Unfortunately, all projects carry a degree of risk. What counts in project management is how you deal with these risks as they occur. The smooth handling of risk gives projects the best possible chance of success: while it’s tempting to think that project management glory comes with overcoming challenges and dealing with difficulties, it is far better to have managed away the problems before they require superhuman efforts to put right.
Project managers have to be good risk managers as well, but the skills for managing risk aren’t necessarily the same ones that you would look for in a great project manager. Here are 5 skills you need to be competent at managing risk.
Managing risk means working out ways to stop risks from materializing. That means you first have to come up with those ways. Creativity is a key skill to help look at problems from different angles and develop several alternative plans of actions. You can also put your creative skills to use in risk identification, through brainstorming what could potentially go wrong.
Everyone is creative enough to do this; it’s a myth that some people are not creative at all. Tools like de Bono’s Thinking Hats, mind mapping and even writing with different colored ink can help spark creative thoughts.
Good risk managers plan well. Project managers have an advantage here, as planning is top of the list of skills for project management too. The core of managing risk revolves around working out what needs to be done to mitigate against the situation and then establishing how best to implement those mitigation activities.
Planning should be methodical and analytical, taking into account all the variables and setting out the best way to achieve the tasks in conjunction with other project work. As well as planning mitigation activities, managers also have to work out who will take responsibility for the work, so resource planning has a role to play here. Enterprise project management tools that help monitor resource utilization at an organizational level can help with this. An organizational approach to risk tracking using standard templates can also help with effective planning.
While creative thinking to establish risk mitigation activities and planning are core skills for managing risk, good risk management does involve other skills too. Risks constantly evolve depending on context, time and stage of the project. Sometimes you will find that they disappear altogether; sometimes they morph into something with a larger potential to wreak havoc on your project. Project managers need to be alert to the shifting boundaries of risk and be able to respond flexibly.
Flexibility is also useful when you put your risk mitigation plans into action. Those plans were put together on the basis of sound analysis, but – as with many things in projects – nothing stays still. If your first risk mitigation strategy doesn’t have the desired effect then you need to quickly change to Plan B.
Risks are not mitigated in isolation. A risk manager needs a team of supportive people with the task of tackling every aspect of the risk. These people are likely to be the project team, but you could also draw in experts from other areas or people with a specific interest in the risk or the mitigation activities.
Creating an environment where everyone works together to address the problem is not easy, especially when you are dealing with something that hasn’t yet happened. Risks have not yet occurred, so some people will see them as less important than dealing with today’s crisis. A skilled risk or project manager will be able to keep the team together, working on preventing problems in a way that supports the common objective and allows an adequate focus on other project tasks.
Sometimes the best risk response strategy is the most difficult. For example, it might involve reducing project scope to mitigate against not delivering on time, and explaining that to stakeholders is a challenging conversation, especially when it is littered with ‘we might not have enough time’ instead of ‘we don’t have enough time’. It might involve spending money on risk mitigation activities when the project or the company is already working with tight margins.
If dealing with risk was easy, we would all be better at it. It takes courage to have difficult conversations with the project sponsor and stakeholders, and it takes courage to suggest the right course of action when that has repercussions for them, even if it is the best thing for the project overall.
Managing risk is a key part of what project managers need to do in order to deliver projects successfully. There are tools such as risk register templates and resource utilization software, but much of what means risk is handled professionally is down to the skills of the project manager. The skills of handling risk can be learned and developed, and spending time doing so will only improve how projects are managed.