The Perils of Risk Management: Six Strategies to Best Plan for Risks
For most, taking risks is uncomfortable. The uncertainty of not having a good idea about
the outcome is a challenge to get over.
According to Merriam-Webster,
"risk" is "something or someone that creates or suggests a hazard," or "the chance that an
investment will lose value." The definition seems to describe "risk" as a purely negative event.
The fear associated with "risk" likely comes from the traditional "fear of the unknown."
Nevertheless, managing risk is a crucial part of any leadership position, including project
managers. In addition to management and planning, one of a project manager's significant goals
should be to ask and prepare for "what could go wrong?"
It's unsettling and a scary idea to think about. However, this mindset can help project managers
navigate all the things that can happen before, during, and after a project. Risk management is
crucial to project management
experience. If you are a project manager trying to better plan for
risk, take a look at these tips to prepare.
Involve Your Project Team—And Vendors
On Projectmanager.com, Devin Deen, Scrum expert, and video trainer,
discussed
the importance of getting your entire team involved in the risk management process. He advised
that project managers reach out to project team members to get their take on potential risks.
Project team members likely have experiences with projects that are different from yours,
which means they can identify situations and opportunities for risk that you could encounter.
Deen even mentioned how important it is to involve people you might not traditionally ask but
are still a part of the project management process, including vendors and client representatives.
These people likely have a long list of things that went wrong during the last project, and they
can speak to this aspect to give you a clear view of what to expect.
Look at Past Mistakes
No one likes to look at a highlight reel of their failures. Nevertheless, a habit of looking
back and learning from past issues can serve you well. When did you go over the budget? What
caused you not to meet a deadline? Was there a lack of communication between yourself and a
client? When it comes to managing risk, some of the best things you can do is create a list
of past errors and retrace your steps. You won't always catch everything, and there are times
where things will go wrong even when you prepare for it. However, you put yourself in the best
position to manage risk when you become committed to keeping track of what didn't work so you
can better plan to deal with these issues.
Build a Risk Database
This step is a way to allow your team to capitalize on the idea in the first step. While
it helps to get the conversation started, and you want to begin a habit of looking back
to understand past mistakes, you need a way to track these issues. One great way to do
this is to build a risk database. As you and your team are working through a project, you
want to create a way that they can actually record mistakes and risks that they come across.
This can be as simple as building a spreadsheet where you allow your team members to record
the risk or mistake, add a brief description, include a date, and include information like
the owner and action steps. You can even create categories for the risk, so you can quickly
sort to find the most relevant risk occurrences when you need them. This database is a
comprehensive record of risks that occurred that you can track. Additionally, it allows you
to keep track of how you are monitoring risk and improving your strategies for addressing it.
Create a Knowledge Base for Recurring Risk Management Issues
So, you've gone back to the drawing board and have identified times where things didn't
go to plan. Excellent! Now, what do you do with this information? A great way to capitalize
on this information is to develop a "risk knowledge base." You can develop a library of
information that you and your team can refer to as you move through projects.
These documents can be an internal knowledge base that addresses solutions for standard or
recurring risk management problems. For example, what do you do if company sales start to
lag? What is the protocol if you have a team member that had to leave their position? It's
important to have a project risk management handbook so you can determine the best tactic
to address administrative and common recurring risk management issues.
Don't Forget About Positive Risk
Risk doesn't always have to be negative. Some events and occurrences could happen that can
benefit your project. Understanding the possibility of positive risk can help you improve
your budgets, decrease the amount of time it takes to finish your project and create a
better collaboration environment. A few examples of positive risks for your project
management team could be a new policy that benefits your project management efforts, the
approval of using new project management or organizational tools, and the possibility of
a bigger budget.
Failing to plan for positive risk can keep you from taking advantage of opportunities that
come your way. So, just like you would for negative risk, go back and see where these
situations happened so that you can plan for them. Additionally, make time to research
things like upcoming policies, new technologies, and any events that could be going on in
other departments that could positively impact your project. The more you know, the better
options you have to plan to capitalize on positive risk.
Develop a Risk Management Strategy for your Specific Projects
Again, you can't plan for everything, but you can use past occurrences for future strategies.
What you want to do is determine the risks that are likely to happen, prioritize those with
a higher likelihood, ask why and how they could happen, and then build a response based on
past actions that did or didn't work.
This step is where that risk database is going to come in handy. You want to create a dynamic
risk management strategy and plan that allows you to be flexible and agile in managing various
risk-based occurrences for your specific projects. It should detail opportunities for risk,
how likely they are to happen, and a step-by-step approach to how you will handle each
situation. You should go over this document with your team as you brief them for the upcoming
project, and it should be available for reference.
Risks Don't Have to Derail Your Project
If you are not using a risk management strategy, you are not alone. According to PMI,
only 27 percent
of project managers surveyed always use risk management practices. However, it’s crucial that
the development of risk management strategies in the project management space becomes standard
practice. Understanding risk can reveal opportunities to see where you and your team can improve.
It can notify you of crucial issues so that you can better prepare while decreasing costs and
timelines. Again, while it is important to identify negative risks, you also want to prepare to
handle situations that can positively impact your project, which is also known as a positive risk.
If you make a point to involve your team while also committing to collecting data, you can build
a comprehensive plan for mitigating adverse risks and taking advantage of positive ones.
Sources:
Project Management Statistics: 45 Stats You Can't Ignore,
https://www.workamajig.com/blog/project-management-statistics
Risk,
https://www.merriam-webster.com/dictionary/risk
The Risk Management Process in Project Management,
https://www.projectmanager.com/blog/risk-management-process-steps