Risk management is vital to project management. Although people may want to think that there are no risks associated with a project, there are risks involved no matter what, so you need to know how to identify and manage the risks so that they do not threaten your success.
What is a risk?
A risk is basically something that could potentially have a negative impact on a project. This could be suppliers letting you down, human error, in a construction project it could be bad weather which places a delay on building work or it could be that one of the firms that are involved in the project goes into liquidation.
There are all kinds of risks that need to be considered and identified to ensure that they can be effectively managed.
Risks need to be identified quite early on in any project so that there are no ‘show stoppers’, in other words, there should be no unidentified risks that can effectively stop the project from being completed.
So risks are looked at in terms of ‘What if?’ type scenarios. ‘What if the project does not finish on time?’ ‘What if the weather delays the building work?’ ‘What if the project goes over budget?’
Knowing what will happen means that you can take positive action to ensure that the risks are managed and controlled and that control is vital to successful project management.
Once you have identified all the things that can potentially go wrong then you need to identify means whereby the risks can be controlled. There are different ways of doing this but all the different methods have one thing in common, the risks are owned.
When ownership is taken of the risks, then they are instantly minimised because whoever has ownership of the risk will do their utmost to see that what could go wrong, doesn’t go wrong – this is called risk mitigation. Risk Mitigation usually means creating an action plan that can lower the probability of a risk occurring.
Although you may think that some risks cannot be controlled by a person, this is not the case. For example, in a construction project it is true that the weather cannot be controlled by a human, so if bad weather delays a project, then no one can be blamed, right?
Well in project management terms, if the risk of bad weather causing delays has been identified and properly managed, then this risk will have been flagged up early on in the project and as a result a means of minimising the risk will also have been identified.
So if bad weather is the risk, then a contingency plan will have been identified. This could be a more flexible schedule of works. It could be some agreement with the contractor that if they have delays due to bad weather, they will, when the weather is suitable work longer hours to make up the time. Any risk can be managed and controlled, so long as it is identified early enough in the project.
Key Players in risk management
The key players when it comes to risk management are all the members of the Project Team. Identifying and taking control of all the risks does not mean that they become someone else’s responsibility, the allocated risk may become someone’s primary responsibility, but all team members still have a collective responsibility.
Although the project manager is vital in identifying risks and he or she has a coordinating responsibility, the collective expertise of the Project Team should also be drawn upon, to ensure that risks are looked at from a multi-disciplinary point of view!
Initially some members of the team may feel intimidated by the risks and may feel slightly uneasy about the process, but risk management is simply about taking responsibility and eliminating the threats that risks can pose!
The Project Manager should ensure that there is an appropriate means of monitoring the risks – for many this will be through a Project Risk Register or Risk Log – this is a simple document that can be used to track risks and monitor the progress of mitigation.
Ultimately ALL projects require some form of risk management planning – with an appropriate process and owners you might not be able to zero the likelihood of risks but your going to be better positioned in managing them.
- Risk Register – monitoring and controlling risks using a risk log
- Guide to Project Management
- Project Management Templates: 10 Vital Ingredients For Success
- What is a project risk
- Project Management Training