A risk is an event or condition that potentially may have a negative effect on completing a project’s objectives. Project risks represent the exposure of uncertain consequences to the project, stakeholders, and organization if those risks occur. Failure to plan, identify, assess, and plan responses to project risk is a major cause for project failure.
Project success can be increased significantly simply by identifying, discussing and planning risk responses for your project. Creating a Risk Management Plan will help you achieve successful project results.
Risk Management includes:
- Risk planning
- Identification analysis
- Response planning
- Controlling project risk
Risk Planning
Risk Planning involves defining how to conduct risk management activities throughout the project. It begins at the projects conception and continues throughout development and execution. The project manager will meet with Subject Matter Experts (SMEs), stakeholders, and partners to gather information such as understanding the organizations risk appetite and tolerance. The risk management plan is then developed and includes the approach, tools, roles, budgeting and timing for risk management.
Risk Identification
Risk identification involves identifying a list of all the risks that may affect the project. The goal is to ask questions such as: “What can go wrong with this project, what are the risks?”
Risk identification is an iterative process. As new risks are identified, they are added to the risk register. Schedule recurring meetings at least once a month to review the project risk register.
Use Information Gathering Techniques to identify risks:
Risk Analysis
Qualitative and quantitative methods are used to analyze risks. Qualitative analysis is an approach of prioritizing risks for further analysis by looking at their probability and impact of occurrence. This approach allows the project manager to focus more on higher-priority risks. It uses a Probability and Impact Matrix to risk ratings to assign risk ratings to each risk by combing probability and impact scales.
Risk Response
Risk response involves creating actions to enhance opportunities and reduce threats to project objectives. There are 4 basic responses to risk events:
- Accept – The project team acknowledges the risk and not take any action
- Avoid – The project team eliminates the threat or protects the project from the risk impact
- Transfer – The risk impact is transferred to a third party by giving them responsibility for its management
- Mitigate – The project team reduces the impact of a risk
Conclusion
My final word: Make sure you have a risk management plan! Failure to do this can cause project failure. Download our Risk Management Plan Template.
