Risk management in practice

Picture credit: JerzyGorecki

Good day...

In the latest project management training I facilitated, I asked the question on who, among the participants, are practicing a robust risk management. I guess it is not surprising to find out that less than half of them are identifying the possible risks during their project planning, and less than half that do, actually doing qualitative and quantitative risk analysis, not to mention planning for risk response.

While it is a good practice to always list down all possible risk, do a thorough probability and impact analysis, and planning for the right response, most project managers do not bother to take a serious action towards this area. I have to admit that even myself is still in the process of sharpening my risk awareness.

In my experience, expert judgement is the best way to get a meaningful risk assessment. Asking to as many experts as possible (could be our peers, managers, vendors, or even community) on their experience with similar projects, is considered as an effective way to expand your horizon on the risk associated with your project. Combining your list with the one of a similar project (usually common risks) is also a practical way to have a more complete list.

Once you have managed to list down all known possible risks, next you need to map the risks to a probability-impact matrix. A pareto diagram should then be made based on the matrix. This method will allow you to focus on the significant risks and try to apply the relevant risk responses (avoid, mitigate, transfer, accept for negative risk, or, enhance, exploit, share, and accept for positive risk).

Using this method will also allow you to budget for sufficient buffer in term of time and cost. Once all risks are being identified and assessed, you will want to bring this into the kick-off meeting to obtain the necessary attention, support, and action from your sponsor, key stakeholders, and higher management.

In conclusion, let's be consistent in practicing a good risk awareness and always keep your key stakeholders updated on the development on the risks, whether they actually occur during the project and whether the response plan is effective.

Edwin