What is the effect of risk management?
Risk management is a very powerful project management tool, which is really easy to use. I am always amazed at the small number of those who answer my question, who is running risk management for my project by my seminar participants. Only individual participants usually register.
This is a real shame because a study that examined the potential and importance of project management from the perspective of top management confirms, within the framework of its results, that companies that successfully manage projects are very important to their risk management.
The 3 pillars of risk management
The project business holds a high risk potential. Therefore, risk management is an important task for you as a project manager.
- Risks are possible events that can jeopardize the achievement of key project objectives (time, scope, budget, quality).
- Risk management is a continuous process that is carried out during the whole project life cycle.
- Risk management is the proactive way to avoid problems in the project as far as possible before they occur.
Possible measures for each risk are identified in order to:
- to prevent a risk,
- to reduce the probability of occurrence of the risk or the scope of the effects of an occurrence of the risk,
- with the effects of the risk entered.
3 Steps to Risk Management
What kind of measures is defined for the risks is to be defined in a project-specific manner.
- Identified risks must be monitored regularly to identify changes in the risks themselves, the risk parameters or the necessary measures as early as possible.
- The implementation of risk management in projects is an essential one success and is started in the early stages of a project. Start early on in the project to identify sources of risk for your project. Risks can be identified from these sources of risk and further categorized if necessary.
- In order to identify possible sources for project risks, all relevant stakeholders should be involved, all processes should be considered and all framework conditions should be considered.
Identify risks in good time
When identifying risks, it is important to ensure that, on the one hand, there are not too many risks, and not too few risks are documented. It has to be considered at every possible risk, whether it is actually a risk or possibly only incidental occurrences in projects.
A typical risk, which is gladly accepted, is the possible illness of employees. This can be a risk if it is an indispensable and difficult to replace key staff. In most cases, however, it is not a particular risk, since short-term employee defaults can generally be offset.
Even if practically no impact of the possible risk can be described, you should ask yourself whether it is really a risk. When recording and evaluating risks, it is also important to ensure the risks to which stakeholders are to be made known. Good risk management requires clearly defined project objectives.
Risk management in 5 steps
Possible risk management strategies are:
- Avoid risks
- Risks or their effects
- Accept risks
- Observe the risks
Risk management is usually carried out in five steps:
- Initiate risk management
- Identify risks
- Analyze risks
- Define measures
- Monitor the risks
Planning of risk management activities in the project
A further step is the planning of the risk management activities in the project. Plan a revaluation of the risks at regular intervals.
They determine who is actively involved in risk management. Do not forget to plan and take into account the risk management effort.
To identify potential risks, you should use all available sources of information. This includes, for example, the project structure plan and the scheduling of your project, project contracts or the Lessons Learned from completed similar projects.
Tip: Always identify risks together with your project team and relevant stakeholders. If you identify project risks at the beginning, there is a risk that you will not have an overview of all the technical aspects or that other project participants could contribute more or different experiences. Different people usually have more and better ideas.
List project risks
You do not have to create the list of project risks exclusively during a project meeting. You can also ask all or part of the project staff to advise you of possible risks eMail to send. Other sources of identification are your project planning documents, contracts, etc.
You can also create a generic risk list that contains typical project risks. You can also extend the generic risk list over time to include project risks from other completed projects. This provides you with a basis that you can use for the risk analysis of all your projects.
The result of the risk identification is a list of possible risks with a risk description.
Example: Generic risk chart
- Co-operation customer
- Know-how customer
- project communication
- customer Availability
- Conflicts or different interests with the client
- Availability of employee resources
- Underestimated expenditure on implementation
- Dates that can not be moved, for example SEPA conversion
- Overloading the project leader
The risks mentioned are collected in the project risk list. In the first step, the risks are not yet assessed. As a result, a number of risks may be taken up which will be removed in the later evaluation because they are redundant, irrelevant or insignificant.
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