The Risk Management Process in Project Management
If you answered yes, then you’re thinking like a project manager. Risk is part of your planning makeup. When you start the planning process for a project, one of the first things you think about is: what can go wrong?
It sounds negative, but it’s not. It’s preventative. Because issues will inevitably come up, and you need a mitigation strategy in place to know how to manage risks on your project.
But how do you work towards resolving the unknown? It’s sounds like a philosophical paradox, but it’s not. It’s very practical. There are many ways you can get a glimpse at potential risks, so you can identify and track risks on your project.
Project risk management is the process of identifying, analyzing and then responding to any risk that arises over the life cycle of a project to help the project remain on track and meet its goal. Risk management isn’t reactive only; it should be part of the planning process to figure out risk that might happen in the project and how to control that risk if it in fact occurs.
A risk is anything that could potentially impact your project’s timeline, performance or budget. Risks are potentialities, and in a project management context, if they become realities, they then become classified as “issues” that must be addressed. So risk management, then, is the process of identifying, categorizing, prioritizing and planning for risks before they become issues.
Risk management can mean different things on different types of projects. On large-scale projects, risk management strategies might include extensive detailed planning for each risk to ensure mitigation strategies are in place if issues arise. For smaller projects, risk management might mean a simple, prioritized list of high, medium and low priority risks.
Jason Westland, CEO, ProjectManager.com, offers his take on why you should care about project risk. He also offers some practical measures to apply to managing risk when in the midst of your project. To begin with, he notes, it’s crucial to start with a clear and precise definition of what your project has been tasked to deliver. In other words, write a very detailed project charter, with your project vision, objectives, scope and deliverables. This way risks can be identified at every stage of the project. Then you’ll want to engage your team early in identifying any and all risks.
Devin Deen, Scrum expert and video trainer, says you can’t be afraid to get more than just your team involved to identify and prioritize risks. “Many project managers simply email out to their project team and ask their project team members to send them things they think might go wrong on the project, in terms of a risk to the project,” he says in his training video on how to plot project risk. “But what I like to do is actually get the entire project team together, some of your clients’ representatives on the project, and perhaps some other vendors who might be integrating with your project. Get them all in the room together and do a risk identification session.”
And if you’re not working in an organization with a clear risk management strategy in place? “Talk openly to your boss or project sponsor about risk,” Westland writes. “You want them to be aware of what risks are lurking in the shadows of the project. Never keep this information to yourself, you’ll just be avoiding a problem that is sure to come up later.”
And with every risk you define, you’ll want to put that in your risk tracking template and begin to prioritize the level of risk. Then create a risk management plan to capture the negative and positive impacts to the project and what actions you will use to deal with them. You’ll want to set up regular meetings to monitor risk while your project is ongoing. It’s also good to keep communication with your team ongoing throughout the project. Transparency is critical so everyone knows what to be on the lookout for during the project itself.
Using a risk tracking template is a start, but to gain even more control over your project risks you’ll want to use a project management software. ProjectManager.com has a number of tools that let you address risks at every phase of a project.
Use our award-winning Gantt charts to create detailed risk management plans to prevent risks from becoming issues. Schedule, assign and monitor project tasks with full visibility. Team members can even add comments and files to their assigned tasks, so all the communication happens on the project level—in real time.
Use our kanban boards to sort and prioritize your risks if they exist in a more agile environment. You can use custom tags to identify tasks as risks within your project. Or, you can dedicate a whole project within ProjectManager.com to managing risks, so you can quickly see how the urgent risks are being addressed.
Of course, not all risks are negative. Positive risks can be a boon for your project, and will likely be managed differently than your typical negative risk.