Why is Risk Management Important? You don't have to be a project manager to benefit from understanding and implementing some level of Risk Management. For example, if you are a Marketing Manager, you should identify and keep track of marketing campaign risks. On the other hand, if you are a software developer, you should keep a simple list of potential risks concerning the solution you are working on. Understanding and implementing Risk Management can help you navigate through the rocky portions of your marketing campaign, software solution, or any other initiatives.
So what exactly is Risk Management?
The goal of Risk Management is to minimize the risk of not achieving the desired outcome and to identify and take advantage of opportunities. We all think of Risks as negative, but don't forget there are positive Risks as well. For example, your website may receive so many sign-ups that it slows down or crashes your site. This is a positive Risk.
Is Risk Management only for large projects?
No. Irrespective of the size of a project, Risk Management assists in allocating resources, setting priorities, and implementing actions to reduce risks. Therefore, it is beneficial for small or large projects.
Where do you start?
Risk management processes can be broken down into 6 areas:
- Risk Identification - the process of identifying what, how and why things may happen (negative or positive risk).
- Risk Analysis - analyzing the risk, determining how often specified risk may occur, and the magnitude of their consequences.
- Risk Evaluation - decide if the risk is tolerable or not. Also, assign risk priority, and document the response and risk treatment.
- Risk Treatment - how you will deal with risks, taking into account the seriousness of the risk and importance of the project.
- Monitor and Review - keep an eye on a risk register (watchlist), and review it with the team and stakeholders.
- Communication - without communication Risk Management is pointless. Therefore, it is critical to the Risk Management process to ensure communication with the project team, stakeholders, client, sponsor, etc. Also, risk documentation can be a great source of information for future projects.
How much time should I spend on Risk Management?
Project role and project size will typically determine how much time you should spend on Risk Management. For example, if you are responsible for the project/initiative, then Risk Management should be part of your day-to-day responsibilities. However, if you are a team member than you should spend no more than a few hours a week thinking about Risks and what can go wrong with your specific solution.
In conclusion, Risk Management is often associated with large and technically complex projects. However, it should be related to any opportunity and initiative. Releasing a new product or service? Starting a new marketing campaign? Entering a new market? Implementing a new HR policy? It is hard to think of an initiative where some level of Risk Management would not be beneficial. Also, understanding and implementing Risks Management will make you a better leader.
Related: How to Rescue a Problem Project