Risk Management

Are You in Risk Denial? 5 Tips for Identifying Risk

When it comes to risk, no one is an island. Yet many a rugged entrepreneur will forge ahead as if everything is hunky dory. Are you one of those people who is in risk denial? In a post for Voices on Project Management, Kevin Korterud establishes five tips to help disbelievers identify the risk in their midst.

5 Tell-Tale Tips

  1. Get the goods from risk.
  2. People are risks too.
  3. Use guiding principles.
  4. Use the 30/20/10 Rule.
  5. Big picture risk

If someone told you that risk was a good thing, that it could help you get what you need for a project, you might think they were crazy. But that’s exactly what Korterud says leaders will do if you bring a potential risk to them early. Wait until the final hour to inform leaders, and then you’ll truly need to fear risk.

People are risks too, as many project managers often forget. Lack of experience is indeed a risk and should be included in the appropriate risk register. But far from just identifying risk, professionals need to formulate a process for escalating risks (that is, prioritizing them). That is where a risk governance methodology comes in handy. Every identified risk requires a mitigation strategy, and the highest-level risks need to reach the highest-level offices of the organization.

An excellent risk measure is the 30/20/10 rule. When risk is first identified at the start of the project, it should occupy roughly 30% of the schedule and budget. Midway through, that number should be reduced to 20%, and in the end 10%. Simple.

Lastly, don’t lose sight of the big picture. It’s quite easy to get lost in processes and procedures, graphs full of numbers, and percentages. But every so often it pays to stop and ask the question, “Is this project still worth the trouble?” To avoid “risk of irrelevance” scenarios, frequently measure your project against others in the business’s strategic portfolio.

Read the full article at: http://www.projectmanagement.com/blog/Voices-on-Project-Management/11902/

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