Risk Management

10 Critical Advice to Lower Your Project Risks

Project risks can be anything. Rest assured that you will encounter risks during every project lifecycle. In this article at Workamajig, Sylvia Moses provides 10 critical advice to lower your project risks.

Reducing Project Risks

Project risks are always unwelcome, be it small or big. While you cannot plan for all, make a contingency plan for some. Following are the 10 critical ways to lower your project risks:

Prioritize Risk Management: A recent study revealed that 97.5% of projects fail. The shocking news is only 28% of project managers rigorously follow risk management practices, as per a PMI survey. 14% of them hardly or never implemented any best practices. Creating a risk management plan is as important as planning for resources, budget, and communications.

Risk Events and Project Risks: Risk event is an individual event or a cluster of situations that can lead to project failure. It is easily manageable as you can plan ahead. Project risk is a collection of all events and other unprecedented situations in a project. It is harder to tackle.

Plan for Explicit and Implicit Risks: While an explicit risk management plan means managing individual risk events, implicit takes a holistic approach. It is about analyzing ‘project’s structure, content, context, and scope.’

Be Implicit to Identify Risks Early: Use the following frameworks for implicit risk planning:

  • PESTLE (political, economic, social, technological, legal, environmental risks)
  • STEEPLE (Same as PESTLE, along with ‘Ethics’ in the framework)
  • SPECTRUM (socio-cultural, political, economic, competitive, technological, regulatory, uncertainty, market risks)
  • TECOP (technical, environmental, commercial, operational, and political risks)

On identifying project risks, take the below-mentioned steps:

  • Avoid them by shutting down the project.
  • Reduce the risk impact.
  • Exploit them to improve the project scope.
  • Transfer the risks to a vendor.
  • Accept them if the project benefits are more than the possible costs.

Continuously Identify and Classify Risks: Use risk repository, expert analysts, checklists, status reports to identify and classify risks. Put the project risks into technical, external, organizational, and project management risk categories.

Focus on Non-Quantifiable Risks: All risks are important—measurable nor non-measurable. List all down all and find relevant data for analysis. Otherwise, use benchmarks, case studies, and insights. Track KPIs of risky deliverables. If you are still unable to find relevant data, avoid or transfer the component. Communicate regularly about non-quantifiable risks.

Communicate Better: Risks are project negatives, and nobody likes to talk about risks. Encourage people to talk about project risks freely to receive early warnings.

Enable Risk Ownership: A popular research firm found out that several bank employees knew about recession beforehand. They did not alert the top management as they thought that that was not their job. Try a bottom-up approach by:

  • Involving teammates in the planning process
  • Designating risk roles
  • Encouraging all to bypass hierarchy to notify risks
  • Allowing employees to include relevant risks in the management plan

Sort Out Cultural Differences: The behavior and ethics deliberated by the top management are followed by the rest of the organization. If employees cannot come up to you regarding risks, there is a communication gap. Involve them and keep your communication channels open for all.

Follow the Process: Various organizations have a benefitted from a common risk management process. Follow it to lower project risks:

  • Define the project and its goals clearly.
  • Focus on the risk management process by discussing and coming to an agreement.
  • Identify all the project risks, implicit and explicit.
  • Structure the risks to categorize and work on them.
  • Ownership of risks is necessary.
  • Estimate risk possibility and impact.
  • Evaluate the success quotient of risk responses.
  • Plan estimates, responses, and ownership of all risks.
  • Manage risks by controlling and mitigating them.

To view the original article, visit the following link: https://www.workamajig.com/blog/project-risk-management

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