The Process of Project Risk Management

Imagine you are out on a sunny day. Suddenly, dark clouds emerge with the chance of rain. Now you have the ‘Risk’ of getting wet by the possible rain. However, if you had an umbrella ready with you, that would be your precaution against getting wet by the rain, and that’s Project Risk Management.

If a ‘Risk’ is defined as anything that could have a probable influence on your project’s timeline, budget, or performance, then ‘Project Risk Management’ is therefore the process of identifying, categorizing and planning for risks before they occur. Despite sounding negative, ‘Project Risk Management’ is being ‘Proactive’ rather than ‘Reactive’.

Everything has its own risk. That doesn't mean don't take risks at all, just plan ahead for possible outcomes. Outline the risks for your projects and possibly the tasks which will be affected by it and have an action ready in response.

What is Project Risk?

Project Risk is practically anything that can impact your projects schedule, budget, or performance. Although they are not real before they happen, there is the possibility of a risk becoming a reality, and an issue for your project. 

The word ‘Risk’ sounds negative, probably due to our association of the word, but it can also be positive. As well as having negative risks to elongate its timeframe or tighten its budget, your project also has positive risks too. In which case you can possibly use it to exploit your project. Basically, a negative risk can be considered as ‘hazards’, and positive risks as ‘opportunities’.

Whether positive or negative, this is where the risk management kicks in. 

What is Risk Management?

Risk management in terms of projects is identifying, analyzing, and responding to any arising risk throughout the cycle of the project to keep it on track towards its goal. Risk management does not mean you need to suddenly become a medium and be able to see into the future nor do you need to have superpowers to protect your project from anything that might jeopardize its success. On the contrary, it is a mitigation strategy in place which involves identifying, analyzing, prioritizing, and responding to risk.

Risk Management Framework:

• Identify

How can you resolve a risk if it is unknown? You can’t. So, you need to identify all the risks that might derail your Project from its path. Use your resources. These could be your team, your colleagues, or even your clients. Set up a time where you gather as much information as you can to both identify and come up with solutions at the same time. Speak with the doom-and-gloom type of people in your office. Their pessimistic outlook may surprisingly be beneficial with this topic! 

Look at all angles and don’t leave any stone unturned. Think of all the things that could go wrong and take note. Check past projects for historical data. Work your way through the project as if it were in progress.

• Analyze

Now you have a whole heap of risks but don’t know what to do with them? The next step is to determine the probability of these risks happening. This is where we can proactively address efficacies and avoid potential issues. Analyzing risk in your project requires qualitative and quantitative analysis across a variety of metrics.

• Prioritize

All risks are not weighted equally. While some are trivial, others are more threatening for the success of your project. This is the time for appraisal. Evaluate the risks and consolidate the resources necessary to resolve them, if and when they take place. 

An intimidating long list of risks can easily be managed through categorizing your risks as low, medium, or high. With this new profoundness, you can address these risks and act accordingly.

As we have stated earlier, not all risks are equal. There are some risks that require immediate action, to prevent them from jeopardizing your project. Some risks which are important but do not have the same devastating effect. Then you have some risks which have minuscule repercussions, and may not need any time wasted on, therefore can perhaps be ignored.

• Ownership

OK, you have worked so hard to get all this identifying, evaluating, categorizing right? Well, it’s all for nothing if you don’t assign a supervisor to govern the risk. This step is just as important, if not more, than the other steps involved in Risk Management. Why? Well imagine you have just blown a balloon and left it on the table where sharp objects are also present. You leave the room, but there are other people there whom you have not asked to watch your balloon. As you had walked to leave the room, the balloon took flight, as balloons do. With no one overseeing what happens to your balloon, it lands on a sharp object, and boom! There goes all your hard work. Whereas you could have eliminated the risk of your balloon popping if you had asked someone to keep an eye on it.

So, to avoid your project success bubble bursting, make sure you assign someone to oversee the risk. The person responsible for overseeing the risk assigned to them should be able to identify it if and when it takes place and be able to act accordingly towards a resolution. Just as you would not drive a vehicle blindfolded, you can’t see the risk coming if you’re not watching.

• Respond

You have planned and prodded, carefully placing mitigation strategies in place against the possibility of any risk arising, and suddenly you have come across one. Now is the time to put your great planning into action. First, check whether it is a negative or a positive risk. If it is positive, maybe you could exploit it for the betterment of your project. If not, now is the time to put your mitigation plans into action. Communicate with the risk owner and make decisions regarding which plans to implement to decipher the risk.

• Monitor

The owner of the risk is responsible for tracking its progress and resolution, but you will also need to stay in the loop at all times to get a clear picture of the of the project’s progress as a whole. Just like keeping tabs on your children through parent teacher interviews and report cards, you need to know what’s happening with the progression of your project.

You may want to set meetings at regular intervals to manage the risks. You may want to use various channels for your communications. Face-to-face meetings, online meetings, emails, and messages through a project management software to name a few. 

Solution is CloudOffix:

Project Risk management may seem complicated and daunting. However, that doesn’t have to be the case, especially if you’re using the Project Cloud by CloudOffix. It is a cloud-based tool which inhabits the collaborative environment you need to manage your risks. It allows you to watch the changing information in real time via the different graphs or Kanban view all through your dashboard. This easy-to-use cloud-based platform offers you the comfort of having all the above-mentioned features and more at your fingertips. These features are fully integratable and customizable in CloudOffix. We understand that each business is unique in the way they operate. We can’t walk their walk if we can’t talk their talk. At CloudOffix we are confident. The most crucial aspect of our Project management solution lies in the fact that it is fully customizable to adapt to the workflow of your business. So, walk the walk with us, turn your risks into opportunities.

Perhaps you’ve tried other project management tools such as Trello, Jira, Asana, Wrike, Monday and the like, but haven’t found one that fully meets your needs? Then take the 15-day free trial and test drive CloudOffix Project Cloud for yourself. With the first and only Fully customizable Cloud Project Management Tool, you won’t be disappointed!