All You Need to Know About Project Risk Assessment

Project management software

What Is a Project Risk?

A project risk can be defined as any uncertain or unfortunate event that can cripple a project, keeping team members from achieving the objectives. Such risks can be known or unknown as no project is completely immune to them.

While known risks can be anticipated and eliminated in advance with careful planning, unknown risks are hard to tackle. That’s why organizations leverage a risk assessment strategy to learn about the possible risks, to avoid them or minimize their impact.

The Stages of Project Risk Assessment

Identification

Identifying the risk is the first step and requires the active involvement of the team members, regardless of the role. Any person who is a part of the project lifecycle qualifies to be a part of the discussion and voice their opinion.

The goal of this step is to identify the probable risks that may trouble any phase of the project later. As multiple factors can lead to project failure, you should comprehensively discuss key risks such as:

  • Technical
  • Managerial
  • Cost
  • People
  • Financial
  • Schedule

When the entire team participates, you get more insights into possible problems or else, you may end up missing a few. You can either discuss and pen down the risks, or better, document them on a simple project management tool for keeping a track.

Start off the discussion on past mistakes to ensure that they don’t impact the current and future projects. After that, you can brainstorm solutions to do away with the mistakes, so that they have no impact on your project lifecycle.

To proceed effectively with this step, you can use a simple project management tool to take inputs from everyone on a single platform.

Evaluation

  • Probability Analysis

When you have multiple risks to mitigate, analyzing the likelihood of their occurrence is crucial. You can take a cue from past projects or ask your team members to add inputs to gauge what risks can cripple the project.

After that, decide what risk needs to be nailed down first and what can be addressed later. Categorize the risks as high, medium and low for better management and to stay on top of the project lifecycle.

While deciding probability of the risks, it’s important to rely on a data-driven approach than simply following your intuition.

  • Impact Analysis

Different events can have varied repercussions in the project lifecycle. In other words, some undesirable events can have a larger impact on the project than the others. Until you gauge their impact, it’s impossible to come up with a mitigation plan.

The ideal approach is to assess the impact of individual risks and focus on minimizing them. Since you are already done with probability analysis, you can apply the approach for segregating risks based on impact:

  • Low Probability- High Impact
  • High Probability- Low Impact
  • Low Probability- Low Impact
  • High probability- High Impact
  • High Probability- Low Impact

Focus your energy more on the “high probability high impact” risks first and then; you can deal with risks having a low impact.

Moreover, you must also learn about the type of impact associated with every identified risk. The risk can be a threat to your budgeting, timelines or any other factor.

Now, you need to decide what you need to work on first. Is it timelines or budgeting or any other factor? Once you prioritize, setting realistic expectations for your client will become easier, that also helps in preventing burnout.

Avoidance

If you find a risk that can be avoided, consider doing away with them at the beginning of the project lifecycle. Avoiding a risk usually involves leveraging technical strategies that have a 100 percent success rate. All in all, you can breathe free as the probability of that risk is reduced to almost zero.

Mitigation

Although some risks can be avoided, that’s not going to be the case all the time. There are risks you can’t avoid, no matter how hard you try. If your project, for instance, has a high rate of employee attrition, you can set aside buffer resources who can work in case the need arises. This way, you can ensure that such risk doesn’t cripple the bottom line of your project.

For such imminent and unavoidable risks, you need to have a mitigation plan. Having a mitigation plan ensures minimal impact on your project if any unfortunate event occurs during the project lifecycle.

Monitoring

The real worth of a plan is realized, only after its successful implementation. Even if you draft the most comprehensive risk plan, the application is crucial. For that to happen, you need to have a risk monitoring plan.

A risk monitoring plan helps in keeping a track whether teams are following what’s required or not. On top of that, risk monitoring also helps in maintaining accountability since you can now determine whether a person is following the plan or not.

Start Averting Risks in Project Management Today

No project manager can forgo risk assessment as it directly impacts the bottom line of the project. Even the old adage says,

“Prevention is always better than cure.”

Risk assessment can ensure that every stage of your project lifecycle is seamlessly executed, without experiencing any significant issues. Even if issues arise, you always have a mitigation plan to guide you on what exactly you need to do for averting damage.

Drafting an assessment plan is not enough for multiple reasons. Until team members are on the same page, there is always a probability of miscommunications and conflicts.

Adequate training for risk assessment can help in filling the gaps and further ensure that your members are not running from pillar to post, in case of an outage.

At every stage, you are most likely to receive multiple inputs; causing you to lose track. To avoid such situations, you can consider using a project management tool to stay on top of risk assessment. Not only a tool will help you in planning, it will also promote collaboration among your teams.

About the author

David Miller

David is a technical writer, his works are regularly published in various papers and top-notch portals including ProProfs.com. His readers revel in thought-provoking write ups which are backed by his innovative findings and researches. His rich experience in Project management domain help him offer latest and fresh perspective on improved efficiency in work flows across organizations.His user friendly take on Project Management has helped many a managers and employees to achieve their goals with utmost efficacy and ingenuity. His informative works on similar lines can be reached out on ProProfs Project.

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