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Managing Project Risk, by Ryan Franklin, PMP

Kim Anselmo - Wednesday, November 06, 2013

Risk management is the process of identifying, mitigating, and controlling the known risk in order to increase the probability of meeting your project objectives. All projects will have some level of risk involved. To keep your project on track, it is important not to avoid risks, but to identify and understand them.

At The Resource Group – a Pacific Northwest-based Microsoft Dynamics GP partner – we understand that to be effective, risk management needs to start early during the planning phase of your project and continue throughout each life cycle or phase. The first step will be to identify what risks may be imbedded in your project. This can be done in many ways. Often it will involve surveying, interviewing and brainstorming with key stakeholders and project team members. These methods will help you identify many of your project risk, but not all. There will always be some unknowns.

Once risk planning starts, it is important to keep open risk communication with your stakeholders throughout the project duration. Too often projects will hit a pitfall due to poor communication regarding risks that are about to happen. Often times when risks become known, they are not properly communicated to the project manager. Risk discussions need to become a regular part of each status meeting.

Any risks that have been recognized need to be tracked in the risk register. Each risk in the register will need to be assigned to an owner who is responsible for overseeing the risk. More importantly, each risk should be prioritized. Some risks will carry more weight than others, and should carry additional risk response planning and contingency budget. Reprioritizing risks should happen throughout your project as well.

The next step is to start planning your risk responses. With risk response, your three key objectives are: risk acceptance, risk minimization, and risk avoidance. Reducing the probability or impact of high priority risk is vital. Much of the planning in this area will depend on your clients risk adverseness. Accepting a risk is only a good options when the effects of this risk will be minimal to your project, or if the probability of the risk occurring is very low and it would be too costly of an effort to minimize the risk. The most popular responses are those that minimize risk. This can be done by attempting to influence the source of the risk or minimizing the effect of the risk on your project once it has occurred. The last response is risk avoidance. Some examples of this include perhaps changing suppliers or using a new technology or software that would lead you away from the risk altogether.

As projects progress, it is the project manager’s job to track risks and their responses. For large projects, a risk officer may be assigned this task. Communication is key. Team members need to communicate any indicators that a risk may occur to the project manager immediately. The project manager will then be able to deploy the appropriate planned response.

Implementing risk management as a regular part of your projects will be a giant step toward project success. Risk planning also can help project managers gain confidence from stakeholders and their project team. Risk planning doesn’t have to be complicated or time consuming, but making it a regular part of your projects will help minimize surprises and help keep your projects on track for success.

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