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01st Oct 2020
Potentially, implementing good risk management could see you mitigate those risks altogether or prevent small risks from developing into larger ones.
The risk management process is a plan, which outlines the actions and appropriate responses that will be taken in regards to potential risks.
Before your project commences, the first step is conducting a risk assessment and identifying what the potential risks are. Here are some things to consider when defining risks:
Each risk will have different impacts if they were to occur and some less so than others. After you have defined what the potential risks are, consider what each of the different risks impact would be on the project – high, medium or low. If you need to use numbers, you can arrange a probability scale: 0.01 to 0.33 = Low, 0.34 to 0.66 = Medium, 0.67 to 1.00 = High.
Remember there is no universal formula, as it will vary by the project and organisation. So it pays to be flexible!
During the risk management process, it is important to receive input from others. If this is an unfamiliar type of project for your organisation, it also might be beneficial to set up interviews with industry experts, more experienced project managers, or long term employees.
What to ask:
When brainstorming with others, it’s important to keep an open mind, as you never know when an out-of-the-box idea could be the solution you need for resolving a potential risk.
From your brainstorming session, you should have information on the possibilities and outcomes associated with each risk. Each risk should have specific consequences listed – be as specific as possible.
Over budget is general and does not accurately portray the risk. However a late delivery of cement to your construction site resulting in a budget blow out of 13% is much more useful.
It’s common practice to develop mitigation strategies for high or medium risk elements, which will help reduce their impact or eliminate them altogether. Address critical risks first, which you identified as having a high impact on the project and assign roles and responsibilities for each risk.
The process of risk management doesn’t stop after you’ve initially created a thorough risk management plan, as it should continue throughout the project lifecycle.
Continually monitor risks and update stakeholders by creating a reporting system for risks. Keep in mind, risks can change over time and one that you had initially assigned as low could turn into a high risk at a later stage.
Lastly don’t forget to take learnings away from the project and how you can implement them into your next project.
By following a risk management plan, you will help define uncertainty surrounding your project and create a system to reduce negative risk.
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