The answer better be YES!
A new client told me the other day they don’t bother with risk management plans. “What’s the point,” he said, “It takes too much time and it’s always rush, rush, rush around here.” My response, “You have a problem, starting doing a bit of risk management planning – it doesn’t have to be as onerous as you think.”
First, let’s define risk management as it relates to project management. Risk management is when you identify, assess and prioritize risks to a project; the risk management plan is your plan for identifying, assessing, prioritizing and managing those risks.
Risk management must be a part of all project planning activities. When working on projects, I don’t try to work on risk management planning by myself – get the team involved! A bit of brainstorming works great in identifying risks. You’ll find that there are common risks from projects to projects – a bit of reuse of past project documentation (think lessons learned!) and you can save yourself a bit of work. But be sure to validate!
When analyzing risks consider these questions during your brainstorming session:
- What are the potential risks for this project ? (Consider both positive and negative risks)
- What is the likelihood of the risk occurring? (Prioritize base on the likelihood)
- If the risk does occur, what is the impact on the project?
- What can I do? Can I stop the risk from occurring? Can I reduce the impact of the risk should it occur? How much can I reduce the impact of the risk? If it does occur – what are my plans for reducing its impact?
Take these steps for effective risk management planning:
Identify the risks to the project, looking at project resources, scope of project, whether a similar project has even been done before, project’s impact on the business, who the stakeholders are for the project, the timeline and budget for the project, and other relevant project information.
List all of the risks you identified during your brainstorming sessions.
Analyze the risks by determining the probability of each of the identified risks occurring and the impact on the project if the risk does occur. The higher the probability and the higher the impact if it occurs, the higher the risk on your list of risks to plan for!
Plan your risk responses. Remember – risks can be positive or negative. Develop options and actions on how you will handle the risks that occur. You might choose any of the following for negative risks:
- Avoidance: Making changes to the project to eliminate the risk completely.
- Transfer: Transferring responsibility of the risk to someone outside of the project.
- Mitigation: Taking steps to reduce the probability or impact of the risk.
- Acceptance: Accepting the risk and managing it.
For positive risks, you might choose any of the following:
- Exploit: Taking steps to make sure the risk happens since it is a good thing.
- Share: Sharing the benefits with someone outside the project who can help exploit it.
- Enhance: Taking steps to increase the probability and impact of the risk.
- Accept: Accepting that it might happen but not trying to make the risk occur.
Once you have mapped out your risk responses, assign owners to each of the risk and delineate the responsibilities of those owners (based on how you are responding to the risks.)
Document it all in a risk management plan and in a risk register.
Monitor and control. Of course, as the project manager, you’ll be monitoring and controlling all of the risks – following up with the risk owners to ensure all is going smoothly and on track.
This really doesn’t have to be an onerous process – and by getting the entire project team involved, along with stakeholders, you can really pull together what you need fairly quickly and efficiently. Once you do it once, you’ll find you can reuse much of the information on your next project – you’ll build some efficiencies into the process
So…your next project…do a bit of risk management planning!
Hi Rasti,
No, I haven’t used logical matrix myself in managing project risks; though I know of some who have and did find it of value. It is something I’ll have to research and look into a bit more.
Thanks for reading!
Best,
Gina
Hi Gina,
you obtained great results 🙂
do you use logical matrix in project management?
I do, and when I discovered LM – planning was more efficient. It helps me to be aware of all possible risks and how to risolve them.
BR
Rasti
Hi Peter,
Thank you for your comment and for sharing the link to your post. I enjoyed reading it!
It is difficult for the project manager to make the case for the need for risk planning if he/she is not supported by the sponsor or other leaders of the organization. I have found that when clients are hesitant about risk planning (or outright tell me they don’t do it regardless) – a few examples of what could go wrong for their business helps to get them to be a bit more open to considering risk planning. Additionally, with some processes in place – it doesn’t have to be an onerous process that drags out the project and so much is applicable from one project to the next.
Thanks again for reading!
Best,
Gina
Hi Gina
Thanks for sharing your insights on project risk management. I reckon one of the reasons many organisations experience poor planning is lack of project leadership or champions to effectively present the business case for proper risk management.
I once posted a similar post on Project Cost and Risk Management on my blog and believe your community can also benefit from it. Here is the link:
http://financeleadership.net/costing-and-pricing/project-cost-and-risk-management/
Thanks for reading and for your comment Rasti. When projects fail it is frequently due to a number of factors – and a key one – especially for strategic projects – is that no one thought about or were concerned with the risks. As you noted when project teams won’t deal with risks – and too often brush them aside! – the effects on the projects can be quite serious. With one client, in analyzing why their projects failed, we noticed that in more than 60% of the cases of failed projects it was due to risks that consumed the project and caused its failure – in nearly every single one of those cases, the risks were ones encountered before! All they had to do was a bit of risk planning up front! I’m pleased to report that after instituting some policies and procedures around risk planning and management, they have seen their success rate increase tremendously and, in fact, no other failed project has been due to poor risk planning.
Thanks again for reading Rasti!
Best regards,
Gina
Hi Gina,great aricle! I agree with you. The risk awareness is important in planning and in implementation. During my experience I saw many projects and companies that have failed because they didn’t deal with risks.