People naturally want to avoid risks so it’s no surprise that people often avoid talking about or planning for risk in projects. This tendency has resulted in many failed projects. By planning and monitoring for risks you not only keep your project on track, but you make it easier and less costly to deal with challenges during your project. Risk management is so important it is one of the ten knowledge areas in A Guide to the Project Management Body of Knowledge (PMBOK). Every project has risks but how they are handled can be the determining factor of if a project succeeds or fails
PMBOK has five process areas for risk management.
- Planning risk management
- Risk identification
- Performing qualitative risk analysis (change risk will occur)
- Performing quantitative risk analysis (dollar amount)
- Planning risk responses
- Monitoring and controlling risks
Much like the overall PMBOK processes this really comes down to planning, analysis, and monitoring risks. The planning and identification process areas cover planning how risks will be handled (how decisions will be made and by whom) and what potential risks there might be. Brainstorming sessions, I personally like mind mapping for this, are great for uncovering potential risks. It is very difficult for just the project manager to do this and the more varied the points of view reflected the better the plan will become.
Once risks have been identified you need a method of evaluating them. Qualitative risk analysis seeks to try to determine the change a given risk might occur and uses this to rank risks. This method allows you to then spend more time planning for the risk that is more likely to occur. It can often be difficult though, as it is almost entirely subjective. Quantitative risk analysis seeks to identify the impact (often in dollar amount) a given risk poses to the project. This is the used to prioritize planning on higher impact risks. Both these processes can be difficult and it is easy to a spend a great deal of time here. Some projects have clear risks that are easy to assess and others carry many hidden dangers. What is important is that the project manager spend enough time to feel comfortable and more importantly make stakeholders feel comfortable about the risks associated with a project
Once analysis is complete you should have a clear sense of what the most likely and most impactful risks to your project are. Plans for how these risks will be dealt with can be developed. Having these plans ready early in your project make it easier to deal with risk and also can end up saving you from unnecessary costs.
The final process is monitoring and controlling risk or putting your risk plans into motion. You should have a good handle on what might potentially go wrong and at a minimum a plan for dealing with the completely unforeseen. No project is perfect and something will go wrong. A little bit of planning can make that into a speed bump instead of something that derails your entire project.