Risk Management

Overview

While projects can be a big and exciting journey, there are always going to be problems and risks involved. However, it is up to the company to be aware of these and figure out how to deal with them, as they are an important aspect to any project.

A risk is a “measure of the probability and consequence of not achieving a defined project goal.” Two parts of risks include the probability of an event happening, and impact of said event.

Risk Management

Risk managing is about dealing with risks, and include planning, identifying, and analyzing risks, as well as making response strategies and monitoring and controlling risks to note change.

The risks management process is as follows:

• Planning – making a strategy, as well as identifying and analyzing risks, with a focus on how they change.
• Identifying – figuring out how to identify and document them.
• Risk analysis – determine probability and impact to the project (can be qualitative or quantitative)
• Risk response – implements strategies to reduce risk; note what is to be done, when, who handles it, as well as cost and schedule

Risk Planning

There is also risk planning, which involves making a strategy, how to execute it, and planning resources needed.

Risks are to be rated high, medium or low, impacting various levels of performance, cost, and schedule. High is the biggest concern, to be taken care of immediately, and take a large amount of resources. Medium has a smaller impact, requiring special action and additional management. Low is the least important, impacting resources the least and needing a normal amount of management support.

Handling Risks and Opportunities

There are different ways to handle risks.

• Acceptance – not doing anything and taking the risk while setting resources aside
• Avoidance – making changes to avoid the risk or anything that leads to them
• Control – doing what is necessary to reduce the risk
• Transfer – having someone else manage the risk

On the opposite end are opportunities, including:

• Acceptance – seeing what happens and accepting the opportunity
• Enhance – trying to increase the chance of an opportunity (more advertising)
• Exploit – making the most of it (more resources to get to marketplace quicker)
• Share – find a business partner to share the opportunity with, since the team cannot do it alone

Employees must also know who is responsible for what, as well as how to take care of them. The team must also prioritize risks (schedule, cost, and technical performance). One example is outsourcing work could cost less than a company doing it themselves, but could lead to more mistakes and taking longer than if the company themselves did it.

Overall

Risk management is an important step in project management. It involves knowing what can go wrong, who is to take care of any issues, how these issues can be minimized or resolved, and how it will impact the project and its components. Careful planning can make this less of a headache, and risks can potentially be turned into opportunities for the better.