Project Risk Management: 10 Golden Rules Every Project Manager Should Follow
In today’s dynamic world of project management, there is a degree of uncertainty and risk involved. Risk management can prove to be a difference maker between project success and project failure. Project risk management involves identifying potential risks, analyzing those risks, mitigate risks and prevent future risks by monitoring. In this article, we will highlight 10 golden rules for project risk management that will help project managers in dealing with any kind of project risk.
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1. Have a Risk Management Strategy
Most project managers do not have a risk management strategy, which is why most projects fail. A solid risk management strategy and plan prepares you for unforeseen risks and enables you to handle them in a better way. Without a risk management plan and strategy, your project is more vulnerable to failure and damage caused by unknown risks. Prepare a strategy by considering all the factors and challenges that you might face as the project moves along.
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2. Keep an Eye Out For Risks from the Start
The first step of project risk management process is to identify risk. Project managers should not wait for the project to reach near the end before starting risk management. In fact, they should be vigilant about those risks from the beginning of the projects. Most project managers leave risk management for too late and bear the brunt when these risks get out of their control. Do not let minor risks turn into major risks by leaving them unattended. Use a combination of risk identification methods to improve the effectiveness of your efforts.
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3. Involve Team Members
If you study failed projects, you might find many projects where project managers seems to have no clue about a risk that is about to sink their project. What is even more amazing is the fact some of the team members are aware of that risks but did not communicated it to project managers, which led to their downfall. To ensure that does not happen to your project, you need to constantly communicate with your team about risks and encourage them to report risk. Listen to team members suggestions and respect their opinion. You never know, they might even provide you a solution to overcome the risk.
4. Do a SWOT Analysis
One of the most popular and commonly used techniques is SWOT analysis. Although, most project managers are fully aware of their strengths and weaknesses but they do not focus that much on threats and opportunities. Not all risks and uncertainties are bad for your project. Sometimes, uncertainties and positive risks can do more good than harm to your projects.
Modern risk management approaches focus on positive risks and turn it into opportunities that can take your project to success. Keep an eye on positive and negative risks and consider opportunities as well as threats associated with each risk. If you deal with risk with such positive attitude, you can easily convert those risks into opportunities and benefit
5. Appoint Risk Owners
You might have read the word “Delegate tasks” many times before but if you want to manage risks well, then you need to delegate risks to team members. That is where a task management software comes into play. Yes, you read that right. Remember, that you cannot manage all the risk alone. Assign each risk to different team member and make them responsible to take care of that risk. Initially, you might have to deal with some backlash but at the end of the day, it would be beneficial for your project. If every member fulfills his or her responsibility carefully, your project will be one-step closer to success.
6. Prioritize Risks
Another common mistake project managers make is that they treat all risks equally. This is not the right approach to managing risks, as one side does not fit all. Each risk has a different level some are minor ones while others are major ones. On the other hand, some risks pose a much bigger threat to your project while others are not that dangerous. In such a situation, you should prioritize risks and deal with each risk according to its complexity level. When prioritizing risks, make sure you follow a specific criteria and do not go with your gut feeling.
7. Conduct Detailed Risk Analysis
In order to manage risks in a better way, it is important that you analyze each risk at a micro level. Study the causes and factors involved in each risk to cope up with it in an efficient manner. What effect a risk could have on your project? What events led to the emergence of risks? All these questions help you in developing a sound understanding of the risk. After the analysis, you will come across root cause of risks, which you can target to mitigate that risk.
8. Implement Risk Response
The main purpose of risk management is to prevent threats from occurring. Even if they occur, you should minimize the negative impact it could have on your project progress. This is where implementing risk response comes into play. When dealing with risks, you can avoid risks, minimize risks or accept risks. Implementing risk response is essential to reducing the negative impact of risks if you are minimizing and accepting risks.
9. Monitor Associated Risks
While project managers lay a lot of emphasis on risk management, they rarely address the issue of associated risks. These associated risks can grow into a major threat for your project if not tackled in a right way. Additionally, it can derail your project and lead to project failure. As a project manager, you should not relax until you mitigate both the risk and the associated risk. You need to understand the level of associated risk and deal with it accordingly.
10. Educate Your Employees
Developing a risk aware culture in your organization is very important. For that, you need to educate your employee on how to deal with risks at different levels. Trainings, workshops and seminars can prove to be very helpful in this regard. Moreover, you should lay down risks procedures and policies so the system continuous to function smoothly even if you are not there. Create awareness among your team members regarding risk management will go a long way in helping you complete more projects inside the budget and before the deadline.