Project Management Risks – Questions and Answers (Part 2)

Risk managementIn my previous post, I’ve addressed the first three questions on risk management and here I address the other two and, at the end, provide a list of take-home messages.

4. How many risks should be on your risk log and for how long?

It depends on the project size, type, complexity, and any other factor that could influence your project. However, in order to be on your risk log, a risk needs to be identified, analyzed (its probability and impact quantified), and mitigation measures applied. Assign a risk owner to each risk. This person is responsible and accountable for monitoring that risk and for defining and implementing mitigation measures.

As you can imagine, not all identified risks will be worth of listing in the risk log, as some risks are just too minor to be worth the cost, or time, of mitigating them. In general, the cost of mitigating a risk should be lower than the cost of the risk consequences if the risk does occur. Importantly, you should never delete risks from the risk log. Even a risk that has occurred can occur again, if not in this project, then in future projects of the organization. In this second case, the risk log becomes a lessons learned piece of documentation.

5. How do you manage project risks?

Risk management is something that needs to be done continuously, throughout the project, not only at the beginning. A project’s success depends on commitment to risk management. Make sure everyone is aware of risk management and appoint risk owners for each risk in the risk log. Regularly review risks, as any change to the project can add new risks or modify the impact and probability of the risks you previously identified.

Manage risks systematically using risk management techniques:

  • Avoid risks. If the project is too risky, the sponsor might decide to cancel the project altogether or modify it to remove the major risks. For this, make sure the sponsor is aware of the risks to the project. Take into account that some sponsors might decide to accept the consequences of some risks.
  • Soften the negative risks’ impact and maximize the positive risks’ consequences to the project.
  • Transfer the risk to a third party (by insurances, guarantees etc.). The risk will still be present, but you’ll have mitigated its consequences by transferring it to another party, usually for a cost.
  • Accept minor risks (those with low probability and low impact) and their consequences if the cost of mitigating them is too high.

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By |2023-05-22T06:38:08+00:00July 2nd, 2015|Risk Management|0 Comments

Project Management Risks – Questions and Answers (Part 1)

Project Management Risk“To save all we must risk all”, Friedrich Schiller once said. If he were a project manager today, he might say, “To save all we must manage all risks”. Books, journals, corporate websites, YouTube, and discussion forums burst of information on risk management, because risk is inherent to every project just like uncertainty is inherent to any risk. Risk management is essential if you want your project to succeed. This article answers five questions on project risk management:

  1. What is the best definition of project risk?
  2. What’s the difference between a risk and an issue?
  3. How do you identify risks?
  4. How many risks should be on your risk log and for how long?
  5. How do you manage project risks?

1. What is the best definition of project risk?

One of Oxford Dictionary’s 1000 most frequently used words, risk refers to the possibility of something unpleasant, dangerous, or harmful occurring. This negative connotation of risk is so deeply rooted in many people’s minds that it takes some effort to get used to the project management definition of risk: “an uncertain event or condition that, if occurs, has an effect on at least one project objective,” according to the PMBOK.

Risk can be any uncertain event that, if it happens, will be good or bad for the project. Negative risks become threats to the project, while positive risks become opportunities. Risk management should address both types of risks, minimizing threats and maximizing opportunities.

Project risk is something you can control. You must manage risks if you want your project to succeed. However, be aware that there are risks called black swans that you cannot include in your risk analyses. I’ve explained why these risks are special and what you can do to minimize their consequences in another article.

 2. What’s the difference between a risk and an issue?

A risk is something uncertain, so it will happen or not during your project. An issue is an event that has happened or that you know for sure it will happen, even though you might not know when. A risk that occurs becomes an issue. This might be bad news or good news for you and your project, depending if the risk is negative or, respectively, positive. A positive risk becomes an opportunity for your project—for example, the opportunity to finish earlier than scheduled, or below budget, or anything that you might otherwise consider “lucky”. Both risks and issues have causes and consequences. Risk management is the way to deal with risks while problem solving is the way to deal with issues. (more…)

By |2022-11-18T10:20:02+00:00May 11th, 2015|Risk Management|2 Comments

Brainstorming – Trendy or Not?

BrainstormingIt’s popular. It’s a classic. Those who endorse it say it’s an effective technique for generating many ideas but not a standalone method, so it should be used with other creative techniques. Those who criticize it say it generates mediocre ideas that are likely never implemented as solutions to problems. But this 60-year old technique called brainstorming – whose effectiveness is an evergreen hot topic among researchers, users, and critics – helps to identify project risks.

Brainstorming – The Definition

According to Merriam-Webster, brainstorming is “a group problem-solving technique that involves the spontaneous contribution of ideas from all members of the group; also: the mulling over of ideas by one or more individuals in an attempt to devise or find a solution to a problem”.

Brainstorming – The Story

A technique with a catchy name, brainstorming has been around since the 1950s when Alex Osborn’s book Your Creative Power was published, becoming a best-seller. This book may be “an amalgam of pop science and business anecdote”, as Jonah Lehrer called it in a New Yorker article that triggered lots of e-ink on discussion forums, but brainstorming is easy to implement and generates many ideas. Besides that, it’s a great team-building exercise, which may also justify its popularity with businesses. A brainstorming session emphasizes the quantity, not quality, of ideas and one of the rules to brainstorming sessions is no criticism so that people do not fear their ideas are rejected by the group and, thus, limit their imagination.

Brainstorming Types

There’s individual and group brainstorming, with individual brainstorming being better for problem solving and group brainstorming better for identifying project risks. Group brainstorming draws from the intelligence and experiences of more people but ideas expressed loudly may be biased since people do worry about others’ opinions even if one of Osborn’s rules for group brainstorming is “no criticism”. Online brainstorming—a sub-type of group brainstorming—uses e-brainstorming tools to help remote teams share their ideas in real time. (more…)

By |2022-11-18T10:20:02+00:00January 16th, 2015|Business Management, Project Management, Risk Management|0 Comments
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