Defining and Managing Risks of a Project

As an experienced analyst or manager – we all know that it will be rarity to expect absolute clarity on each and everything involved in the project. With that knowledge – when we proceed with the project planning and execution, we cannot afford to sleep over the gaps. Whatever clarity we don’t have must be treated as a risk and we should always keep looking for right time and opportunity to take care of that risk. If we can take care of risk properly, often all the parties will be happy otherwise, they will keep popping as issues (sometimes devastating issues) now and then.

So, the obvious question is – what is risk and risk management in the context of Project Management?

A risk is a potential problem, a situation if it materialize, will adversely affect the project. Once risk materializes we call them problem / incident / issue. The goal of risk management is to ensure that risk doesn’t materialize and even if it materialize – it doesn’t have a devastating effect on project and / or people working on that project.

Risk will be there when you are running a project. Even spider man has to take risks :-). As a project manager you have to handle it. Following simple steps will keep you prepared to handle them:

  1. Document all possible risks
  2. Evaluate its possibility of getting materialized
  3. Evaluate impact when it materializes
  4. Identify the action you want to take
  5. Associate the date by which action must get completed
  6. Keep management (and other stakeholders) informed

One of the thing which will help you in identifying risks is – to look at different aspects of project. In a project what are the things that you can see, which may have any impact on your project. Well, let me provide sample list

  1. Client Staffs
  2. Your own staffs
  3. Infrastructure – which includes equipments, building, power condition, etc.
  4. Project Scope
  5. Technology
  6. Delivery
  7. Etc.

If you look at above high level categories of risks, there will be various aspects on which you may have some sort of control (or may be complete control) and there will be few items on which you will have less control (or may be no control). For example – if power situation is not good or you see a risk then you can buy inverter, UPS and generator and try to ensure you have enough backup. However, if fire catches your office building then you may not have too much control.

Idea of talking about control is to spend your energy on something which is in your control. At the same time – try to minimize your risk for the situation where you don’t have much control. For example – if fire is a threat (although possibility is extremely less), you may like to take regular backup of your data at a site which is physically separated from your current office. Obviously, this is just an example and you need to think on similar line for other similar things.

Since there will be many risks during project execution – the question is – how to prioritize those risks? Well Jolyon has provided simple way in his book on Project Management in IT. He says find out

  • Impact of risk and
  • Probability of its occurrence

You can use three parameter values for both of them. Namely they will be High, Medium and Low. Following figure provides you a chart for assigning risk degree to that risk. Jolyon has mainly suggested five such degree of risks – Extreme, High, Medium, Low and Minimal.

Once you are aware of degree of the risk, it is important to understand how we can mitigate these risk. Note, we are still talking about mitigation and not completely removing the risk. The reason is that practically, there will always be some sort of risk. Although, we aim to get rid of them, at least we must evaluate possibility of reducing the risk. Following generic steps will help you mitigate some of the risks:

  1. Remove Excuses – be proactive and use appropriate communication channels – including timely reminders.
  2. Demand Visibility – whenever there is dependency, make sure that you have enough checkpoints to ensure your plan don’t get disturbed.
  3. Help People Communicate – don’t go for judgment immediately. Let people communicate and gather all the information before concluding anything.
  4. Have Contingency Plan

As you might have seen – risk management requires a lot of planning and as expected – any planning comes out with set of activities that must be performed. Hence, just planning and documenting is not enough. Ideally, you must have a risk management work sheet for every project and it must contain the plan and related activities. Also, this sheet must be circulated to stakeholders and talked about during project team meeting and client project meeting.
This is where a very good Project Management tool becomes really handy. At Walking Tree we have customized our EagleRP product to create a project management solution. If you need any professional help, you can find our contact detail on Contact Us page.

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