With great power comes great responsibility.
Or, as we like to say in the project management world, “With great projects come great risks.”
Risk is any unexpected event that might affect the people, processes, technology and/or resources involved in a project. Yet even with no guarantee of a risk event, project managers must continually focus on identifying ways to overcome any problems that could crop up and negatively affect a project. Whether it be the project’s quality, timeline, budget, etc.
The key to properly managing a project’s risk, then, is preparation. You must always be on the lookout for risk, and you must always be prepared to fight risk. Effectively doing so means implementing a few key steps into your project management strategy:
#1: Incorporate risk management into every part of your project and its respective tasks.
No one is immune to risk, so why not deal with it upfront? As such, you should establish specific roles and responsibilities among your team for actively identifying potential risks, monitoring risk triggers and determining what preventative steps to take if one occurs.
Just as you have members on your team that are responsible for managing the budget, providing key deliverables and so on, you also need to have someone whose job it is to manage risk. By incorporating risk management into your team’s daily responsibilities, addressing potential threats becomes more manageable versus it being an intrusion every time something unexpected occurs.
Not only does it make the risk easier to handle, but it also has less of an impact on the project and its final deliverables.
#2: Identify and evaluate all potential risks.
One of the things you should do in the early stages of your project is to identify all the potential risks that could affect the project in one way or another. Potential risks could be as simple as a key team member catching the flu and being out sick for a week, or as drastic as a major earthquake sending all of California, along with your primary supplier, into the Pacific Ocean.
However, unless you try to identify all the potential things that could go wrong, you can’t come up with a plan to combat them.
The process of identifying a potential risk often involves asking five key questions:
- What might happen to affect the project?
- When might such an event occur?
- What are the chances of it happening?
- What type of outcome would such an event have?
- What factors might indicate or trigger this event?
The answers to these five questions can help identify all potential threats to the project. Knowing the risks isn’t enough, though. You also need to be able to assess the consequences for each potential threat.
For example, some risks can completely blow up a project, such as your main supplier disappearing into the Pacific Ocean. And there are some that, while an inconvenience, barely cause a ripple. (Think network outage for an hour.)
The key is to evaluate, and then prioritize, the risks you identified using two factors: their likelihood of occurring, and their level of impact on the project. Once you’ve determined the probability of each risk, you should rate them as high, medium or low impact.
The risks that have both a high probability and a high impact are the ones you will need to most plan for and devote resources toward preventing.
#3: Take the time to communicate potential risks.
While you might be aware of the potential risks that could affect the project, including its budget and timeline, others might not be. This includes your team members, stakeholders, clients, executive team and so on. Taking the time to enlighten them about potential issues that might crop up means everyone is better prepared to handle any unforeseen events – whether it is the chance of a significant budget increase or a two to three week delay in meeting the target deadline.
#4: Evaluate risks to determine if you need to take action.
In addition to making sure everyone is on the same page, you should also take the time to analyze potential risks and their outcomes. This means considering best- and worst-case scenarios, as well as what you might gain or lose for each one.
From there, you should determine what might lead to a risk occurring, which triggers indicate a risk is imminent and what steps should be taken to minimize any potential damage. Ideally, you should have a plan in place for how you would respond to each individual situation.
Of course, one option is that you simply accept the risk. Perhaps it has minimal effect on the project, or maybe the amount of time and money it eats up are simply not worth it in the grand scheme of things. These are just some of the many factors you should consider when weighing the impact of a potential threat and whether or not you should take action.
#5: Don’t forget about the opportunities.
At times, you may want to take calculated risks to maximize success. Some risk might be an opportunity for you to maximize the project’s efficiency, decrease the timeline, improve the budget, etc.
When faced with a risk opportunity, you often have one of two options: you can either maximize the opportunity in the hopes that it will pay off in how the project turns out, or you can ignore the opportunity if the gains are too small to make it worth the risk.
#6: Take the time to monitor project risks and associated tasks.
It’s an undeniable truth that every project carries some risk, including the possibility that the project might be completely derailed. With that said, you still have to account for when something does go wrong and provide details on why it happened, what you did to correct it and if there was anything that could have prevented it.
One of the most effective things you can do is to record project risks and the response taken. By maintaining a log of what went wrong and how it was handled, you keep everyone involved in the project informed. It also helps you cover your bases, showing that you handled each risk to the best of your ability and kept the project on track as much as possible.
After the project ends, take the time to evaluate which parts of the risk management project were successful, and which need to be improved for next time. Only be continuing to assess the situation and identify potential issues, can you ensure the best project outcome.
In the end, risk management is a never-ending battle, but by following these steps you can better position yourself for a successful outcome – and a great project – every time.