Risk management is crucial to any successful workplace; in putting strategies in place to minimise and manage risk, there is a much higher chance of ensuring projects run smoothly, productivity is kept high and professional standards are maintained. But what is ‘project risk management‘?
Project risk management explained
Essentially, project risk management is a case of planning for and preventing any uncertain event, hazard or risk that would have a significant impact on the objectives of a project should it occur. The overall goal of project risk management is to assess how likely it is that the project will not be able to meet its objectives, but also to identify anything that may derail or delay the project as it is conducted.
From the very beginning of any project, it is important to make risk management part of what you’re doing. If you have a project manager, it should be their responsibility to liaise and direct proceedings, but others can be involved in the process.
Early on, before any other work takes place, it is important to identify what risks your project has the potential of encountering and creating a strategy document that is available for all stakeholders and executives to view.
There are the risks associated with the work itself – for example, with the documentation and execution – but also with the people conducting it – such as when colleagues are communicating with external individuals, leading meetings and brainstorming sessions, etc. It’s important to be thorough with all possibilities.
Communication is key
During this initial development of a project risk management strategy, it is important to communicate with all individuals on the team about the potential issues to ensure everyone is on the same page and to ensure there is nothing that hasn’t yet been communicated.
It is important to always stay in dialogue throughout the project to ensure nothing will derail it. It’s also crucial to prioritise any risks to ensure you know where your biggest losses and gains will be along the way. This may require you to put together criteria for how to make this decision and putting key decision makers in place on your project.
Creating a structured response to risk
There’s no guarantee that risks won’t come to fruition and it is, therefore, valuable to have a plan for your risk response and incident reporting. This will help to minimise the potential negative effects of any threats. You can handle this in three ways – either through risk avoidance, risk minimisation or with risk acceptance.
The first of these means you structure your project in a way that means you won’t encounter the risk any more. This might mean you change the technology that is causing you problems or bring the work being conducted by an external company in-house to cut off the risk they bring.
There is also the idea of minimising risk – this would involve trying to prevent it from occurring by looking at the causes and whether they can be influenced or decreased to prevent the negative impact it could have.
Finally, there is the option of simply accepting the risk – this is often okay if the result will be minimal to the project or if influencing it would be too time-consuming, expensive or complex. This will always be the less stable path, though.
In putting together a project risk management strategy, it is important to track these risks and to identify and analyse them as you go along in order to ensure a response is implemented. Part of this can be done through using software such as Risk Mate, which allows for online risk reporting, project management and multiple users to log in and manage information.
For further detailed information about project risk management, Michael M. Bissonette wrote a book in 2016 by the title “Project Risk Management: A Practical Implementation Approach”.
In this detailed resource, Bissonette highlights that risk management is a crucial and vital part of any industry. He provides insight into how to effectively implement traditional techniques for risk management but also presents innovative methods to help company culture, improve success and help financial performance.
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To find out more about Risk Mate and how we can help with your project risk management strategies, contact us today.