Risk Management Processes

Like all things, when taking on a new project there will always be risks and threats to your work, however, by implementing risk management you are proactively identifying, analyzing and responding to any potential risks that may impede your project.

A project risk can be identified as something that might impact a projects success by either delaying the project timeline, overloading the budget, or leading to a reduction in the project’s performance (Martins, 2021). Effective risk management can help with addressing any potential risks and seek to mitigate them so as to keep your project on track and meeting its targets.

When looking to properly implement risk management in any project, there are 6 steps, or processes that can be followed:

1. Identify

This step involves identifying the potential risks to your project and compiling them all into a list. Identifying potential risks can be done in a number of ways:

- Interview project stakeholders: this is done because anyone with experience in project management, such as stakeholders, will have run into these issues before and dealt with them, therefore imparting their knowledge onto you. Essentially learning from people with past experience.

- Brainstorm potential risks with your project team: meet with your team and ask them what they think are and could be potential risks to the project.

- Document and ratify your assumptions: you may be making decisions based on unfounded assumptions which can hinder your project and potentially open yourself up for risk. However, by documenting these assumptions, you can see whether or not they are based on fact, and if so, what you can do to mitigate the risk.

Once you have identified all the potential risks involved, you can get to work on putting a register of these risks together or a risk register, and ask the following questions:

- What the likelihood of the risk is?

- What is the impact and severity of the risk if it occurs?

- What is our risk response plan?

- What is the priority level of the risk?

- Who owns this risk?

(Martins, 2021)

2. Analyze

Whenever you identify a risk, you will need to analyze the likelihood, severity, and response plan. When deciding on the severity of the risk, think of how the risk will impact the projects objectives. From here you can then come up with a response plan for each risk. The response plan is what you and your team will do to quickly pivot and address the risk if it comes to pass (Martins, 2021).

3. Prioritize

This is the point at which you evaluate the risk in terms of the magnitude of the risk. The risk magnitude encapsulates the combination of likelihood and consequence. It is here where you decide if a risk is acceptable or whether it is serious enough to warrant treatment (Kloosterman, 2021).

4. Treat the risk

This is where you assess your highest ranked risks and develop a plan in order to treat these risks to achieve acceptable risk levels. Next you create mitigation strategies, preventative plans and contingency plans. This will help you to minimize the probability of the negative risks as well as enhancing the opportunities.

5. Risk review

It is at this stage where you use the risk register, mentioned in the first stage, to monitor, track and review risks.

By putting a framework around risk and the uncertainty it brings, then you can effectively mitigate a lot of risk in your project, meaning you can move much more confidently to achieve your projects goals (Kloosterman, 2021).

This a nice graph that clearly illustrates the risk management processes from the website: https://www.researchgate.net/figure/Project-Risk-Management-Process-Action-1-Plan-The-process-begins-with-risk-management_fig2_333461316

References

Kloosterman, V. (2021, October 27). What are the 5 Risk Management Steps in a Sound Risk Management Process? Retrieved from Continuing Professional Development: https://continuingprofessionaldevelopment.org/risk-management-steps-in-risk-management-process/

Martins, J. (2021, January 29). The project risk management in 6 clear steps. Retrieved from Asana: https://asana.com/resources/project-risk-management-process