What step should you take after you complete your risk management plan?

Risk and uncertainty are inherent parts of all project work, making project risk management an important topic for teams to address. Which is why so many projects—especially large technology projects—run into trouble. When studies tell us that easily half of all IT projects run over budget and past deadline, we see how easily risk turns into real trouble for projects and their organizations.

But there are ways you can mitigate and manage risk. When teams have a good project risk management process in place, then you can identify and deal with all the project’s risks in an appropriate and thorough manner. When you’re good at managing risk, it means that fewer issues crop up and that you’re prepared for all eventualities. (And, people start asking for you to run their projects!)

Here are nine project risk management steps that will help you keep everything on track:

1. Create a project risk register

Create a risk register for your project in a spreadsheet. Include fields for date of the risk being logged, risk description, likelihood, impact, owner, risk response, action, and status. A means of accurately tracking information is a crucial first step to a successful project risk management framework.

2. Identify project risks

Brainstorm all current risks on your project with the project’s key team members and stakeholders. Go through all the factors that are essential to completing the project and ask people about their concerns or any potential problems. Identify risks that relate to project requirements, technology, materials, budget, people, quality, suppliers, legislation, and any other types of project risk you can think of.

3. Identify opportunities

When you identify risks, also factor in positive risks and opportunities. For example, include all events that in some ways could affect your project in a positive manner. What would the impact be, for instance, if too many people turned up to the concert? What could you do to exploit this opportunity and plan for it? Just as you anticipate and plan for problems, prepare for unlikely successes.

4. Determine likelihood and impact

Establish how likely the project risk is to occur (on a scale from 1-5) and determine the impact of each risk according to time, cost, quality, and even benefits if it were to occur (again on a scale from 1-5). For example, a likelihood of five could mean that the risk is almost certain to occur, and an impact of four could mean that the project risk would cause serious delays or significant rework if it were to happen.

5. Determine the response

Focus your attention on those risks that have the highest potential impact and likelihood of happening (i.e., an estimate of three or more on the scale mentioned in No. 4). Identify what you can do to lower the likelihood and impact of each project risk. To lower the impact, get to the root cause by asking why, why, why?

6. Estimation

Once you’ve determined what you’ll do to address each risk, estimate how much it will cost you to do so. For example, using the concert example—how much will it cost to look after the performer’s health before the show, and how much will it cost to prepare for a backup? Provide a range of estimates (best case/worst case) and add the aggregated cost of these risk responses to your overall project estimate as a contingency.

7. Assign owners

Assign an owner to each project risk. The owner should be the person who is most suited to deal with a particular risk and to monitor it. Assign risk owners with involvement from your team and stakeholders to get the best possible buy-in. Collaborate on the best possible actions that need to be taken, and by when.

8. Regularly review project risks

Another valuable part of any risk management process in project management is setting aside time at least once a week to identify new risks and to monitor the progress of all logged items. Project risk management is not an exercise that only happens at the beginning of the project, but something that must be attended to in all of the project’s life cycles.

9. Report on project risks

Obviously, the importance of risk analysis in project management cannot be overstated. When you have a proven process to lean on, it will undoubtedly lead to projects running more smoothly and successfully. And who doesn’t want that? Conduct a risk assessment for your project now and see how LiquidPlanner can help.

Article Contributor: Susanne Madsen is a Project Management Leadership Coach, and author of The Project Management Coaching Workbook (2012) and The Power of Project Leadership (2015). She is a PRINCE2 and MSP Practitioner and a qualified Corporate and Executive Coach. Susanne is a member of the Association of Project Management (APM) and has over 17 years’ experience in leading large change programs for the financial sector. You can also follow her on Twitter: @SusanneMadsen.

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Posted by: Lucid Content Team

With any new project comes new risks lying in wait. While your organization can’t entirely avoid risk, you can anticipate and mitigate risks through an established risk management procedure. Follow this risk management framework to streamline your team for success, making the team more agile and responsive when risks do arise.

It's simply that: an ongoing process of identifying, treating, and then managing risks. Taking the time to set up and implement a risk management process is like setting up a fire alarm––you hope it never goes off, but you’re willing to deal with the minor inconvenience upfront in exchange for protection down the road. 

Identifying and tracking risks that might arise in a project offers significant benefits, including:

• More efficient resource planning by making previously unforeseen costs visible
• Better tracking of project costs and more accurate estimates of return on investment
• Increased awareness of legal requirements
• Better prevention of physical injuries and illnesses
• Flexibility, rather than panic, when changes or challenges do arise

Risk Management Steps

Follow these risk management steps to improve your process of risk management.

1. Identify the risk

Anticipating possible pitfalls of a project doesn't have to feel like gloom and doom for your organization. Quite the opposite. Identifying risks is a positive experience that your whole team can take part in and learn from.

Leverage the collective knowledge and experience of your entire team. Ask everyone to identify risks they've either experienced before or may have additional insight about. This process fosters communication and encourages cross-functional learning.

Use a risk breakdown structure to list out potential risks in a project and organize them according to level of detail, with the most high-level risks at the top and more granular risks at the bottom. This visual risk management strategy will help you and your team anticipate where risks might emerge when creating tasks for a project.

Once you and your team have compiled possible issues, create a project risk log for clear, concise tracking and monitoring of risks throughout a project.

A project risk log, also referred to as a project risk register, is an integral part of any effective risk management process. As an ongoing database of each project’s potential risks, it not only helps you manage current risks but serves as a reference point on past projects as well. By outlining your risk register with the proper data points, you and your team can quickly and correctly identify and assess possible threats to any project.

2. Analyze the risk

Once your team identifies possible problems, it's time to dig a little deeper. How likely are these risks to occur? And if they do occur, what will the ramifications be?

During this step, your team will estimate the probability and fallout of each risk to decide where to focus first. Factors such as potential financial loss to the organization, time lost, and severity of impact all play a part in accurately analyzing each risk. By putting each risk under the microscope, you’ll also uncover any common issues across a project and further refine the risk management process for future projects.

Ready to improve your systems and reduce failures through FMEA risk analysis?

Now prioritization begins. Rank each risk by factoring in both its likelihood of happening and its potential effect on the project.

This step gives you a holistic view of the project at hand and pinpoints where the team's focus should lie. Most importantly, it’ll help you identify workable solutions for each risk. This way, the risk management workflow itself is not interrupted or delayed in significant ways during the treatment stage.

4. Treat the risk

Once the worst risks come to light, dispatch your treatment plan. While you can’t anticipate every risk, the previous steps of your risk management process should have you set up for success. Starting with the highest priority risk first, task your team with either solving or at least mitigating the risk so that it’s no longer a threat to the project.

Effectively treating and mitigating the risk also means using your team's resources efficiently without derailing the project in the meantime. As time goes on and you build a larger database of past projects and their risk logs, you can anticipate possible risks for a more proactive rather than reactive approach for more effective treatment.

5. Monitor the risk

Clear communication among your team and stakeholders is essential when it comes to ongoing monitoring of potential threats. And while it may feel like you're herding cats sometimes, with your risk management plan and its corresponding project risk register in place, keeping tabs on those moving targets becomes anything but risky business.

Try one of the templates above to start your risk management process.

Be better prepared and implement a complete risk management strategy.