A lot of literature and training in project management is mainly focusing on the planing phase, that becomes completely obsolete once the team starts working.
The success of your project will most likely depend on the relationships you have built, to the team and to the stakeholders/ customers and on how well you are troubleshooting, course correcting and taking decisions.
A key role in being able to really lead the project are your risk management capabilities.
Throughout the project you should revisit the 6 steps show in the graphic and assess occurred and potential risks and mitigation actions.
The better you can handle adversity as a project leader and as a project team, the better the performance of your project and your product will be and the easier it will be to keep a overall timeplan, budget and quality expectation.
So what is Risk management?
Risk management in a project refers to the systematic process of identifying, analyzing, assessing, and responding to potential risks that could affect the project’s success. It aims to minimize the impact of adverse events and maximize the opportunities by managing uncertainties. Here are the key components of risk management in a project:
1. Risk Identification
- Definition: Identifying and documenting potential risks that might affect the project.
- Tools and Techniques: Brainstorming, interviews, SWOT analysis, checklists, and expert judgment.
2. Risk analysis
- Qualitative Analysis: Assessing the impact and likelihood of identified risks using a subjective approach.
- Tools: Risk probability and impact matrix, risk categorization, risk urgency assessment.
- Quantitative Analysis: Numerically analyzing the probability and impact of risks on project objectives.
- Tools: Monte Carlo simulation, decision tree analysis, sensitivity analysis.
3. Risk prioritization
- Definition: Ranking risks based on their potential impact and likelihood to determine which risks need the most attention.
- Tools: Risk matrix, Pareto charts.
4. Risk response planning
- Definition: Developing options and actions to enhance opportunities and reduce threats to project objectives.
- Strategies:
- Avoidance: Changing the project plan to eliminate the risk.
- Mitigation: Taking steps to reduce the probability or impact of the risk.
- Transfer: Shifting the impact of the risk to a third party (e.g., insurance, outsourcing).
- Acceptance: Acknowledging the risk and not taking any action unless it occurs.
5. Risk monitoring and control
- Definition: Tracking identified risks, monitoring residual risks, identifying new risks, and evaluating the effectiveness of risk responses throughout the project lifecycle.
- Tools: Risk audits, status meetings, risk reassessment, variance and trend analysis.
6. Communication and Documentation
- Definition: Ensuring that all stakeholders are aware of the risks and the actions taken to manage them. Keeping detailed records of the risk management process.
- Tools: Risk register, risk reports, project management information systems.
Benefits of Risk management in projects
- Increased likelihood of project success: By proactively identifying and managing risks, the project is more likely to achieve its objectives.
- Better decision-making: Provides a structured approach to decision-making by understanding the potential risks and their impacts.
- Cost savings: Helps avoid costly issues and delays by addressing risks early.
- Improved stakeholder confidence: Demonstrates a proactive approach to managing uncertainties, building trust among stakeholders.
In summary, risk management is a critical aspect of project management, ensuring that potential issues are anticipated, prioritized, and addressed in a structured manner to increase the likelihood of project success.
Sebastian Strobl 