For most of us, risks and risk management are a part of everyday life. From the time we wake up to the time we settle in for sleep at night, our days are filled with making decisions both big and small that help us manage and prevent potential risks. For example, we know that a car accident could happen as we drive to work, so we wear our seat belts to reduce the risk of injury. We’re aware that we may get sick or need surgery, so we make sure we have good health insurance coverage. Essentially, we’re all risk management pros, whether we know it or not.
Despite all that, project risk management is one of the least understood tools a Project Manager (PM) has in their toolkit. Some think that risk management is too time consuming, only needs to be assessed once at project initiation, or is only a concern for leadership. In reality, research shows that effective risk management increases the likelihood of project success. This crucial element of project management involves everyone from the top down, throughout the entire life of the project.
Five Risk Management Best Practices
Project risk management involves identifying and assessing potential risks that may occur over the course of a project and developing solutions to overcome the identified risks. Risk management is one of the most important tools a PM can employ. As you create and implement your project’s risk management plan, consider these five risk management best practices.
1. Assign a Risk Manager
Having someone dedicated solely to risk management is key to preventing risks from getting overlooked and falling through the cracks. This is a massive undertaking for a PM on top of your other responsibilities, so consider assigning someone other than yourself to this role. This person should have the skills to anticipate which risks could become problematic, monitor low and priority risks, and ensure the risk management plan is being followed. Though it may mean adding an extra line to your budget, it will be less expensive than the entire project getting derailed by an unforeseen risk.
2. Continuous Risk Monitoring
Though it would be nice to perform the initial risk assessment at project initiation and be done with it, the real world doesn’t operate like that. Projects are dynamic, which makes it important to keep your finger on the pulse of potential risks and risk mitigation strategies throughout the life of a project. Know that risk management is an ongoing process that doesn’t end once your risks have been identified.
As PM, it is your role to establish clear monitoring processes to ensure that all your risk mitigation efforts are effective. Conducting regular risk assessments ensures your leadership has the most current information before any decisions are made that impact the project. By keeping risk management as a continuous and evolving process, you set your project up for success.
3. Maintain Clear and Transparent Communication
When a project fails, the PM and other leadership are all too often unaware that the proverbial ball is about to drop until it does. In many cases, someone on the project team did know what was coming but did not communicate it to leadership. Open communication allows your team members to flag any risks that may have otherwise flown under the radar. Emphasizing the importance of direct, open, and clear communication with your entire team can prevent this from happening to your project.
One way to do this is to consistently include risk communication as a part of your project culture. For example, you could add “project risks” as a standing agenda item for all your team meetings. This not only demonstrates that risks are important to you, but it provides your team with an easy way to bring up and discuss any risks they’ve identified. If your team members aren’t sharing in meetings, developing an anonymous risk reporting method may be helpful.
In that same vein, openly communicating risks with the project sponsor and stakeholders is essential. Of course, your project sponsor doesn’t need to get “in the weeds” and hear about small risks that can easily be taken care of, but it is essential to communicate big risks before they happen. Be sure to give the project sponsor the reins to make any decisions on the biggest risks, because oftentimes these decisions go beyond the scope of the PM.
4. Implement Risk Accountability for Every Team Member
While risk management is often believed to fall squarely on the lap of the Project Manager, the truth is that risk management is every team member’s responsibility. Simply put: all project risks are owned by everybody in the project in the respective levels in which they operate. Creating a project-wide, risk-aware work culture can help increase risk accountability in all team members, no matter their role.
Risk accountability on a project means that all team members are responsible for their actions, performance, and decisions they make. When there’s a lack of accountability, one person’s delay becomes the entire project’s delay, which can snowball into a nightmare scenario. On the other hand, strong risk accountability is linked to an increased commitment to the project, increased productivity, and higher team member morale.
To implement risk accountability from the bottom-up and top-down, consider communicating to your team members that risk management is more important than avoiding errors. Let your team members know that every error is a learning opportunity, and a chance for team members to develop their skills. You want your team members to come to you with identified risks and any errors made knowing it’s an opportunity for growth, not something to worry about losing their job over.
5. Consider Opportunities (Not Just Threats)
One of the most common mistakes project managers make is only considering project risks that could be harmful to the project. But taking a risk approach that focuses on positive risks can help identify potential opportunities. These are uncertain events that may be beneficial to your project, helping the work get done faster. The reality is, project teams often get bogged down by the day-to-day work that needs to get done immediately, which creates a dynamic where only bad risks are important. Be sure to carve out time to handle opportunities in your project, even if it’s only an hour a week.
Risks can be positive if they provide an opportunity for your project. For example, let’s say you and your team will spend 9 months working on a new website for a client. A positive risk example would be that the website has a high number of visitors the day of the launch, and the servers may not be able to handle that much traffic. You’d handle the risk management process for positive risks the same way you do harmful ones: identify, assess the impact on the project, and monitor throughout the project. Instead of avoiding or transferring positive risks, you want to take advantage of them. So, in this case, you’ll want to ensure your servers can handle high traffic for website launch day.
Risk is a part of every project, and there’s always some level of uncertainty that comes with not knowing how the future will unfold. As a Project Manager, knowing how to forecast and alleviate project risks is critical. Developing a risk management plan that includes continuous risk monitoring, open communication, assigning a risk manager, and creating a culture of risk accountability will help ensure your project is a success.