Projects face risk in many forms. Project managers, project sponsors, and project teams need to collaborate on identifying, monitoring, and responding to projects risks in order to improve their chances of success. Mitigating risks can add value to a project by reducing the costs that those risks would create.
- Every project faces risks. Let's look at a process for effectively managing risks while you're executing a project. For me, risk is the same thing as uncertainty. The real world is unpredictable, so project leaders need to handle surprises when they appear and that's what risk management is all about. It's helpful to track project risks in a document called a risk register. The risk register lists all of the issues that your team thinks might come up during the project.
Here are two things that make a risk register really useful. First, it can be the collection point for everyone's concerns. The more input that you're able to gather from the various perspectives on the team, the better the odds that you'll have thought about a risk before it becomes an actual problem. Second, the risk register provides transparency and helps the team collaborate. It can be shared with the entire team, so people who are focused in one area can learn about the challenges that are confronting folks in other functional groups.
And sometimes a team member can help with a risk that someone else is facing. When you add a new risk to the risk register, you should make two decisions about it. First, on a scale of one to 10, how likely do you think it is that this risk will occur? In other words, what is the probability associated with that risk? Second, on a scale of one to 10, how severe would the impact be if the risk materializes? Multiply the probability by the impact to create a risk score.
Then you can sort all of the risks in your register by the risk score to prioritize where you should focus your energy. But, beware, while the risk scores can help with prioritizing, sometimes it's the low probability risks that cause the most havoc. Just because the risk score is low doesn't mean you can afford to ignore a risk. The team at H+ Sport is using a risk register for their project. Three of the risks that they have identified are deliveries can be late, bad weather could hit, and a key supplier could go bankrupt.
These all fit nicely into their risk register. Along with a probability and an impact for each. Once a risk has been identified and added to the risk register, the next step is to decide what you're gonna do about it. Believe it or not, there are really only four options for responding to a risk. You can accept it. You can avoid it. You can transfer the risk to someone else by buying insurance, for example. Or you can choose to mitigate the risk.
By choosing to mitigate the risk, you're saying that you'll do something to make the risk less severe. Or to make it less probable. Whatever you decide to do to mitigate the risk, then becomes an action item. Risk management adds tremendous value to projects by reducing the potential costs of things that might go wrong. As a project leader, you play an important role by helping to anticipate, capture, and make plans to deal with the risks your project might face.
- Name who is responsible for approving the resources for the project.
- Recall what the spine of a fishbone diagram represents.
- List characteristics of the environment.
- Identify the tools used for mapping processes.
- Recognize what needs to be captured on the action item list.
- Recall what project metrics should be related to.