Everyone knows by now (especially if you have a PMP/CAPM) that the benefits of risk management in projects are huge. You can gain a lot of money and time if you deal with uncertain project events in a proactive manner. The result will be that you minimize the impact of project threats and seize the opportunities as they occur. Risk Management allows you to deliver your project on time, on budget and with the quality results your project sponsor requires. Your team members will be much happier if they do not enter a “firefighting” mode needed to repair the failures that could have been prevented. Here are 10 Rules that you should take into consideration in your project to manage risk.
Rule 1: Make Risk Management Part of Your Project
The first rule is essential to the success of project risk management. If you don’t truly embed risk management in your project, you cannot reap the full benefits of this approach.
Rule 2: Identify Risks Early in Your Project
The first step in project risk management is to identify the risks that are present in your project. This requires an open mindset that focuses on future scenarios that may occur. Two main sources exist to identify risks: people and documents. People are your team members that each bring along their personal experiences and expertise. Projects tend to generate a significant number of (electronic) documents that contain project risks. You and your team need to analyze these project documents for hidden risks or statements of risk.
Are you able to identify all project risks before they occur? Probably not. However if you combine a number of different identification methods, you are likely to find the large majority.
Rule 3: Communicate About Risks
Failed projects show that project managers in such projects were frequently unaware of the big hammer that was about to hit them. The frightening finding was that frequently someone in the project team did see the issue but never told anyone. If you don’t want this to happen in your project, you better pay attention to risk communication. Team meetings should always start with risk identification and risk status. Another important line of communication is that of the project manager and project sponsor or principal. Focus your communication efforts on the big risks here and make sure you don’t surprise the boss or the customer! Also take care that the sponsor makes decisions on the top risks, because usually some of them exceed the mandate of the project manager.
Rule 4: Risks can be Threats and Opportunities
Project teams struggle to cross the finish line, being overloaded with work that needs to be done quickly. This creates project dynamics where only negative risks matter (if the team considers any risks at all). Make sure you create some time to deal with the opportunities in your project. Chances are that you see a couple of opportunities with a high pay-off that don’t require a big investment in time or resources.
Rule 5: Who owns the Risk
The next step is to make clear who is responsible for what risk! Someone has to feel the heat if a risk is not taken care of properly. The trick is simple: assign a risk owner for each risk that you have found. The risk owner is the person in your team that has the responsibility to optimize this risk for the project. If a project threat occurs, someone has to be responsible and it should not be just the PM. This sounds logical, but it is an issue you have to address before a risk occurs. Especially if different business units, departments and suppliers are involved in your project, it becomes important who bears the consequences. When you own the risk you are more aware of its consequences.
Rule 6: Prioritize Risks
Whatever priority measure you use, use it consistently and focus on the big risks.
Rule 7: Analyze the Risk
Understanding the nature of a risk is a precondition for a good response. Therefore take some time to have a closer look at individual risks and don’t jump to conclusions without knowing what a risk is about.
Rule 8: Plan and Implement Risk Responses
A risk response is an activity that can actually add value to your project. You prevent a threat from occurring or minimize negative effects. If you deal with threats you basically have three options, risk avoidance, risk minimization and risk acceptance. Avoiding risks means you organize your project in such a way that you don’t encounter a risk anymore. The biggest categories of responses are the ones to minimize risks. You can try to prevent a risk occurring by influencing the causes or decreasing the negative effects that could result.
Rule 9: Log Project Risks
Maintaining a risk log enables you to view progress and make sure that you won’t forget a risk and is the perfect communication tool that informs your team members and stakeholders what is going on. A good risk log contains risks descriptions, clarifies ownership issues even the tasks on the plan that can be affected by the risk The Log should also contain how the risk will be mitigated.
Rule 10: Track Risks and Associated Tasks
Tracking risks differs from tracking tasks. It focuses on the current situation of risks. Which risks are more likely to happen? Has the importance of risks changed? Answering these questions will help you pay attention to the risks that matter most for your project value. Tracking is a real time endeavor in a project and a method of electronic tracking by all members of the team must be implemented as a part of the project reporting.
Good risk identification and tracking can go a long way towards generating a successful project on time and within budget.
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Filed under: Al's Angle, Risk Management | Tagged: Project manager, Risk assessment, Risk Management | 1 Comment »