Managing Project Risks
Identifying, analyzing, and mitigating potential risks that could impact project outcomes.
As a project manager, one of your primary responsibilities is to ensure that the project you are managing is completed on time, within budget, and meets the desired quality standards. However, achieving these objectives is not always easy. There are many potential risks that could impact your project’s outcome, and if you do not manage them effectively, they could lead to project failure.
Series
This blog is from a series of the 12 things you MUST master, to be the BEST, Project Manager, I just wish someone wrote them out for me at the start of my career.
Why?
In this blog, we will discuss the importance of managing project risks and provide some strategies for identifying, analyzing, and mitigating potential risks.
Why Manage Project Risks?
Risk management is an essential component of project management. Without proper risk management, you are essentially flying blind, and you may not be aware of potential issues that could impact your project’s success.
Managing project risks can help you:
- Anticipate potential problems and proactively take steps to mitigate them.
- Ensure that your project stays on track and meets its objectives.
- Protect your project from unexpected events that could lead to delays or cost overruns.
- Improve communication with stakeholders by keeping them informed of potential risks and how you plan to address them.
What do Risks look like
Risks are those items, or potential events, that if not acted on to prevent, will cause you, your project, your people, your customer, your reputation, your confidence, Harm!
Risks come in many different forms, and from every context. Some are very real and LIKELY (truck turning up late with off cement), others far less likely however could lead to catastrophic CONSEQUENCES (an earthquake right under you)
Be conscious of risk in the following contexts:
- People Safety
- Property Safety
- Logistics and resources risk
- Coordination or sequencing risk
- Commercial and Contract risks
- Technical risk
- Quality and Product risk
- Financial risk
- Procurement risk
- Communications risk
- etc
Identifying Project Risks
The first step in managing project risks is to identify potential risks that could impact your project’s outcome. Adding on to the points made above:
Technical risks
These risks are related to the technology or processes used in the project, and they could include hardware or software failures, data corruption, or other technical issues.
Schedule risks:
These risks are related to the project schedule and could include delays caused by weather, resource constraints, or other factors.
Cost risks:
These risks are related to the project budget and could include unexpected expenses, changes in scope, or other factors that impact project costs.
Stakeholder risks:
These risks are related to the people involved in the project and could include issues with communication, conflicts of interest, or other factors that impact stakeholder relationships.
Once you have identified potential risks, the next step is to analyze them to determine their likelihood and potential impact on the project.
Analyzing Project Risks
To analyze project risks, you should consider:
- The likelihood of the risk occurring: How likely is it that the risk will happen?
- The potential impact of the risk: If the risk does occur, what will be the impact on the project in terms of time, cost, and quality?
- The priority of the risk: Based on its likelihood and potential impact, how important is it to address this risk?
- The cost implication of managing the risk: What will be the cost of taking steps to mitigate the risk?
Ahhh What am I going to do with all these Risks
Once you have analyzed potential risks, the next step is to develop strategies to mitigate them. There are several strategies you can use to mitigate project risks, including:
- Avoidance: This strategy involves taking steps to avoid the risk altogether. For example, you could change the project scope or approach to avoid potential issues.
- Transfer: This strategy involves transferring the risk to another party. For example, you could purchase insurance to transfer the financial risk of a potential issue.
- Mitigation: This strategy involves taking steps to reduce the likelihood or potential impact of the risk. For example, you could implement quality control processes to reduce the risk of defects in a product.
- Acceptance: This strategy involves accepting the risk and developing a contingency plan to address it if it occurs.
Key Takeaways
Managing project risks is an essential component of project management. By identifying, analyzing, and mitigating potential risks, you can proactively address potential issues
Thought Leaders
Managing project risks is a critical skill for project managers, and there are many great thinkers in this space. Some examples of authors and their works that discuss managing project risks include:
- Carl Pritchard – “Risk Management: Concepts and Guidance“
- David Hulett – “Integrated Cost-Schedule Risk Analysis“
- David Hillson – “Managing Risk in Projects“
- Kim Heldman – “Project Management JumpStart“
- Rita Mulcahy – “Risk Management Tricks of the Trade“
These authors provide insights into the various tools and techniques that can be used to manage project risks, such as risk identification, risk analysis, risk mitigation, and risk monitoring. They also emphasize the importance of establishing a risk management plan, communicating risks to stakeholders, and continuously assessing and updating risk management strategies throughout the project lifecycle.
What separates Great from Good
Great project managers in this space are able to anticipate potential risks, identify opportunities to mitigate those risks, and communicate with stakeholders effectively to keep everyone informed and on the same page. They understand that risk management is an ongoing process and continually reassess and adjust their strategies as the project progresses.
You can find these books on Amazon by searching for their titles and authors.
