The risk is all around us; it is ever present. And while many of us believe that risk is unavoidable and all we can do is manage it, there is a possibility to practice wise risk management to either avoid most risks or be prepared to mitigate risks that cannot be avoided. There are five risk management strategies that you can use to manage risk on your project. Most likely you will probably find yourself using a combination of techniques, choosing the strategies that best suit the risks on your project and the skills of your team.
- Accept the risk – Accepting the risk means that you have identified it but have chosen to take no action. Simply put, you acknowledged it and decided to deal with it if only if it occurs. This is a good strategy to use for minuscule risks – risks that won’t have much of an impact on your project if they happen and could be easily dealt with when or even if they arise.
- Avoid the risk – If the risk has a potentially large impact on your project, you can change your plans to try to avoid it. But what are the risks that should be avoided? Well, you will find out later in this post.
- Transfer the risk – this risk management strategy is rarely used and is only viable when there are several parties included in the project. Basically what happens here is that you transfer the management of the risk to someone else. For instance, web designers will not be responsible if website’s backend crashes – it is a risk that should be handled by developers.
- Mitigate the risk – by limiting the impact of a risk, the problem that may occur is smaller and easier to fix. You can mitigate against the impact, as well as against the likelihood of it happening.
- Exploit the risk – Sometimes the risk can have a positive impact on your project. Exploiting is about doing everything to make sure the event happens. In this risk response strategy, you will make sure that the opportunity is realized: take the opportunity very seriously and develop a strategy to accomplish it.
Risks in project management
1. Not defining a problem
Not knowing what the problem will prevent you from solving it. Some project managers underestimate the ability and skills of their team, they willingly enforce unreasonable deadlines, and overestimate the available budget. As a matter of the fact, underestimating complexity is listed as a factor in 35% of projects.
In these cases, it is important to establish a clear objective with quantitative measurements at the very beginning. Focus in on the project’s main problem, determine the necessary requirements, and make all parts and steps clear and transparent. Also, when pondering about your project objective, make sure that it is DUMB (doable, understandable, manageable and beneficial).
2. Ignoring the scope creep
It would be best if there is no scope creep at all. However, sooner or later you will have to face it.
While welcoming it is not the best idea, ignoring it is simply dangerous, which is why in these instances you should creating a change management process. The document, review and approve new requirements should be, and determine what new resources are needed. In the end, make sure that the entire team is in the loop and that is focused on the task at hand.
3. Poor selection process
Choosing people based on availability has often proved disastrous. Just because someone is available doesn’t mean that you should snatch him up! Just like adding the wrong ingredient to the concoction spoils the taste. Thus the bad addition to the team can put the entire project at risk.
Hire the project manager who can handle the work, and choose team members that can deliver on the customer’s requirements and expectations. Always strive to choose your people based on skill set and experience, not on availability. And remember, everything is about quality – the quality of an employee and the quality of work.
4. Poor communication
A study conducted by researchers at the Project Management Institute revealed that “Ineffective communications is the primary contributor to project failure one-third of the time, and had a negative impact on project success more than half the time.”
Make sure that all information is clear and detailed, and that every team member has access to data they need to fulfil their designated role. And since you want everyone to relate to the information you’re sharing, a technical and complex language in your written or spoken communication should be avoided if possible.
5. Underestimating time and budget needed
This is the huge risk for new and inexperienced project managers. Since staying within the deadlines and within the budget everything in project management, you should opt for help on this one, especially if you are new in the field. Using a proper tool can help you stay on project management timeline, within the budget and on track. Choose one with time and cost tracking, as well as task management feature so you can have an insight into process progress at all times.
6. Micromanaging the team
All members are part of the team because of their skills and expertise. They want to feel valued and empowered and are prepared to bear responsibility for their actions. In these cases, micromanagement is a serious risk: it can destroy trust and lead to a lack of confidence and motivation. Most PMs like to run a tight shift and keep everything under control, but in cases where you have a strong, independent and creative team – this is not a good approach. Remember, leniency results in trust and trust is almost always repaid.
Handling a risk can and will prove to be a challenge, no matter the kind of work you are doing, so it is of utmost importance to prepare for the possible dangers of everyday business. No matter what type of risk management strategy you choose, be wary of the situations where you can expose your company, and try to avoid them if possible. Remember, it is up to you to make wise business decisions and keep your organization on track!