Managing Project Risk

How many times have you seen a project of your colleagues going on smoothly and nothing ever goes wrong? And then you look at yourself, struggling!

Wondered what went wrong?

Maybe they are lucky, maybe they are smart, or maybe they know how to use Risk Management Techniques to make their lives easier.

Risk can be dangerous when you don’t know how to manage it. There are two forms of risk, first, a “Good Risk”, which teaches you something and comes with the opportunity that helps you to grow. The second one is called a “bad risk”, which hampers the life of your project and can cause a threat.

The purpose of project risk management is to minimize the likelihood or the impact of negative events or threats to your project and to increase the likelihood or impact of positive events or opportunities so a positive risk is an opportunity and a negative risk is a threat.

So how do you do that? It’s simple, when you start the planning process, the one question that you should always ask yourself is “What could go wrong?”

It might sound negative but a good Project Manager knows that this type of thinking is actually Preventive.

Risk Management Process

Project team members at various levels identify and handle risks in different ways. However, this will be ineffective without a structured risk management framework, as this leads to:

1. Incomplete Impact Evaluation.
2. Gaps in the Expectations.
3. Impact on Time, Quality, and Cost.

To avoid this a well-managed Risk Management Process/Framework needs to be set up by any organization following standard practices around

1. Forecasting Conscious Risk Identification and Management.
2. Fewer Gaps and Project deviation from the objective.
3. Early and effective communication between all Project Stakeholders.
4. Most importantly Effective Team Building.

Type of Risk

Let’s start with the most important thing that is to Identify what kind of Risk can occur during the Project Life Cycle.

1. Cost: For any organization, the most important risk to avoid is Cost/Budget as it carries the entire Organization Project Implementation Structure. In case the Project Cost and Client Requirement does not match, there is always a struggle on how to get a project done.
2. Quality: If not the quality then what’s the project built for? It holds importance for Organization, the Client, and the End User. Any time there is a compromise in the quality a product fails. So, it’s imperative to account for it as soon as you can.
3. Duration: The risk of unplanned scheduling conflicts, such as events that cause the project to be delayed. Scope Creep is a common reason for scheduling issues and project delays.

Risk Mitigation Strategy

There are five risk mitigation strategies that help reduce or mitigate the risk.

1. Accept
2. Avoid
3. Control
4. Transfer
5. Monitor

Accepting the Risk

When a risk arises, as a Project Manager you need to acknowledge the potential loss from a risk and decide if that risk is enough to spend time and effort on it. The main purpose of doing it is so that every member of the team is aware of its forefront and has a better understanding of the consequences that come with it.

Be aware that while you may choose to accept one or more types of risks, you may not be willing, or able, to withstand others.

Avoiding the Risk

When a Project team member comes along with the forecasted risk and you build together a strategy around avoiding the risk altogether before it comes into place. Accepted risk comes with an opportunity to be avoided.

Controlling the Risk

When risk cannot be avoided then the entire team comes around with the way to control that risk so that the damage/impact could be minimized.

Transferring the Risk

Another strategy is to transfer the risk where you give the control and liability of that risk to another 3rd party. It means that it’s up to that 3rd party how they want to deal with it. They can either accept it, avoid it.

Monitoring the Risk

Changes come at every part of the project lifecycle and with those changes certain risks, dependencies are created. That is why it is very crucial to monitor all those risks so that they do not make any drastic impact on the overall project.

Final Thoughts

The unknown threats for any project or organization are critical so it is important that you lay out a strong Risk Mitigation plan at every step of the project. One of the most important things is that it’s not just the Project Manager but every single individual of the team needs to be educated on it so they all be proactive about it and make the Project A Success.