6 Essential Rules For Effective Project Risk Management

What is Project Risk?

Let me quote it from ZilicusPM blog “Risk is the probable occurrence that a given action/activity (or lack of action) will lead to an undesirable outcome (in the most general cases). There can be choices/options that decide the potential outcome of the probable occurrence of an event/instance. These choices in turn can decide the extent of undesirable outcome ”. Put it in simple words, project risk is unplanned event or situation, and when it occurs, it can have positive or negative impact of project’s goals.

Project risk management is NOT a secondary or sideline activity wherein project manager keeps entering few risks for namesake in the project risk register. If the project being delivered is fairly complex, involving multiple stakeholders like team members, sourcing vendors, partners, customers, etc; project risk management is essential. The benefits of project risk management in such case are immense. Businesses when act proactively to manage risks, depending on whether risk is opportunity or threat, organization can make money or save great deal of money. That’s the importance of risk management. Project risks are not to be managed when they occur in a fire-fighting mode, they should be managed as an integral process of managing projects.  

Let’s look at six essential rules for effective project risk management.

6 Essentials Rules For Effective Project Risk Management

A project risk can be defined as an uncertain event or condition that, if it occurs, will have a positive or a negative effect on a project’s objectives. Some very comprehensive guidelines and procedures for managing risk are available from many sources. For example, the Project Management Institute describes the following summary process to managing project risks:

1. Make Risk Management as Integral Process of Project Management, Right From Planning Process and as an ongoing basis
2. Follow Proactive Risk Management Approach
3. Remember, Risks Are Not Threat Always, Look For Opportunities Too
4. Involve Team Members, Subject Matter Experts & Stakeholders For Risk Review
5. Ensure Responsibility and Accountability for All Significant Risks
6. Use Online Project Risk Management Software for Better Risk Management and Collaboration

Proactive Project Risk Management

Though there is considerable amount of literature and research material available for understanding project risk management but let’s focus on some of these key aspects of managing project risks.

1. Risks can turn into opportunities or threats, but one has to be constantly evaluate risks for both aspects
2. Risk management can impact almost all facet of projects – primarily project schedule, project cost, project resources, project scope, project quality, stakeholder engagement and potentially fate of the project delivery itself
3. Though Risk management isn’t about project manager alone, but project manager has a key role to play. S/he acts as a driver for the whole delivery process, hence project manager’s understanding, approach even attitude toward project risk is important aspect. I can also put it in the bucket of project risks if project manager does not have good understanding of project risks
4. Project manager should be aware of/ or thinking about what can go wrong (without being overly skeptical but thinking pragmatic), and such approach can help project weather threats to project and tap potential opportunities
5. It is important to do stakeholder’s analysis. Knowing which stakeholders are important, influential, decision maker is critical for project manager. Also knowing the risk aversion of key stakeholder can help you decide risk response strategies.
6. Making risk register easily accessible to stakeholders, team members is absolutely necessary, since this is a team activity and not only for project manager’s record keeping. One should have online project risk register accessible to team members, at all times.

Your life can be become easier with the right project management system. ZilicusPM is the right PM tool for you and your team. Get started now.

Additional readings about project management, leadership

• Case Study: What Happens When Project Team Has Dual Reporting
• Avoid These 10 Most Common Mistakes That Leads to Project Failure
• Back2Basics: Ultimate Project Management Guide: Project Planning
• 8 Reasons to Decide Whether Your Organization Needs Project Management Office
• Compare the best project management software 
• All in one project management software
• Guide to selecting best project management software

Do you know ZilicusPM project management software offers comprehensive project planning, project tracking, project collaboration capabilities such as

• Gantt Chart
• Time Tracking
• Budgeting and Cost Management
• Resource Planning and Management
• Issue Tracking
• Risk Management
• Change Management
• Meeting Management
• Stakeholder Management
• Project Portfolio Management
• Project Reporting
• Document Management to help you manage and deliver projects better?

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