A Practical & Effective Approach to Risk Management
Most experts unanimously agree that a sturdy risk management strategy can help decrease any issues related to a project up to almost 90%. The things you always need to ensure is that you have a solid and strong project management practice, a well-defined scope, the ability to incorporate input from stakeholders, the leverage following a well-designed change management process, and the facility to keep the lines of communication fluent and open.
A well-designed risk management process cuts down any surprises or unanticipated risks effectively. With that being said, an effective risk management strategy can also contribute to the resolution of the problem when changes are occurring because they then become recognized threats that you can defend your project against, so that you can avoid any unpleasant knee-jerk reactions.
What is “Risk”?
Before you can actually embark on building an effective risk management methodology, you must first have a clear and comprehensive understanding of the chief definitions. The PMI perspective defines project risks as unknown events at their core; they can be negative or positive, which implies that the word “risk” itself is used on a very neutral term. Keeping that in mind, most organizations mainly focus on the negative risks, or threats to be more precise, instead of the positive opportunities that might present themselves as risks as well.
Often, most companies that perform a risk management process on a typical project that runs for multiple months (no longer than a year) will be able to easily identify and eliminate 5-10 potential risks that have been recognized. However, this number should be much higher since there are positive risks to consider as well. As a result, your team’s potential of identifying issues early on, looking for what exactly is needed, handling the issues, and seeing the opportunities more readily is increased. What all of us need to understand is that project risks can be managed without diverting away from the actual work related to that project; they can easily be an extension of the project itself with these simple steps.
The Risk Management Progression
- Step One
Get each team worker involved in the planning process by asking them to enlist at least ten potential problems they feel the project may face. You get a variety of potential threats to deal with this way and all possible problems are identified.
- Step Two
Collect the lists, and compile them into one, removing duplicates.
- Step Three
Assess the probability of each of the enlisted possible shortcomings of the planning of that project. Try to estimate their strength on a scale of one to ten, calculating all the lower and higher risks one by one.
- Step Four
This step requires you to divide your entire planning team into smaller groups and assign a portion of the final list to each. These groups can then identify any warning signs and triggers related to their assigned threats; it’s important that all triggers be clearly noted, and there are at least three triggers for any apparent risk.
- Step Five
Your sub-groups of workers will now assess and identify the probable preventive measures for the risks that project runs and what sort of enhancement actions will be taken for the possible opportunities.
- Step Six
This is where your sub-groups devise a contingency strategy for most of the project threats, one that includes the preventive actions to take as well. Make sure you keep this process effective by decreasing the time consumption.
- Step Seven
The final step is to estimate and determine the owner of each risk on your final list. The owner is the worker that will be responsible for observing any triggers and responding accordingly by implementing the actions mentioned in their pre-approved contingency plan.
This process can be applied on every project in the same manner, once you develop a list of recurring threats the management will start becoming a lot easier. This will help your team become extremely time-efficient and defensive against threats so that your organization can benefit as a whole.