What Great Looks Like: Best Practices and Tools for Successful Risk Management
Risk management is a critical aspect of program management. In order to ensure the success of a program, project managers must be able to identify and assess potential risks, and implement effective risk management strategies to mitigate those risks. In this blog, we will discuss some best practices and tools for successful risk management, with a focus on risk identification and assessment techniques.
Series
You will find this post is one of several in the series I have focused on Risk: Check out the other posts here.
Best Practices for Risk Identification
Risk identification is the process of identifying potential risks that could impact a program. Here are some best practices for effective risk identification:
- Involve stakeholders: Engage all stakeholders in the risk identification process to ensure that potential risks are identified from all perspectives.
- Use a structured approach: Use a structured approach, such as brainstorming or a risk checklist, to ensure that all potential risks are identified.
- Consider both internal and external risks: Consider both internal risks, such as resource constraints or stakeholder conflict, and external risks, such as market fluctuations or regulatory changes.
- Continuously review risks: Continuously review risks throughout the program lifecycle to ensure that new risks are identified and assessed.
Best Practices for Risk Assessment
Risk assessment is the process of evaluating potential risks to determine their likelihood and potential impact on a program. Here are some best practices for effective risk assessment:
- Use a risk matrix: A risk matrix is a tool that can be used to assess risks based on their likelihood and potential impact. This can help project managers prioritize risks and determine which risks require the most attention.
- Consider the interdependencies between risks: Consider how different risks may be interdependent, and how the impact of one risk may be compounded by the presence of another risk.
- Involve subject matter experts: Involve subject matter experts in the risk assessment process to ensure that risks are evaluated accurately and thoroughly.
- Use data and analytics: Use data and analytics to inform risk assessments, such as historical data on similar programs or industry benchmarks.
Tools for Risk Identification and Assessment
There are many tools available to assist with risk identification and assessment. Some commonly used tools include:
Brainstorming:
Brainstorming is a technique that can be used to generate ideas and identify potential risks. It involves gathering a group of stakeholders together and encouraging them to freely share their ideas and concerns.
SWOT analysis:
SWOT analysis is a tool used to identify both internal and external factors that impact a program. It stands for Strengths, Weaknesses, Opportunities, and Threats.
Risk checklists:
Risk checklists are lists of common risks that can be used as a starting point for risk identification.
Monte Carlo simulation:
Monte Carlo simulation is a technique that can be used to model the impact of different risks on a program, and to determine the likelihood of different outcomes.
Key takeaways
In conclusion, effective risk identification and assessment are critical components of successful risk management in program management. By following best practices and using the right tools, project managers can ensure that potential risks are identified, evaluated, and managed effectively.
Risk Identification and Assessment Techniques – Best Practice Thinkers
Some of the best thinkers in the space of Risk Identification and Assessment Techniques, along with their notable works:
- Douglas Hubbard: Douglas Hubbard is the author of “The Failure of Risk Management: Why It’s Broken and How to Fix It”. In his book, Hubbard argues that traditional risk management techniques are flawed and proposes an alternative approach based on quantitative analysis and measurement.
- David Hillson: David Hillson is the author of “Risk Management: Tricks of the Trade for Project Managers”. In his book, Hillson provides practical advice and tools for effective risk management, including risk identification and assessment techniques.
- David Hillson et al: “Practical Project Risk Management: The ATOM Methodology“
What Separates Great from Good?
What separates great from good risk identification and assessment techniques? The ability to accurately identify and assess risks, and to implement effective risk management strategies to mitigate those risks.
Great
Great risk managers use a structured and systematic approach to risk identification and assessment and involve all stakeholders in the process. They also continuously review risks throughout the program lifecycle and use data and analytics to inform risk assessments.
Excellent risk managers communicate risks and their potential impact to all stakeholders effectively and are proactive in implementing risk management strategies to mitigate potential risks.
Overall, great risk managers are those who effectively manage risks in a way that minimizes the impact on the program and maximizes the chances of success.
