Stop Being So Hopeful!

Employing a 7-step framework to identify, assess, and proactively manage project risks

Project risk management is the process of identifying, assessing, and responding to potential events that might affect a project's goals and progress. In simpler terms, risk management aims to reduce project threats (and increase project opportunities) that might occur in the future.

Every project worth performing will have inherent risk. Risk is real and ever-present. Proactively identifying and addressing potential threats can significantly minimize negative consequences and improve the overall project’s chances of success. Failure to address them is akin to “hope management.”

The solution is to first recognize that risk management is not some horrible, onerous thing that will take more effort than its worth. If approached systematically, risk management is actually straightforward to undertake—and it almost always provides a substantial benefit in return for that effort.

The general 7-step process for managing project risks is shown below in the figure.

The process starts with a roadmap. The Risk Management Plan (RMP) defines how risks will be tackled, from overall tolerance to specific methods and reporting schedules. Next, all potential risks are identified and documented in a Risk Register, serving as the central hub for tracking and analysis. Each risk is then thoroughly assessed, considering its likelihood, impact, and overall exposure. Based on this analysis, risks are accepted as they are or tackled through specific responses. For threats, this involves reducing their likelihood or impact. For opportunities, it means maximizing likelihoods and impacts. After implementing these responses, the risk is re-evaluated to determine if it's now acceptable. If not, the cycle continues until it is. If a risk materializes, pre-developed “issue” response plans swing into action. Finally, the project's overall risk exposure, considering all the remaining risks combined, is assessed and addressed through contingency plans or other means. Throughout the process, regular communication with stakeholders keeps everyone informed, while continuous monitoring ensures additional risks are identified, old ones are retired, and the Risk Register remains accurate and up-to-date.

In coming posts, I’ll dive a bit more deeply into each of the seven steps, but in the meantime, the key takeaway is this: Don't leave your project to chance! Proactively identify and manage potential threats to increase success and avoid simply “hoping” for success.