By Loay Dirar
Effective risk management is increasingly perceived as a critical element of delivering successful projects. With a project risk management process and system, risks to the project can be identified early and minimized, and teams will be able to seize chances and opportunities once they happen. When it comes to practicing risk management, use the five steps below to help deliver projects on time, within budget, and with the highest quality outcomes.
Step 1: Involve the Whole Project Team
Risk management must be a part of your project involved by all team members. Rather than teams looking blindly to the project manager and assuming he is managing all risk for the project, the entire team must be involved. The organizations that are the most successful at project risk management have both top/down and a bottom/up approach – risk management is authorised and supported from senior management, and each team member is empowered to speak up and take action. Employees who identify risks early are appreciated and rewarded.
Step 2: Identify Risks
Before the project starts, your team should be focused on identifying risks. Begin by gathering all project team members into risk identification workshops and brainstorm a list of potential risks and opportunities. Revise the project plan, previous project plans, online publications, and outside consultants/experts to make sure your list of probable risks is as complete and accurate as possible.
Step 3: Constantly Communicate
To ensure risks are continuously identified and communicated appropriately, add project risks and opportunity discussions as a standing topic to the team’s regular meetings. The benefits of open communication trickle up, as the project manager will have better information to report to the project sponsor or principal, ensuring that the customer doesn’t have unexpected surprises. Open communication also allows for the identification of interrelated risks – risks that appear small on their own, but may act as a catalyst for larger problems.
Step 4: Examine and Prioritize
As risks are identified during a project, teams must decide how to prioritize them. Overall, risks should be measured by the impact they could have on the project goals, and start with those that could cause the biggest losses and gains, and those with the highest probability of occurrence. Once you have a set of risk criteria, use it to assess all risks as they are identified during a project.
Risks may be re-scored and re-prioritized as they pass up the project hierarchy and organization, based on the different priorities at each level. What may be seen as a less important risk by a single project might be viewed as more important at the program or organizational strategic level.
Step 5: Plan and Implement Risk Responses
Once your risks are identified, examined, and prioritized, the risk response is the activity that adds value to your project. The right response can prevent a risk from materializing or minimizing its negative impacts. Responses include risk avoidance, risk reduction, risk transfer and risk acceptance.
By implementing risk management into a project early, and ensuring risks are openly communicated throughout the project, teams can be more successful in delivering on time and within budget, by avoiding unexpected risks and sticking to the project timeline. And last of all, share a lessons learned report of what worked – and what didn’t, throughout the business so the future projects have a library of best practices to refer to.