Risk Management (Practical Project Management Series). This time the subject is ‘risk management’.
With great pleasure you start as Project Manager with your new project. After the contract analysis you have a better view on the project and you have identified the initial risks. In fact a Project Manager is continously scanning around, like a radar, to look for risks which might disturb his/her project. These risks might be coming from outside as well as inside the project.
Risk management is an important Project Management task and can be decomposed into:
- The risk has been signalled.
- During this process an estimate is made of the chance and impact when a risk might become reality. The impact can be expressed in time, costs, quality, scope, advantages and resources (including human resources).
- Determine which steps need to be taken in case the risk becomes reality.
- Execute planning when the risk becomes reality.
You can handle a risk in different ways:
- Make a change which prevents a risk will nor occur anymore or the impact is minimal.
- Take action in advance to reduce that the risk will occur or to reduce the impact.
- Share the risk with other involved organisations.
- Take precautions. Make in advance a plan how to act when the risk occurs and prepare as much as possible.
- Transfer the responsibility, including the financial risks, to a third party (eg. an insurance company).
- If the costs of the impact or the costs of the measures to be taken are too high, you might decide to accept the risk.
Finally a few generic remarks regarding risks:
- A risk doesn’t need to be a threat but can also be an opportunity.
- Involve the right specialists in risk management. As Project Manager you can’t see and know everything.
The next time I’ll describe ‘issue management’.
This is a ‘blog’ article by Lex van der Heijden regarding practical Project Management. For questions/remarks I’m available via [email protected] or via LinkedIn (nl.linkedin.com/in/lexvanderheijden/).