Risk Management – There's A Storm A-Coming!

For a full description of risk management, feel free to click just here (warning though, it’s pretty heavy duty stuff!). Or you could just read on for a minute or two and I’ll explain it as I see it from a business project management perspective.

So what is risk management?

1. Identifying possible problems/issues/risks that could occur during a piece of work/project.
2. Thinking about how likely the risk is and if it occurs its impact.
3. Thinking about whether you can accept the risk (risk tolerance)
4. Planning what you will do if you encounter those problems/issues/risks.
5. Managing the risk if it does occur.
6. Managing risks when they occur that you hadn’t thought of before (oops!)
7. Learning for next time around.

That’s pretty much it. As with many of our other management principles, we have simply over-analysed and over-complicated what it is and this is scaring people off applying the principle of risk management to their business project deliveries.

So when do I do it?

Before your project starts is the best time i.e. when you have had a bit of time to think about it.  The questions you need to sit down and think about for a small while are simply

1. What can go wrong with this bit of work/project? (risk identification)
2. Do I need to prevent or lessen this risk? (risk mitigation/reduction)
3. Who is going to “look after” the risk if it occurs i.e. who can own it if it comes to pass.

These three questions served us well when we were going through the development of MyProjectTracker and helped us mitigate in advance some things that would have caused things to go pear shaped!

Can we have some examples then?

Sure, no problem.

Example 1

Situation : This is a new customer.

Risk : I may not get paid.

Mitigation: Ask for a deposit, a bank reference or a business reference or..

Example 2

Situation : Dependency on a key supplier delivering X for your project on time.

Risk : Supplier fails to deliver X when they say they will.

Mitigation : Order in plenty of time, have a second supplier option, work your project plan that other things can happen if there is a delay..

These are two very simple examples, but show how straightforward risk management actually is as a concept for your business. How you track it is up to you, from the whiteboard in the office to an integrated software solution,  the key is to make sure you have it covered off. You can create a risk management process over time, start small and get it right and then build it up.

What are you doing to mitigate risk in your business projects?