Risk Management

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The reality of projects and risk

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At the start of projects, the potential impact of risk (in cost and / or schedule terms) is almost unlimited. The real choice is either to dedicate proper and timely attention to understanding and managing risk, or suffer its consequences (impacts) downstream. From a corporate perspective, all key projects should be challenged (through governance) to demonstrate a disciplined approach to the management of risk and that their project's exposure to risk is reducing in a systematic way, especially in the early stages of the project lifecycle.

The reality of projects and risk

Risk Identification and Capture

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Improving the management of risk involves improving a project's ability to identify risks early, via productive methods linked to the project's strategic decision-making lifecycle, along with effective methods of presenting and using this data. Poor quality, partially completed or limited data will often result in a limited understanding of project risk, thus the attention being dedicated to the management of risk will be insignificat. This can lead to a false sense of security relating to the delivery of any project.

Assessment and Understanding of Risk

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All risks should be assessed to decide: The probability of its occurrence (against a relatively simple scale expressing the likelihood of occurrence, e.g. low / medium or high) The impact of the risk should it occur (again either in simple overall terms, or perhaps impact on schedule, budget or quality)

Assessment and Understanding of Risk

How do we know if we can manage the risk, if it arises?

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The clear message here is that setting a risk tolerance level is a dangerous business. Each potential risk needs to be carefully, rigorously, analyzed and the project team, the supporting teams and individuals, the organization(s) involved in managing the project, all need to be evaluated to determine whether there is the capability to manage that risk successfully, should it arise. During the project itself, this capability must be constantly monitored and, where necessary, action taken to return the level of capability to the required level. The project management team must include "conflict over resources during the life of the project" as a major potential risk and plan for it accordingly by securing agreements and then monitoring the situation continuously.

10 Golden Rules of Project Risk Management

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Make Risk Management Part of Your Project Identify Risks Early in Your Project
Two main sources exist to identify risks, people and paper. Talking with experts outside your project who have a track record of a similar project can help you identify both traps and opportunities.

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Communicate About Risks

Consistently include risk communication in the tasks Make project risks part of the default team meeting agenda

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Consider Both Threats and Opportunities

create some time to deal with the opportunities in your project

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Clarify Ownership Issues

assign a risk owner for each risk that you have found

10 Golden Rules of Project Risk Management

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Prioritise Risks Analyse Risks

Individual level Project level

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Plan and Implement Risk Responses

Risk avoidance Risk minimization Risk acceptance

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Register Project Risks

risks descriptions, clarifies ownership issues and enables carrying out some basic analyses with regard to causes and effects

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Track Risks and Associated Tasks

Which risks are more likely to happen? Has the relative importance of risks changed?

References
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http://www.projectsmart.co.uk/10-golden-rules-ofproject-risk-management.html http://www.pmis.co.uk/project_risk_management.htm http://www.projectsmart.co.uk/project-management-riskmanagement.html