Do you mange risks?

As a project manager, do you do risk management? Are you aware of potential events that can throw off your project’s cost, quality, or schedule? Are you doing anything to protect against these events? Or since they are not a problem right now, then are you going about executing your plan until something unplanned comes up?

If this is your attitude, then you are not currently doing risk management. Risk management is an important part of project management that, in the long run, saves you time and money.

What is a risk?

A “risk” is an event or condition that has not happened yet and may never happen. These events can be negative (“threats”) or positive (“opportunities”). Let us look at two simple examples to illustrate the difference:

  • The potential that a used piece of equipment can come on the market at a reduced price compared to new is an opportunity. This can cut the project’s cost.
  • However, the chance that the delivery of the purchase could be delayed is a threat, particularly if the piece of equipment is coming from somewhere along the Gulf Coast during hurricane season.

Depending on the criticality of the risk (i.e. depending on the probability that it will happen or impact it can have if it happens), it is generally not wise to simply take no action until the risk materializes. By then, it may be too late. Instead, you should be managing risks, not letting risks manage you.

Steps to manage risks

Below are the steps to take when doing risk management. Details will be covered in subsequent posts.

  1. Decide on how you will do risk management.
  2. Identify a thorough list of the risks.
  3. Rank the identified risks.
  4. Determine how to respond to the top risks.
  5. Take the defined actions to handle known risks while keeping an eye out for new ones.

Sounds simple? Good because it is. You just need to spend the time and effort to do it.

We will cover each topic in greater detail in subsequent posts.

Let me leave you with this: risk management saves a project time and money.