Improving Project Risk Management

All projects carry risk  through uncertainty. However, few companies would claim to be satisfied with their management of risk at project or business levels, or be able to demonstrate it successfully. This can be a major constraint on project delivery.

Improving project risk management involves two principal objectives:

• improving the ability to identify, communicate and manage risk well, and
  

• embedding the management of risk into the mainstream culture.

At the detailed level, there are also a number of actions required to support these objectives. For example, every project makes major decisions about its solution and delivery strategy (e.g. Gates). Better alignment of the actions from risk management with major points of project commitment will enable projects to reduce risk systematically, and achieve far more benefit from risk management. It will also dramatically increase the chances of successful delivery of projects.

Improving Risk Identification and Capture

Few project teams have comprehensive risk management plans, or a clear account of the risks that face their projects. This is partly cultural, partly ‘mechanical’. Both can be addressed.

Improving the management of risk involves improving a project’s ability to identify risks early, via productive methods linked to the project’s strategic decision-making lifecycle, along with effective methods of presenting and using this data.

Many risk databases hold poor quality, partially complete or limited data. Often this results in a limited understanding of project risk and little attention or resource being dedicated to the management of risk. It also makes risk data of lesser use to others (e.g. stakeholders), and can foster a false sense of security relating to the delivery of a project.

PMIS helps projects implement innovative and effective methods to:

• significantly improve the identification of risk and the capture and presentation of risk data

• integrate risk management into the project, and

• improve the quality of risk management information substantially and its communication to others.

Improving the Assessment and Understanding of Risk

In all the literature on risk, much has been written on modelling the impact of risks (e.g. statistical analysis). This has its place and value, especially when major project decisions are being taken. However, PMIS believes greater benefit is achieved by improving the systematic assessment of risk, together with an improved statement of its description and consequences – something that can rapidly focus the mind, which all too often is not presented to stakeholders with clarity, if at all.

PMIS has developed efficient methods to assess and then present project risk management data to stakeholders and decision makers much more clearly, with a resulting improvement in project decision-making.

Improving the Management of Individual Risks

The strategies and actions to manage risks that pose a real threat to a project must be built into the baseline project plan, from the outset. Risk mitigation must never be treated outside the mainstream project management processes, yet in many projects today, this is exactly how it occurs.

Teams need to understand the difference between mitigation and contingency planning, and when each needs to be applied. Moreover, teams also need to know how to integrate risk information with the mainstream technical, management and performance measurement processes (e.g. Earned Value Management).

Once a project starts to approach risk management in this way, it can turn into a controlled, productive process of systematically reducing project risk, while enabling projects to be prepared to manage the impact of risks that occur and still deliver their project!

Managing the Risk Management Process

As with any process, project risk management must itself be controlled. There should be periodic reviews and events scheduled into the mainstream project plan to address risk. These reviews must be managed with enormous discipline, as they are not brainstorming or analysis sessions - they should review the status of risk mitigation strategies, and assign actions as appropriate.

In addition, there are simple but very powerful metrics that can be employed, at the project and business levels, to monitor the application of the risk management process and the status of health of projects. PMIS can help you bring control to the application of the risk management process.

Improving Opportunity Management

While projects need to manage risks, they will similarly have opportunities, which are the opposite of risk. Many organisations now use the same core process for managing both. There can be some merits to this, perhaps the most important of which is to raise the focus on opportunity management and to offer a realistic balance to the overall picture during significant project decisions.

Email today to find out more on how we can help you improve Risk Management.

Links and References

For more information on Risk Management and how it is applied.

BSI 6079-3:2002 Project management. Guide to the management of business related project risk

Related Pages

Project Risk Management Training

Project Management Training Courses from PMIS

About PMIS:

PMIS is a leading specialist provider of project management training, Prince2 training, APMP training course, project risk management training, benefits realisation training. Whether you are looking for public or tailored project management training, PMIS provides first-class earned value training, project management courses, IT project management training, and project manager certification.