When it comes to project planning, regardless of the industry, risk management is a huge and incredibly important part of the process. It can however also be seen as a very important skill to have and one that every project manager needs to master. It is one of those areas that many project managers feel is worth attending training courses for project managers. They could do so in order to enhance their understanding of the process.
What is risk management and why should it matter?
Risk management allows us to minimise any possible problems that might occur that would have an impact of the budget, timescale, or both of a project. Every project involves an element of change. It is part of the risk involved when you are looking to create a change. It is important to take these risks into consideration when planning out your project.
Many project managers feel that they simply don’t have the time to plan for possible risks in a project. However, risk planning is not something it is simply nice to have in place. It is an invaluable resource that can help to ensure that your project is successful. When it comes to project planning risk management is important because:
- It identifies risks and helps you to take the steps needed to prevent problems that might cause issues in the project
- It will make team members much happier because they will not have to “firefight” to fix issues that might have been avoided
- When problems arise there is already a risk plan in place that can help you to feel in control and able to address the problem
- It builds trust and creates transparency. If you are honest about the uncertainties that can occur, then it will allow the team members to engage properly with the project and realise that should problems occur they have a responsibility to help take care of them
The big question is how we work towards addressing these problems when we don’t actually know what they are until they occur?
Identify the risks
Ask yourself what might possibly go wrong with the project. What things could stop you from getting the results from your project that you want or need? You could ask your team, and others who have done similar projects, for their input. You could use this to help you create the list of issues in addition to your own experiences.
We don’t always know what will happen. But, it is possible to look at what has happened before and add these to the list just in case they might happen again.
Assess your risks
Once you have created your list, is it important to assess each of the risks that you have thought about and consider which of them are the ones that you will need to pay particular attention to. These are the ones that will cause you the most problems in term of budget or timescale. You should be asking the following questions for each risk:
- How likely is it this risk will occur?
- If this risk does happen what will the impact be on our project results?
There are several ways that you can code the risks that you have identified. You could use colours; green, amber and red, with green the smallest impact and red the highest. Or, you could use umber for example 1-5 with an explanation for each number ranging from smallest impact to largest. You could even score it twice - once for impact and once for the likelihood of it happening. This is where your project management skills will prove invaluable.
If a risk scores highly for then you will definitely need to plan for it. You really should plan for any potential high impact risks even if they are very unlikely to happen because if there is even a chance that they actually could then the implications for your project could be significant
Plan how to manage your risks
The next step of your risk management plan is to create a plan for any risk that may cause problems. The things that you need to consider are:
- What can be done to stop the risk happening? Is this affordable?
- What can be done to ensure that the risk to the results of the project are minimal? Is this affordable?
- What plan do we have for is the risk occurs? How do we need to prepare ourselves?
The majority of contingency plans need to have activities planned into them from the beginning in order for them to work effectively.
The final step is possibly the most important one when it comes to risk management,. This is to monitor any risks you have identified for the duration of the project. You need to ask yourself the following questions at regular intervals:
- Are the risk management activities we have put in place happening?
- Are they working?
- Is the possibility of the risks we have identified decreased or are they increasing?
- Are there any new risks emerging and what can be done about them?
There are likely to be changes that will occur whilst you are implementing your project, and it is really important that you are ready to adapt to these changes. You need to keep a look out for those tell-tale signs that there are new risks emerging. If a supplier or stakeholder is nor responding to your communications then this could be a sign that there is a potential problem you need to be worried about. Whilst these signs may come across as simply annoying, they could hide a bigger issue. It is important to think about what the impact might be if they continue and take the appropriate action as soon as possible.
Risk Management is in Fact Project Management
Risk is a huge feature in any project. This is why risk management needs to be a central element of any effective project management plans that you make. It should be something that is at the heart of every project that you work on.
Managing risk can help you to understand you project more clearly, see what works best and also ensure that you can take control even when things start to go wrong.