Risks in the Right Way
Once you have everything else in place, it is imperative that you actually respond to risks in the right way and take appropriate steps to address or mitigate against them. Ultimately, your response should be geared towards minimising the likelihood of most negative risks ever amounting to anything. However, there are other cases where acceptance may be a better response and when this occurs, your focus should be on protecting against negative consequences, or ensuring that your business is well-placed to react in a positive way.
10. Review Your Risks Regularly
Finally, all good managing projects training programmes will highlight the benefits of continuous risk management. This means that it is not sufficient to simply manage your risks at the beginning of a project. Instead, you need to constantly review your risks, track progress on your response to existing risks, and ensure you are able to swiftly and accurately identify any new risks that emerge over the duration of the project’s life cycle.
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There are a number of risks associated with any project, and these risks can be either positive or negative. By following the ten steps in this article, project teams should be able to identify risks, anticipate problems, prioritise the most critical risks, delegate responsibility for managing them, and respond in the best possible way. It is, however, of the utmost importance that risk management is built into projects, rather than being treated as an afterthought.
Nadine is a technical marketing director at Strategy Execution, project management training courses providers, with over 20 years’ experience in the global B2B sector, hands on, creative marketer. Nadine demonstrates a passion for cutting-edge technology and a proven ability to effectively translate client priorities. Nadine is passionate about Project Management, managing and contributing to the company PM blog servicing 40,000 monthly users.