Despite all the planning, deep thought and assumptions you put into a project plan chances are there is still risk of not meeting your goals once you move beyond planning and get into execution…“Stuff” happens. As obvious as that statement is, it is amazing how ongoing, proactive risk management is still lagging behind for many organizations. Without robust Risk Management on your project, you are flying blind.
So what is Risk Management? Risk management is the systematic process of managing a project’s risk exposures to achieve its objectives in a manner consistent with stakeholder interest, human safety, environmental factors, and the law. It consists of the planning, organizing, leading, coordinating, and controlling activities undertaken with the intent of providing an efficient pre-loss plan that minimizes the adverse impact of risk on the project’s commitments, resources and profitability.
That definition isn’t exactly controversial, like “stuff” happens, most folks could agree on the basic ideas identified in that definition. Furthermore, most people would agree that risk management is important. So if everyone agrees that stuff happens, that it is important do deal with as much stuff as you can before it happens and in general what that means, why is it not more successfully implemented on projects?
Here are 5 things that you need to do to ensure Risk Management gains traction on your project:
Identify Risks Early and Often
Too often risk management is something that is done at the start of a project or at major milestones within the project life cycle. The environment your project is being delivered in constantly changes and so should your understanding of the risks you face. Maybe it is technical results not being met, contractor performance not meeting expectation or changes to the approach to meet the current crisis. Whatever the reason, risk identification and quantification should be an ongoing process, not one left behind with the kickoff meeting.
Go Beyond Identifying Risks
It is one thing to identify risks to your project; it is another to understand how big of a risk something is. There is a tendency for risk identification exercises to spiral out of control and waste valuable time dealing with potentially catastrophic black swan events. They are exciting, potentially devastating and…exceedingly rare. The other extreme is focusing on things that everyone agrees will likely happen, but the reality is they will not have a big impact if they do. It is important that you look at all the risks identified for a project and assess what the likelihood of that risk occurring is and its potential impact.
Track Your Risks
The old adage “what gets measured gets done” applies to risk management as much as it does to everything else. For effective risk management you need to track not only what has been identified and qualified, but also how successful you mitigate risks and how accurate your risk process is. Your risk register should track identified risks, their mitigation plans and should be regularly reviewed for the accuracy of your predictions. If you consistently miss events that impact your project you should review why you are not identifying those risks earlier.
Incorporate Risk Management into your Project Management Processes
Like all good habits, Risk Management gets stronger with repetition. If you want Risk Management to take hold on your project you need to require risk data in your regular project status reports and forecasts. Build in a risk profile slide into your standard monthly review and hold people accountable for the data that is in your risk register.
Foster Open Communication about Risks
Risk in a project is not a bad thing; it is reality. If you are set on only taking on projects with zero risks you are not really managing projects. Plus you are missing out on a lot of fun! Key to fostering a successful risk management process is to encourage all of the project participants to embrace the idea that a risk identified early is a risk that can be avoided and that not speaking up is worse than an identified risk happening. In other words, the unknown unknown is worse than the known unknown. Your teams need to feel empowered to bring forward potential risks irrespective of the source or potential impact.
If you are looking for ways to improve your organization’s Risk Management start by looking at these 5 areas. The first step in improving is to make sure you are doing all five of the things listed above. The next step is to make sure you are doing each step in the most effective way. There are key things you can look at to measure how you are doing in each area.
Ten Six is offering a free ’Pulse Check Schedule Assessment’ which looks at 10 key schedule health metrics and provides initial analysis around the results. The metrics are focused on areas that have proven to be weak spots in schedule health over time and represent areas that the project should review. Learn more here and call us today!