The Risk Management Process in Project Management

Whenever a project starts the first question that should come to your mind is what could go wrong?

Some might think that such a perspective is negative but practical project managers take into consideration this question. When a project starts risks come up and the best thing is to come up with a mitigation strategy to know how to manage risks.

Some risks are known but working about the unknown is the real issue here. There are practical steps that can be taken to get the work done. In this article, we will discuss the strategies that can be implemented to mitigate the risks once they are identified.

What is Risk Management on Projects?

Risk management is a process where a threat to a project is identified and analyzed. It also includes the project lifecycle analysis so that it remains on track. It is not a reactive process and should be made a part of the planning process so that the risk is mitigated if in case it occurs.

Risk is anything that impacts a project in terms of budget or affects the timeline that is committed. Risks are not real until they do not occur and once, they do they are regarded as issues that must be addressed. Risk management therefore a process that analyzes the threat, identifies, plan, and prioritize the risks that might occur or before they become issues.

For different projects, risk management has different meanings. For large-scale projects, it means extensive planning and overall strategy that will come up with plans that could completely overcome the issues that risks turn into. For the low-level projects, the meaning is simply classifying the processes into low, medium, and high priority tasks.

Starting with Risk Management

First of all, take a look and analyze the project deliverables that what it is thought to be delivered. In other words, it means that the project charter must be written that encompasses the project vision, objectives, scope, and deliverables. The project must be segregated into stages so that the risks at each stage are identified and mitigated in each project’s early phase.

You can use resources other than your team and you must be fully prepared in doing so. Traditional project managers only email their team about the risks but this should not be the case. Being a project manager, you should involve the client, vendors, management, and your entire team before a risk management session is conducted.

The risk tracking template is another aspect of risk management. Once the risk has been identified it must be logged in the template so that the levels of risk are prioritized. The risk management plan comes next and it must be done to capture all the negative and positive aspects of the projects and the actions that must be taken to deal with all the situations. Make sure that you conduct regular meetings on risk management while the project runs. All the sessions must be very much transparent.

What is Positive Risk?

Note that not all the risks are equal it has both positive and negative impacts. Each one of us treats the risks as latter but this is not the case. Negative risks are the ones that impact a project in an unwanted way and the positive risks are opportunities are the ones that arise to affect the project positively.

Both positive and negative risks are considered when planning risk management but the approach is not the same at all. Make sure that the negative risks do not damage the project’s success and that the effect is neutralized so the project remains on track. Positive risks must be managed at the same time so that their full advantage is taken.

Examples of positive risks include for instance acquiring more customers than expected, and getting the project done before more time, a negative risk of any kind that has a positive impact on the customers is also considered to be an as positive risk. Note that the definitions of negative risks are not limited to these definitions. A positive risk can quickly turn into a negative and vice versa. Make sure that your team is ready for all kinds of risks that they face.

Responding to Positive Risks

Positive risk is good and you must reap all the benefits and hamper all the ways that can turn it into negative risks. Below are the top three tips that you can follow to get the work done.

  1. Exploiting the risk means that the occurrence is repeated and the positive benefits are reaped as much as possible
  2. You want to share the risks with others and other departments are involved and you are not alone in getting the project done. The other departments will make sure that the effects are maximized
  3. The third option is to do nothing at all. Sometimes even for the negative risks, the best thing is to do nothing at all. It is the only thing that should be done in regards to the project that you are running.

Risk Management in Organization

The question here is if your organizations are ready to improve risk management. The simple answer is yes. The standard tools and training can be used to make sure that the work risk management culture is not only developed by there is also an element of consistency. This will also resolve the overhead-related issue and the same matrix can be used on other projects seamlessly.

When you are starting a new project then you must take a look at your company’s archives and history. It will give you an assessment of how to approach risks traditionally. To become more aware, you must follow the organizational culture so that the nature of uncertainty is gauged and valued as the core business issue. It will lead to better governance that in turn gives you a better strategy, policy, and decision making becomes unclouded.

Risk Management Process: 6 Steps to follow

Here the question is that how can you handle something as a vague risk? Make a complete risk assessment plan as this is all that is required. Follow the below 6 steps that are required to get the work done:

Risk Identification

To mitigate the risk, you must know it thoroughly. There are ways to mitigate the risk once it has been identified. Collect all the information in a risk register as you go through the process.

Take on board all the stakeholders and team members first of all. Make sure that the interviews are conducted and the right man for the job is shortlisted once all the information is gathered. Brainstorming to know all the risks that you can face and historical data in this regard can be very helpful as it will grow your potential risk list.

Delve deep into the risk so that the effect can be identified. It will make sure that you get to know if the risk has the same effect that you are thinking about. Rely on your intuition so that you come up with the scenarios that you cannot think of otherwise. Use processing to make sure that the risks are weed out and separated from non-risks.

Risk Analysis

It is one of the hardest parts to perform. The data is complex and sometimes it is not available but getting information from the other industries can greatly reduce the effect. You might be able to find the framework that has already been implemented within your business.

Once it has been done it is easy to make sure that the impacts have been mitigated and it includes litigation, regulatory issues, new legislation implementation, and impact reduction.

So to analyze the risk you must perform qualitative and quantitative analysis as it will make sure that you get to know how your schedules will and budget will be impacted.

Project management software completely monitors your project and analyzes it for the risks involved. With live data and real-time analysis, you are always a step ahead. The dashboard is already set up so you never have to do it manually. With live data, you get the best analysis so that the issues are caught faster with real-time data, graphs, and charts.

Risk Prioritization

Just understand that all the risks are not equal and therefore they should not be treated as such. Evaluate the risk to make sure that the resources that you need to get the work done are readily available.

A long list at first glance can be daunting to see. Just prioritize the risks as low, medium, and high. Now you can easily know which risks are involved and how they should be catered to. It makes a perfect plan for you which can be replicated for future projects as well.

High priority risks are the ones that should be addressed on priority as they can hamper the project’s success. Other risks should also be resolved but they are not as impactful as high priority ones. The other risks are the ones that have little to no impact on schedule and budget. Some of the low priority risks are important but time and resources should not be wasted.

Risk Ownership

Risk management is hard and all the work goes in vain if there is no one to oversee it. This is something that is very important and should be listed on the risk register. The person responsible and the process that should be adopted to get the work done should be documented.

Now the selection is completely up to you. It can be an employee that has the experience to handle the situation. The person should lead the situation and mitigate the issue. It could be any other choice but the person chosen must have all the rights and privileges to deal with the situation. Once again right person for the right job and every risk must have an owner to get the work done.

If the person has not been assigned to the risk then it means that the project is opening up to more risk. It is also important that the overall management of the risk is done as per the processes defined and company culture is kept in mind.

Responding to the Risk

Now comes the time to take action. The issue has been found and you now have to check if the risk is positive or negative. Check if the risk can be exploited further for the betterment of the project. If it is a negative risk then take measures to get the work done.

Risk management involves a complete plan and the mitigation strategy must be integrated as a part of the contingency plan. The risks are prioritized and they must be dealt with as per the prioritization. With the communication with the risk owner, you need to decide how the plans are to be implemented.

Monitor the Risk

Risk management is not completed without proper monitoring. This is the factor where monitoring comes in. The risk owner must know what the progress on the resolution is and how to mitigate such issues in the future. The project’s overall picture and updated picture should be viewed to get to the end of the plan.

Communication is one of the best ways for monitoring. The channels and ways of communication should be decided and you must have more than one channel for the communication for seamless contact.

Transparency is one of the best ways for successful risk management. It also means that everyone on board must know what is going on and if any sort of help is required to complete the project successfully or get it back on track, to say the least.

Managing Risk with Project Manager

The risk tracking template is just the beginning and therefore complete risk management software must be used to get complete and accurate information. Nectain has a set of tools that will ensure that you get real-time updates with easy-to-understand graphs and presentations.

Risk management is complicated. A risk register or template is a good start, but you’re going to want robust project management software to facilitate the process of risk management. Nectain is a tool that fosters the collaborative environment you need to get risks resolved, as well as provides real-time information, so you’re always acting on accurate data. Try it yourself and see, take this free 30-day trial.

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