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5 Keys to Project Risk Management

bigstock Manage Your Risk in a dangerou 46979656 300x300 5 Keys to Project Risk ManagementWe all know Project Risk Management forms a key platform to successful project management and is an increasingly important part of bid and proposal management and strategic program management.

Your risk management process can be as simple or as complex as you choose to make it, but there are five key elements you should concentrate on getting right to ensure effectiveness. Get these wrong and the rest of the exercise is a waste of time.

Tailor

Risk Management can be applied to any situation from a work team undertaking a workplace hazard risk assessment to a multi national mega project in the Billions of Dollars. The key is that the process you use is scaled to the task at hand. Small projects and work teams are most at risk of becoming disheartened with the process if it is cumbersome or bureaucratic, ensure the process is right for the job at hand.

Scope

Key to zeroing in on the risks that affect your project is to define the scope of the risk assessment. Risk assessments have a tendency to wander down paths that don’t concern the initial intent of the exercise by analyzing anything and everything in and around the project.

Prior to risk identification, prepare a risk analysis scoping document that clearly defines what’s in and what’s out and if you are facilitating the risk analysis, steer the workshop away from these no go areas. A typical example is where a construction project starts to analyze risks associated with occupational health and safety issues of the workforce. Whilst safety is everybody’s responsibility, unless the project stands completely alone, most organizations will already have standard processes and procedures for hazardous situations, you don’t need to reinvent the wheel, you only need to consider risks peculiar to your project.

Risk Identification

It makes sense, that clearly articulating the risk is crucial to everything else to do with analyzing and managing risk, get this wrong and the rest will follow down the wrong route after it.

Try using the “So What” method. When you think you have identified a risk, give it the “so what” test. For example, if your project is to build a fence, you identify materials are delivered late as a risk, ask yourself “so what”, answer would be, work would start late. Yes, because it has a consequence and because it may happen, it is a risk, if it is sure to happen, it is a constraint. Next, ask yourself, is this the real consequence, again ask “so what”, well, if fence starts late, consequence would be, fence will be completed late, is this the real consequence, ask again, “so what”, there are no further consequences, so you have accurately defined the risk and consequence.

Risk Control Strategy

Many risk control strategies are no more that platitudes or as I like to call them Motherhood Statements. Feel goods that mean nothing, such as “increase schedule monitoring” (one of my favorites).

Risk control strategies need to be actionable strategies that follow some type of method like the SMART process:

  • Specific: A specific goal must have a clear objective.
  • Measurable: Establish concrete criteria for measuring progress toward the attainment of each objective set.
  • Achievable: The goal must be able to be delegated to an individual and that individual must have the capability/capacity/authority to achieve/action it.
  • Realistic: To be realistic, a goal must represent an objective toward which you are both willing and able to work toward.
  • Timely:  A goal should be grounded within a time frame. With no time frame tied to it there’s no sense of urgency.

Manage Risk

Here’s where it regularly falls apart. We analyzed the risks, we made plans to reduce them, then we put it all in the top drawer and forgot about it, sound familiar?

Management of risk during the project is just as important as analyzing the risks and opportunities beforehand.

As part of your project management plan you should develop a risk management plan that outlines who is responsible for managing and reporting on individual risks, what’s to be reported and when and what will occur when new risks arise and existing risks pass.

I always make risk an agenda item in my projects and we go through the status of the top 5 to 10 risks at each meeting, it only has to be brief, but it maintains awareness.

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Comments

  1. Peter Westerhof says:

    Might be worth to also have a look at APMG’s Management of Risk :
    http://www.mor-officialsite.com/

  2. Good overview. I personally feel that these activities are important, but the most important technique that I am using is something different.
    Looking deep into the eyes of my employees and ask them if they think our risks are in control.

    Based on their reaction I get an indicator if they are confident or if they are unsure. If they are unsure, I know we need to do something about it. If they are confident, then I have to ask myself: is this person overconfident?

    This is obviously a very “intuitive” approach not based on facts and you should not substitute traditional risk analysis with this approach. But maybe it is still something that can be used together with a more rational, calculated approach.

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