Project and Program Risk Management

For a project-oriented organization, the success of a project is key to the company’s success. Completing the project with minimal resources, a skilled workforce, and the allotted budget are a few things that help a company achieve its organizational goals. And while schedule, cost, deadlines, resources, and budget are all crucial for success, the biggest and more important factor that can be the difference between the success and failure of a project is risk.

Every project, irrespective of its size and nature, carries some form of risk. It might vary depending on the type of project you are working on. The risk might also change based on how your project progresses. It’s important that you monitor the risk throughout the project lifecycle. Some risks bring new opportunities for the company, while others are a threat that might lead to negative consequences. Identifying the risks, evaluating them based on the potential consequences, and, most importantly, establishing the ways to mitigate those risks is important in ensuring the successful completion of different projects.

What is Project Risk?

Risks are uncertainty. As mentioned above, you can only guess whether a certain risk has a positive or negative impact on your organization. This also allows you to better equip yourself with the tools needed to deal with risks when they crop up in the middle of the project. Remember, the risk affects one or more of your project objectives. You need to evaluate the risk beforehand to understand better whether it’s worth taking the risk or if you should just leave the part that has any chance of leading to negative consequences.

Usually, managers work with stakeholders and their teams to make a risk management plan. The first step in mitigating any kind of risk is developing a risk management plan. You need to document each step you should take to reduce the risk or deal with it as efficiently as possible. Risk management, basically, refers to the process of handling the risk such that your end result sare not affected. Simply put, risk management is the process of identifying, evaluating, and mitigating risks through a series of steps.

Project Risk Management Steps

These six steps will help you plan risk management proactively so that when something uncertain occurs, you know how to handle that.

Risk Identification

The first step in risk management is to identify potential risks that can have positive or negative consequences on your project outcome. Talking to your team and conducting regular meetings with stakeholders and supervisors will help you understand the risks that might occur.

For example, when you are working on a project with a tight deadline, there is a risk of delaying the delivery because of the national holidays. You can create a list of project risks based on previous projects. Work with your team to figure out all things that can go wrong or might affect your project’s outcome. It’s best to use your intuition to avoid missing out on anything.

Risk Analysis

Risk analysis is pretty complex. You need to gather information about the project, evaluate the past project to get a better understanding of what may cause problems in executing the existing project, and work with your team at all steps.

Certain risks, like violating your state’s legal requirements or corporate laws, can result in the termination of the project and a hefty penalty. Even worse, these issues can shut your company down permanently. That’s why identification and analysis of such risks before starting a project are critical. You can use quantitative and qualitative risk analysis to determine the impact the risk has on your business.

Prioritize Risks

Prioritizing risks requires gathering information about the level of impact a risk can have on your project or the organization as a whole. These steps involve risk classification as — low, medium, and high. It’s easier to decide on the actions you can take if these risks occur and the resources you are going to need to address them.

Some risks require immediate addressing, or they will impact the success of the project. Some risks might affect your work schedule but don’t necessarily pose a big threat to your project outcome. Some risks have no impact on your project’s success at all. While these are critical, you already have the resources and plan to deal with them. These can be categorized as low-priority risks.

Assign Risks to Your Team

Once you have created the list of potential risks, assign them to your team. Each employee should be assigned a particular risk based on their area of specialization and their involvement in the project. This reduces the manager’s burden. You can have peace of mind knowing that when a risk occurs, your team will take care of it and address the problem the way you had planned. You can also create a team for risk management. This team will handle all sorts of risks in all projects.

Creating a Risk Management Strategy

The next step is identifying whether the risk will have a positive or negative impact on the project outcome. Based on this, you need to come up with a risk mitigation strategy. You must work with your stakeholders to create a strong risk management strategy that helps you handle small to complex risks effectively and ensure that they don’t impact your organizational objectives.

Monitoring the Risk

Your job doesn’t end with creating a risk mitigation strategy. While that’s pretty much all that you need to manage stress and address them as and when required, you never know if your strategy will be effective as your project progresses. There’s always a chance you might face different risks when you start working on a project. When implementing a risk mitigation strategy, you need to monitor its progress throughout the project’s lifecycle and develop new risk management plans when necessary.

A transparent risk management process where your entire team knows the project status and the risks it presents will help you deal with the project risks efficiently. Follow the above six steps to implement the best risk management strategy for future projects.