4 Important Considerations When Managing Project Risks
The purpose of this article is to cover managing risks that occur when running the project and how to ensure they are understood managed and their mitigation supported.
Risks are covered under the LEAD domain and within Motive in the MPM model.
Risks are covered under LEAD and within Motive
Risks Can Impact the Project or Organization
Risks are potential issues that, if they occur, can cause problems leading to negative impacts on your project or organization.
Document Initial Project Risks in the Charter
The charter contains a set of risks based on what is known or not known at the time and then this set needs constant monitoring and updating over the life of the project as what you know changes.
Risk phrasing was covered in the INITIATE part as a component of the charter and that is summarized briefly in the next section and then we add a section regarding a risk framework and then how to manage the risks on a weekly basis.
For the example we covered of the vehicle purchase project which is in the INITIATE article, those effects can be personal.
- For example, one risk could be stated as:
If you buy an unreliable vehicle, it could cause excess money and time for repairs, that impacts you with additional costs in terms of your time or parts not covered under warrantee.
- Another risk could be stated as:
If your vehicle does not meet your lifestyle needs, so for example you can’t use it for taking your friends and gear on a camping trip, then it could cause unfavorable constraints on what you can do and this can result in a negative impact on your personal enjoyment.
In a business project, the risks cover others than yourself and there is an initial set specified in the charter usually in terms of the risk phrasing above.
Phrase Risks for Understanding and Support
Risks can be phrased with the formula:
There is an issue that if realized causes a problem that can lead to a particular negative impact:
Risk Phrasing =Issue if it occurs,causesa Problem, which leads to anImpact
Risks are Issues that cause a Problem with an Impact
Keep this statement to a single sentence, maybe 60 words or less, but that is just a suggestion. The point is to keep it brief so it can be easily consumed and supported by an executive or quickly understood by your project team in order to understand how to mitigate it.
Risk Mitigation
Mitigation is what you are going to do if it happens. Or the steps you can take to minimize the impact if it does occur.
Building on the examples above from the vehicle purchase project:
- For the unreliable vehicle risk example two mitigation statements could be:
Make sure when you buy your vehicle you get an extended warrantee or pay extra for a bumper-to-bumper warrantee, in an attempt to avoid the risk all together.
You could also make the statement that if you get a vehicle that is unreliable you can commit to selling it within a couple of years before it is too old, and as well make sure that any warrantee you get is transferrable.
- For the lifestyle fit risk example, a mitigation statement could be:
If the vehicle doesn’t offer the space you were looking for to handle your lifestyle preferences, make sure it can accommodate a roof rack, so no convertibles or soft tops. Also, then in your budget add an amount for a roof-top carrier if this condition occurs.
Managing Risks Weekly
Each week I like to spend 10 minutes reviewing the risks and looking over the elements of the project that could provide indicators of the risk materializing.
For example, if there was a risk associated with a particular deliverable getting done, then I would determine the likelihood of that occurring based on where the deliverable is at with respect to its completion or any current challenges around its completion that I am are aware of and then take the necessary steps and communicate appropriately.
Also, at that time I do a quick review of all deliverables or key tasks and make note of any issues that have appeared and need to be added as risks.
Mitigate risks if they occur
If risks do materialize, that is the issues do cause a problem and impact, then the need to find their way on to your weekly status report.
I would not advise sending out a separate communication, but rather add it to the Issues section of your weekly status report and call attention to it in an accompanying note.
One way I have handled risks in the past is to review them at each monthly steering meeting. This is monthly review with your project steering committee which is usually made up of your key stakeholders and some additional financial or operational staff.
At the monthly project steering meeting while review project items, I draw attention to any impending risks. I explain why I think they might occur in the foreseeable future, and also review the mitigation steps.
This ensures that I do not blind-side any of my steering committee members who I depend on for support, and therefore do not want to surprise.
It also allows them an opportunity to give feedback to my mitigation steps and offer alternative suggestions.
If the risks do materialize, I quote the whole risk in the weekly status report in the Issues section and add a statement covering the steps being taken to mitigate them.
I also draw attention to that risk in the note that accompanies the Status report and assign the name of someone who owns that risk resolution. And sometimes this is me as the project manager.
Since the risks are on the status report, I also discuss them with the team. And the team knows that I communicate that exact wording to any of my key stakeholders, so they know that if they are in a meeting or part of a hallway conversation about the project, that they are aware of what the leadership team knows.
The point with the risks is to be anticipatory, have a plan B in case they occur, and be very open about them with your key stakeholders.
No one expects a perfect project without issues that need close attention. What they do expect is transparency and involvement in resolution of some of the challenges a project may face.
Summary
Risks are potential issues that, if they occur, can cause problems leading to negative impacts on your project or organization.
The charter captures an initial set of risks, but risks need to be reviewed weekly to see if any additional ones have surfaced and need to be added, and to see if any of the listed ones are in danger of occurring.
If risks do occur or are imminent then communicate openly with your key stakeholders and team members. No one expects things to be perfect, but they do want to have communication and involvement in the resolution of challenges a project may face.
Action Steps / Apply This Knowledge
- Review over your project risks if you have not done so since the start of the project.
- Add risks to your weekly routine of reviewing over project items for changes or updates.
- If any risks have a potential of occurring or are happening now, ensure they are on your risk list, and if not add them. Then communicate with your stakeholders and project team.
- If it is too long until the next status report or monthly steering meeting, it may warrant an intermediate email informing your stakeholders. If it comes to this include the whole list of risks and highlight the one which is occurring and provide details about your mitigating steps.
- Prompt engineering guidance for AI GPTs such as chatGPT: “I’m a business leader launching a project whose purpose is Y, and delivering X. What are some of the risks I should identify that could cause potential problems on my project?”
Learn More to Do More
Business evolves through change initiatives otherwise known as projects. The key to managing these change initiatives so you have more time, and less stress is to use simple strategies and tools.
Check out the Learning Hub’s other Articles with Actionable Steps, organized with a busy leader in mind, by topic or main idea, and with some AI GPT (e.g. ChatGPT) prompt engineering suggestions under the Action steps: https://simplepmstrategies.com/learning-hub-index
LEAD – Managing Risks
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