Top tips for effective project risk management
Does your organization’s approach to risk impact the success of delivering critical projects?
Are missed deadlines, disappointing performance, or exceeded budgets too frequently when it comes to the attainment of project goals?
Effective project risk management can make a huge difference to project success and in this article, we’ve collated some useful tips to help project and risk managers mitigate risks and ensure projects produce positive results.
Project risk – what could possibly go wrong?
Project risk management can be defined as the process of identifying, analyzing, and responding to any risk that arises within the lifecycle of a project to help keep the project on track and on target.
But it’s not just about being reactive – project managers might consider the possible ‘negatives’ up-front; the risks that could potentially crop up within a project in hand and if not dealt with, pose issues that will impact success.
Risk management therefore could be considered the process of identifying, categorizing, prioritising, and planning for risks before they get to become problematic.
Start with your project plan
Before considering risk, be very clear in defining the outcome that the project must deliver. What are your key objectives, what is the scope of the project, the milestones, and deliverables?
In this way, risks can be identified across every stage. It’s often useful to get your team and stakeholders together to consider the risks that could occur over the entire lifecycle of the project so no stone is left unturned.
Early identification of risks is useful as it will equip the project team with information about potential risk scenarios, enabling them to make balanced decisions and create mitigation strategies.
The project team should continuously evaluate expected, or known risks, so that the latest, most relevant information is always available to inform decision making.
Risks v opportunities
People typically think of risk as being negative – an unwanted impediment that can thwart the performance of projects.
But it’s important to consider the risks that can affect the project in positive ways and create opportunities.
The team’s approach towards negative and positive risks should naturally differ; negative risks should be managed to reduce their likelihood or impact, while positive risks should be managed to take full advantage of their potential.
Create a risk register
As you identify important risk events, positive or negative, best practice is to create a risk register – effectively a ‘list’ that will help answer questions around the risks you’ve identified: what is the likelihood of the particular risk event? What would be the severity of impact should the risk occur? What is the response plan? Considering likelihood and impact, what is the risk priority level? Who is responsible for managing the risk (the risk owner)? Ideally, all project and risk managers will risk register access and accurate, timely information to draw insights from.
Analyze risks throughout the project lifecycle
The team’s focus should remain on the risks that could have the greatest impact on a project, causing the biggest losses or gains.
The precedence of risks within your register will change and vary between different stages of the project lifecycle and through careful monitoring can be re-prioritized accordingly.
By analyzing risk in this way, project leaders and risk managers will be able to allocate resources, time, and budget to a project more effectively.
Risk management software – an essential project risk tool
Accuracy, transparency, and access to up-to-the-minute information are all essential if you are to have a clear picture of risk at any given stage in the project lifecycle.
Risk management software provides project and risk managers with a single view of risk, through which they have the ability to identify, assess, prioritize and monitor risks using live, real-time data and assess these against the constraints of schedule and budget. With the information you need at your fingertips, your team will be better placed to make the right decisions. And the result? Better project outcomes.