5 steps for managing project risk

Excellent project managers are not scared of risks. Far from it. They know that identifying, prioritising and managing risks can actually be what makes their project more likely to succeed. Risk can sound like a negative word, but risk management is a positive, proactive and essential process. Good project managers will incorporate risk management into every stage of the project life cycle, using these five important steps. 

1. Identify risks  

Potential risks should be identified early on, in the planning phase. Risks should be assessed with an open mind, and feedback should be sought from team members, stakeholders and outside experts. Early risk assessments are all about considering what could go wrong, what impact this might have, and how likely it is. You are trying to identify, and ultimately plan for, possible but undesirable scenarios here, so it is important to be honest and realistic, rather than overly optimistic. Identifying risk does not equal failure. 

2. Get to know your risks 

Once you have identified risks, it’s time to analyse, prioritise and document them. The better you know your risks, the easier it will be to respond to them. Once you fully understand the nature of a risk, you can put plans in place to mitigate it. You can assign it a priority, based on the impact it will have and how likely it is to occur.  Devise a process to monitor it and predict when it might happen. You can also document it so that everyone on the team knows that the risk exists and should be tracked.  

3. Plan your responses 

The most important reason to get to know your risks is so that you can plan for them effectively. Planning risk responses means taking a decision on what needs to be done. You may need to take steps to avoid the risk, or put a process in place to deal with the risk if it happens. It may be possible to reduce the likelihood of the risk, or minimise its impact. It is also useful to assign “ownership” of the risk. Who is responsible for monitoring it? Who is responsible for dealing with it if it happens? This should all be documented so that everyone knows who to turn to regarding any given risk. 

4. Communicate with your team 

Documenting your risks in a centralised system is a great way to communicate with your team. The right systems and software can ensure that all relevant team members are aware of risks and risk management strategies, and can be easily updated as risks become more, or less, likely. Any updates to the planned responses to risks should also be clearly documented. 

5. Don’t ignore “positive risks” 

Modern risk approaches include assessing “positive risks”, also known as project opportunities. These are uncertain possibilities that could have a beneficial impact. Monitoring them, and taking advantage of them, can help your project be completed faster, cheaper and more effectively.