Steps Involved in Risk Management to Execute the Project Successfully

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Forming a powerful and well-thought-out plan doesn’t assure the success, unfortunately. However well you scheduled everything, there is always something that can go wrong. Risk is an inherent part of planning, and once you create a scheme for your project, one of the initial questions to ask yourself is ‚Äì what can cause a trouble? This point shouldn’t be taken as a negative attitude towards the future project. Instead, you get an alternative plan in case of emergency. Though, can you find a resolution for the unknown? However strange it sounds, there are some potential risks, learning which you can determine, monitor or prevent the tricky situations.

What is risk management on projects?

Risk management (RM) is a process of defining, examining and then acting against any kind of risk that may occur at any stage of the project execution. It helps a project keep going and achieve the desired results. However, this is not an instant thing, and it should be included into the project planning process to be aware of all potential risks and figure out how to solve them when needed.

What types of risks involved in project management?

There is a variety of risks that follow each complex project. Among the top PM duties is to define, manage and not let the risks influence on the project. Here, we reveal the major risk types that may occur within a typical plan.

  • Scope Risk. The initially planned scope can be changed with various factors. Among such aspects is scope creep caused by the growth of the project complexity. There are also involved correlation changes, SW & Hardware failures, and integration issues.
  • Scheduling Risk. Due to some natural factors, outsource delays, estimation mistakes, the project may deviate from the line. There exist such tools as Gantt Charts, WBS (Work Breakdown Structure), and RACI matrix to reduce the risks in scheduling.
  • Resource Risk. The danger of a project crash may arise from personnel related items and outsource. For instance, as you hire a new employee on a later stage, it can slow down the project movement significantly. In case there is a task connected with web design, and there is no one in your team with the relevant skills, there may also occur some delays.
  • Technology Risk. This kind of risk occurs as a result of software or hardware defects, service or platform. For instance, within the process of the project implementation, you suddenly realize that the cloud service used so long doesn’t match your project milestone.

Key 5 steps in the risk management process

So, how to operate the risk management process? The solution is simple. You should make a plan. You can turn the potential disadvantage to a benefit for you and your project. Here are 5 crucial steps to help you prevent unnecessary or foreseeable risks and be ready to solve any tricky situation within the working process.

1.    Risk identification

To recognize the risks in the appropriate way, you are to think of every possible unforeseen situation. And the problem arises as there may occur such issues that you simply are not aware of. The following tools will help you reveal the hidden danger:

  • Fishbone. Aka cause-and-effect diagram offers a structure to help the team determine the areas, which may grow into problems.
  • Survey. Reviewing the root cause, the technique includes the analysis of the situation with possible solutions.
  • Diagramming. This is a small format of the risks. The tool can provide effect, cause, influence and flow charts diagrams.

2.    Qualitative risk analysis

The tools of qualitative risk examination help you determine which risks to pay attention to. Here are the most common techniques: 

  • Red/Amber/Green (RAG). With this method, the risk is divided into 3 categories. The danger gets to a certain group by such criteria as likelihood occurrence, time influence and quality. A risk with the highest impact is dedicated to the Red group. Amber is for mid-point, while the Green group includes the cases with the lowest influence.
  • Risk Urgency. The risk determined in RAG can be narrowed down in this tool, which focuses on timing specifically.
  • Risk Type. It is used for managing the risks, grouping them by various classes.

3.    Quantitative risk analysis

The following techniques help examine the risks influence on the project in figures: 

  • Decision Tree. This is a diagram with branches that define the possible results on various decisions and events. Each outcome then should also be accompanied with its financial effect.
  • Failure Mode Effects Analysis (FMEA). This is an evaluation process to identify how and where there may be a failure. Then, the action is focused on the area where the defection may occur.
  • Sensitivity Analysis. The analysis shows the impact of various changes on the risks. It identifies what can happen if the predicted dangers don’t take place.

4.    Risk response techniques

After the previous analysis, you need to combine the appropriate responses for solving the risks. The following options can be dedicated to threat and opportunity, though, they can be used together: 

  • Threat Responses. These are the cases, which may have a negative impact on the project benefits or objectives. Once the risk can lead to dangerous outcomes, use the following strategies:
  1. Change the conditions of the risks, so that the danger no longer exists.
  2. Having no chance to remove the risk, you can reduce its impact.
  3. Shift the danger or its potential influence to the third body.
  4. Get a ‚ÄòPlan B’ or a scheme how to deal with the influence.
  • Opportunity Responses. Once the changes in the project may bring advantageous solutions, they belong to the group with opportunity responses. In this case, you should do everything to realize the possibility of the benefits.
  1. Implement some changes to the project for an opportunity to appear.
  2. Increase the possibility of danger and its positive effect.
  3. Distribute the opportunity to a related party.
  4. Admit the risk and think of its solution.

5. Risk management and control.

Keeping track of the potential risk, you make sure that nothing will go wrong. The following techniques help you in risk monitoring and control process:

  • Status Reports. It is used to inform about the progress of risk management. The more meetings are organized, the more it shows the people’s interest and concern.
  • Risk Auditing. This tool estimates the effectiveness of responses. You can also evaluate the process of risk management with the audits. In order to improve the procedure, all the targets, findings and formats of the risk audit should be totally documented.

Bottom Line

Risk management is complex. It is not only about thinking of probable complications in the project but also knowing how to deal with them. All above-mentioned tools and techniques included into risk management process can be helpful. Though, you are to determine which of them suit your business in particular. Taking some time to define the needed solution, you can always try another one if the previous doesn’t work out.

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