Risks refer to the general eventualities that may affect a project. They are an inherent component in the project’s life cycle, risks can be very troublesome especially for large-scale projects. This article about the risk management process in project management will guide you through the process of managing risk.
As a project manager, managing and mitigating risks effectively should be your typical cup of tea. Given the numerous risk management techniques, you will need to first adopt the best approach possible. This way, you will be able to identify and deal with any uncertainty promptly.
Risk Management Process Steps
Having a good risk management plan in place helps to optimize project performance as well as keep your team ready for any eventuality. No wonder certain project teams and managers are more preferable than others.
That aside, here are some top risk management steps for you:
1. Make a Risk Register
First things first, you should always begin by creating a risk register for every project that you are managing. This can easily be done using a spreadsheet so long as you include appropriate risk-related elements such as dates, description, probability levels, severity rate, response action, etc.
2. Risk Identification
Here you will need to engage all relevant team members and project stakeholders in a brainstorming activity for identifying any existing eventuality. To predict potential risks, you will have to weigh between the requirements and the available resources and see what could hinder smooth progress.
3. Remain Positive
Despite risks generally being negative, some may positively turn out as opportunities. For this reason, you will also need to prepare for any possible positive outcome. Who knows, the success of your project could heavily rely on such opportunities.
4. Determine both Risk Severity and Probability
At this stage, you will need to carefully estimate the chances of a particular risk occurring as well as its impact level with regards to time, quality, available budget, and even benefits. You can use a scale of 1 to 5 to denote both levels but be sure to define your scale in advance to avoid confusion.
5. Establish a Contingency Plan
Also known as a response plan, you will need to pay special attention to the risks with the highest probability as well as impact severity. The focus here is to minimize its chances from occurring as well as mitigate its impacts. To do this effectively, you might have to begin by establishing its root cause then make your strategic plan to curb the problem.
6. Contingency Costs
Now that we already have a contingency plan, you will need to brainstorm and make an estimated budget for managing the risks. Whether the risk will influence your project negatively or positively, you will have to assess and estimate how much it would cost to pull through with the response plan. Afterward, include this budget in the overall response plan to complete it.
Summary of Risk Management Process in Project Management
In summary, risk management in project management is very critical if you want to have a successful project. Just remember to engage all stakeholders in the process, appoint the person responsible for implementing your response plans, and continue to review your project risks regularly.