Are you prepared to handle any unforeseen project risks that may arise?
To begin with, project risk management is the practice of preventing or minimizing project risks from occurring and impacting a project. Risk management is the systematic process of identifying, analyzing, and responding to project risks.
For project managers, having a well defined and effective risk management process in place and implementing it throughout the life of a project is crucial for success.
With a risk management process in place, you can be better prepared to handle any project risks that may arise. In this article, we share our top four helpful risk management strategies to help you manage risks.
1. Develop a Risk Management Plan
Just as it’s essential to have a project management plan, the same holds true for establishing a risk management plan. In fact, the risk management plan is included as one of the key components within the project management plan.
A risk management plan is a comprehensive document that clearly lays out the processes for identifying, analyzing, and responding to a project’s risks. It defines how you will carry out the four steps of the risk management process, which are:
- Identify the risk.
- Assess the risk.
- Treat the risk.
- Monitor and report on the risk.
It includes the tools and techniques that you will use as well as the funds to perform these four risk management activities. Having a risk management plan is essential for proactively mitigating and handling project risks. Contact our team to assist your organization in creating a risk management plan today.
2. Assign a Project Team Member as a Risk Owner
To effectively manage risks, it’s crucial that you assign a project team member ownership or responsibility for a project risk, or in other words, a project risk owner.
A risk owner is the person responsible for monitoring the risks and for selecting and implementing an appropriate risk response strategy. Having an assigned owner for a certain risk ensures that there is someone on the team who is actively handling and mitigating project risks.
However, this is not to say that for each risk identified, there should be a risk owner. You should first begin with the most important risks and then consider adding more once an effective process is established.
Assigning a team member with the role of a risk owner should be based on that person’s expertise and experience. Ideally, you should choose someone who is responsible, detail-oriented, and knowledgeable of the topic concerning the risk. Furthermore, a person who has experience in risk management is beneficial for being a risk owner, but it’s not required.
Having a risk owner can be a major benefit for ensuring that your project risks are properly managed and dealt with. It can help to bring about greater success for your projects and helps to keep the project moving forward.
3. Maintain a Project Risk Register
A project risk register is an important tool for project managers to utilize to identify, record, and monitor potential risks that could impact the project. Whenever there is a possibility that something could impact your project, it should be evaluated by the project team and recorded in the risk register.
A risk register contains key information about each project risk, including the impact of the risk, the probability that it will occur, the rating or the priority level of it, who oversees the risk, and what measures will be used to manage and mitigate the risk.
Using a risk register allows you to track potential risks early on so that you can decide how to best handle them so that they don’t interfere with your project. A risk register is an integral part of the risk management process and can help in your project success.
As the complexity of a project increases, it becomes more difficult to keep track of what’s important. This is where a risk register can be of great value. It documents the potential risks in one place and allows you to be able to easily refer to it for the management and monitoring of the risks.
4. Be Proactive in Resolving Project Risks
One of the key aspects of effective risk management is being able to proactively identify and mitigate project risks. This is important in order to ensure project success for you and your team.
In a study of various IT projects conducted by Harvard Business Review, it was found that “… one in six projects have a 200% cost overrun as a result of not being able to fully quantify and account for large risks.” Knowing how to quantify and mitigate risk is a critical skill set for your project team.
Proactive risk management involves identifying risks before they occur and determining how to best mitigate them. It aims to reduce the negative impact that the risk could have on your project and works to eliminate it.
Identify potential risks early on so you can take the necessary measures to mitigate and prevent them. Also, if a risk has already impacted your project, this is where you want to proactively work to mitigate its effect right away. In addition, to proactively resolve project risks, this is where a risk register and a risk owner becomes effective and efficient.
That wraps up our list of our four helpful strategies for risk management implementation. By leveraging these key points, you and your team can better manage project risks and ensure success for your projects in 2022.
At BDM Squared, we help you deliver projects on time, on budget, and within scope. If you have any questions about risk management, please get in touch with our team.