What is Project Risk Management and how to manage it?

Illustration Image of the blog post "What is Risk Management and how to manage it?"

According to Project Management Institute (PMI) Pulse of The Profession ® 2019 report, organizations wasted almost 12 percent of their investment in project spend last year, due to poor performance—a number that’s barely budged over the past five years.

 

How to limit investment loss in project?

There are several actions you can undertake in order to decrease your average project completion time :

  • Sequence projects within a portfolio to prioritize them based on strategy, budget, and resources.
  • Plan your project and view dependencies
  • Ensure the right resources with the right skills are working at the maximum utilization rate achievable.
  • Implement a collaborative work management system to accelerate value-added tasks like change and issue management.
  • Get reliable, consolidated data to monitor your projects’ health and dependencies and expedite decision-making.

But you should also implement project risk management best practices in order to minimize, manage, monitor, and control the probability or impact of unfortunate events.

Project Risk Management is a continuous process that begins during a project’s planning phase and ends once the project is successfully commissioned and turned over to operations.

 

What is Risk?

As defined in A Guide to the Project Management Body of Knowledge (PMBOK® Guide – Third Edition), project risk is an uncertain event or condition that, if it occurs, has a positive or a negative effect on at least on project objective, such as time, cost, scope, or quality. A risk has one or more causes and, if it occurs, one or more impacts.

 

What is Risk Management?

As defined in PMBOK® Guide, Project Risk Management includes processes concerned with conducting risk management planning, identification, analysis, responses, monitoring and control on a project. 

 

Project Risk Management made easy with a PPM software

Screenshot taken from Sciforma Project Risk Management

 

A PPM platform like Sciforma makes it easy to :

Identify risks

During the Identification phase and based on previous project experiences, Project Managers will compile a list of risks. 

Analyze and prioritize risks

The Risk Analysis phase determines the likelihood of the occurrence and impact of each identified risk and prioritizes all the risks for management to review. The Probability and the Severity will then be used for ranking the Risks and will define their position in the Severity/Probability Matrix.

Mitigate risks

During this phase, the Project Manager assesses the project’s highest-ranked risks and defines and executes a plan to alleviate them using specific risk controls.

Run contingency plans

Although the Risk Mitigation Plan is created to decrease risk exposure, risks can still materialize. When they do, Project Managers need to come up with a Risk Contingency Plan in order to handle them appropriately.

Monitor & control risks

This phase should be set up to track potential risks, oversee the implementation of risk plans, and evaluate the effectiveness of Risk management procedures.

 

For more information on how to launch and manage project risk management in your PMO, attend our webinar on March 24 2020 à 9 AM.

Banner to register for the webinar "Project Risk Management Made Simpler with PPM Visibility"

 

Valerie Zeller

Valerie is Sciforma Chief Marketing Officer and likes to research and share how a Project and Portfolio Management Solution can help you achieve your business goals. Main interests: digital transformation, change management, strategy execution. Send your thoughts @valeriezeller