Risk management in project management – types, process, tips & tricks
If you aspire to become a project manager or already are on the path to becoming a project manager, you should know how to predict, prevent and respond to those risks.
Before anything else, let's have a look at the project risk management process. We have also listed a few steps and tips to help you manage the risks associated with projects.
What is risk management?
From a project management perspective, it is the responsibility of project managers throughout the project. To effectively manage risk, one should clearly understand the goals and the processes to identify the possible barriers that could harm the project or team's ability to produce results.
Types of project risk
These common types of risk include:
- Cost: These are the risks that are associated with the budget. This can include overspending the budget, errors in cost estimation, denials from stakeholders, etc.
- Schedule: This consists of risks like scope creep, delays, conflicts, etc.
- Performance: These are the risks associated with the progress and the quality of the project. Risks that cause inconsistent results in comparison to what was actually planned.
Once the project managers have identified the risks pertaining to the project, they begin with understanding these risks and their effects and try to reduce the impact.
Steps in the risk management process
Step 1: Identify the risks that can harm the progress of your project.
Step 2: Assign responsibility for identified risks to capable team members. Although project managers often take on this task only after a thorough analysis of the risk and its impact, it is better to assign responsibility early on.
Step 3: Now, it's time to analyse each risk to understand the driving factors and potential impacts fully. Be sure to evaluate the severity of each risk in the context of the overall project.
Step 4: Prioritise the risks based on urgency and the severity of impact.
Step 5: Have a brainstorming meeting with the team and plan a systematic approach to respond to the identified risks.
Step 6: Monitor how your team and the person in charge deal with the risk and take the necessary measures if things do not go according to plan.
Four tips to reduce and manage risks
1) Have a solid risk management plan
An ideal risk management plan should be created taking into consideration the nature of the project, the skills of the team, time available, budget, etc.
2) Keep track of your risks with a “risk register”
Keep track of all the risks you have faced and responded to in the course of the project. Also, mention the risks that you were unable to detect initially. This will help you and your team to have a clear understanding of the progress of your project.
3) Follow a proactive approach rather than reactive
The project managers should always invest a decent amount of time in risk management to take preventive measures to reduce the impact and even the chances of risk events occurring. Planning beforehand is much better than trying to respond at the last moment.
4) Hone your project management skills
Conducted myriad project management and ITIL process consulting engagements in various organisations. Performed maturity assessment, gap analysis and project management process definition and end to end implementation of project management best practices.