What exactly is project risk management?

A project risk is a certain situation where there can be an uncertain event that either has a positive or a negative action on some objectives of a project.  It also tries to anticipate certain threats that go against the goals of a project and address them.

When we say that it can happen, the probability is less then 100%, because the 100% probability tha an event will happen is only when will say “it will happen”.

A certain risk also almost always has a probability of happening that is over 0%, it has to have a chance.

Continuing with the project risk management, we need to take into consideration the definition of ” it will have a negative effect or a positive effect” ?.

Human nature is always trying to go with the negative aspects of the risks, but sometimes something can go right also.

What are the four steps that we need to take in a project risk management/planning:

1. First we need to identify the cause ( the risk )
2. We need to quantify it
3. Responding to the risk
4. We need to control and monitor the risk

The effective Project risk management

Now that we listed all the steps, let’s take them further down by analyzing every step in a project risk management:

Project risk management – Identifying the risk

This stage is as it sounds, A good approach that we can is is carrying out a workshop with IT and business people in order to complete the identification. In this step, a good brainstorming session will help us deal with it.

Deciding on what to do with each risks:

Generic risks – these category are risks to all projects ( a good example is the risk of not having enough business users available )

Business risks – like the name suggests, these risks are better handled by the business ( example case would be the inability of meeting the financial year deadline)

So you see, there are two parts that can be discovered : the cause of the situation and the impact that the situation will make

Project risk management – Trying to quantify the risk

Choosing two dimensions in quantifying the risk ( the impact and the probability of occurrence ), we can use a scale from 1 to 4. ( the bigger the number, the bigger the priority is ).

Project risk management quantification

Tips:

Probability High => Low Impact => Medium risk

Probability Low => High Impact => High priority

Responding to the risk

We will list some of the strategies that you can use in dealing with the risk

• Avoid it
• Transfer it
• Mitigate it
• Accept it

Note: No descriptions needed, anyone can pretty much figure out what is with every strategy

Project risk management – Risk response plan

Risk response plan => includes a strategy => includes actions that address the strategy = > Actions include what should be done and who is doing them => completion

Controlling the risk

This is the last step that you need to take, the monitoring of the risks should be done continually in order to avoid turning a risk into an issue. A good practice in controlling the risk would be to create regular risk analyses in order to identify the risk impact and probability, to update the risks that have gone and try to identify any new risk that may appear.

Project risk management is not a very easy task, but like any task in a business, it needs to be done with accuracy and professionalism.