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Best Ways for Project Risk Management

June 28, 2021

By Simpliaxis

All project work has associated risks and uncertainty when you start planning about it. When you look at the value and the profit which you may achieve from the project, you should always consider all the risks which also have the probability of occurring. When companies overlook the risks which may occur, they run into trouble such as being over budget or past the deadline. When you don’t understand what will go wrong in your project, and what will happen if anything goes wrong, you are easily prone to trouble and failure. As they say that prevention is better than cure, you should always be ready with the preventive measures to avoid risk and also measures to deal with it when something does not go according to the plan. 

But how will you figure out what will go wrong? And how will you be prepared for something which you do not know in the first place? There are many ways to identify the risks and manage them effectively such that minimum damage occurs to the project. There are practical steps that companies have to implement in Risk Management in Project Management, to ensure that few risks show up. These risks could be dealt with easily and that makes the process of the project development smooth. 
 

What is Project Risk Management?
 

Project Risk Management is a way of recognizing, analyzing, managing or responding to any risks, shortcomings, or downfalls which can occur over the life cycle of a project. The main aim of project Risk Management is to run the project smoothly which helps the developers to achieve the project goal. Project Risk Management is a process that takes part from the beginning of the project during the planning process. It is not only used to react to sticky situations occurring during the project but also used to be prepared for all the situations that may occur during the project. Risk implies anything that affects the project’s timeline, budget, or the performance of the employees. 

Risks are potential situations that have not occurred in the project but may have a high probability of occurring during the process. When a risk becomes reality, they are referred to as issues that should be addressed. Hence, the main objective of the project Risk Management process is to prevent risks from becoming issues by preparing, planning, and responding to the problems that occur. The process of project Risk Management involves recognizing, assessing, and preventing the risks that may affect a project to achieve the desired results. The role of the Project Manager involves managing the risks during a project. Hence, Project Managers should have a better understanding of the objectives of the project so that potential barriers can easily be identified. 
 

What are the different types of risks that occur in a project?
 

Various types of risks occur regularly in whatever type of project you are working on. These risks are:
 

  • Scheduling: When meetings and events are not planned accordingly, there may be conflicts that arise among the team members which causes the project to be delayed. One of the common reasons is called scope creep which causes a delay in projects by causing scheduling issues. 
     
  • Cost: When costs and budgets are estimated properly, there are chances of being over budget costing more money for the project development. Other factors such as an error in calculation could also cause risks affecting the process of project development. 
     
  • Performance: When the specifications of the projects are incorrect and inconsistent, it confuses. This affects the performance of the members working on the project and causing project delay. 
     

Once the Project Managers understand the types of risks that may occur in their project, it is time to implement the various steps of the project Risk Management plan to eliminate the potential issues. 
 

Steps of Risks Management in Project Management
 

1. Recognizing the Risk
 

Until you know what you should resolve, you really cannot do anything about the potential issue. The best way of risk identification in Project Management is to collect the data of all the potential issues in a separate register called the risk register. Brainstorming all the risks with the team members and stakeholders is one way of finding out the risks in the projects. Assess all the similar projects in the past and gather what has gone wrong in those projects. Note all the risks which you gather in a separate register. You can also interview people who have worked on similar projects and ask them what issues they faced when they worked on other projects. When you are identifying the risks, you may find that a single issue will cause many problems, hence, finding a root cause should be your aim. When you solve these single issues, all the issues will subside. Use technology to assess risks, and do not overlook any small risks which can become a bigger threat in the future. 
 

2. Risk Analysis
 

A lot of data that you have collected may be complex, and may not make sense. All of the data has to be filtered and all the potential risks have to be identified. You could always use the previous information to weed out the non-risks, but risk analysis is always a complex process. Many large organizations have a framework to analyze risks. Few common things such as preventing potential litigation, complying with new legislation, addressing regulatory issues, and reducing the exposure and the impact are to be focused on during risk monitoring and control. You have to do quantitative and qualitative analysis which has an impact on the budget and schedule of the project. There is much software designed to help companies analyze risks and help them avoid or prevent these potential issues.
 

3. Arranging risks according to priority
 

There may be bigger risks and smaller risks all of which cannot be categorized with equal priority. These risks have to be arranged according to priority by evaluating which will cause more damage to the project. Whichever is more harmful should be first dealt with following those which cause lesser threats to the project. When you have large lists of risks, you may not focus on the main objective of the project and only focus on what will go wrong with the project. Classifying the risks as high, medium, and low would help you to understand which risks you should concentrate on preventing so that you have fewer things to deal with on your plate. 
 

By having a range of risks, you can plan on how you will take care of it one by one without feeling daunted. Address the ones which require your immediate attention, and those which can cause a halt to your project. You can also spend a lot of time solving the risks based on how important you feel the risk is and how greatly it would cause your project to fail. If you have small risks, which would not affect the progress of the project, it is always recommended to spend less time on them and focus on making the project better. 
 

4. Have a person to oversee the risks
 

A single Project Manager cannot allot much of their time in the project Risk Management process, they can only help in project risk assessment and prioritizing the risks. When you are evaluating the risks, you should also assign a specific person to oversee the risks. This person would identify any type of risk and alert before it becomes a bigger issue. They would also know about resolving the risks in case it occurs during the process of the project. Assign the right person for this job, whoever is more skilled, experienced, and responsible such that any risks do not come knocking at your door. However, as a Project Manager, you should also allot a specific risk to specific team members such that everyone has a shared responsibility of project Risk Management and the project is well protected by any type of risk.
 

5. Responding to the risk
 

When you find a risk that may harm the project, you should use all the plans which you set aside during Risk Management planning. Evaluating whether it is a positive or negative risk is one of the first steps in responding to the risk. If the risk could be exploited for the betterment of the project, then it is a positive risk, however, if taking the risk would do more harm than good, then it is a negative risk. Create a plan to resolve each risk you find, and develop a proper strategy to eliminate it. Discuss with the person responsible for the specific Risk Management and implement the plan which is decided. 
 

6. Risk Monitoring
 

Whatever solution you have provided to manage the risks has to be monitored and its progress has to be tracked. The risk owner will be responsible for tracking the progress, but the Project Manager should stay updated about the risk resolution. All of the risks involved in the project have to be monitored by the Project Manager to ensure the smooth sailing of the project. Set meetings with the risk owners and decide the mode of communication such as video calling or face to face. You have to be transparent to the entire team so that everyone knows what may go wrong with the project. This way everyone may think of better ways of dealing with the risk and yield better results with the project. 
 

Other ways of dealing with Risks
 

  • Identifying opportunities
     

Few risks can be used as opportunities but recognizing these opportunities in the main tasks. Suppose you organize an event or a concert and more people than you anticipated turned up. This could be a potential opportunity to sell more tickets or more products which can be used to benefit the company. Hence, identify which risks can be used as an opportunity and use them to maximize your project outcomes. 
 

  • Estimate the probability of the risk and its impact
     

What are the chances of the risk occurring on a scale of 1-5 and how will it impact the cost, quality, and benefits of the project on a scale of 1-5? These questions can help you prioritize the risks on which you should be focusing. A risk of scale 5 with an impact of 5 will surely devastate your project and would need immediate attention.
 

Conclusion
 

Risk Management is a daunting task as no one can be a hundred percent sure that some issues cannot occur during the Project Management process. Project Risk Management and control is an ongoing effort that is given by everyone in the team. Risk control and evaluation require agility and discipline as it is very unpredictable. Project Managers and the team should always be ready to accept changes and adapt to environments to reduce risks of project failure. Although the steps of Risk Management seem clear, in the real world, it is easier said than done. Hence, using these tactics and steps to have an idea about approaching a Risk Management problem would help in laying a foundation for the process of Risk Management.

 

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