Four Risk Mitigation Strategies for Effective Project Management
Effective project management requires a proactive approach to mitigating risk. Here are some proven strategies for making sure your projects stay on track.
When beginning the planning phase of a project, one of the first things to consider is what can go wrong. This might sound pessimistic, but effective project managers know that a proactive approach to risk management is always better than leaving things to chance.
Risks include anything that can potentially impact the performance, budget, timeline, or output of your project. This might include digital risks, such as data loss or data breaches, or human factors, such as members of your team taking time off, or supply chain issues. One of the tasks project managers are responsible for is incorporating risk management in the planning phase—and throughout the project, so they’re ready to tackle issues if and when they arise.
Risk management means different things for different types of projects. Large-scale projects have a natural tendency to carry more risk, in which case risk management involves extensive planning. Smaller projects involving just a handful of stakeholders, by contrast, might be fine with some simple risk prioritization.
With that in mind, here are some proven strategies for mitigating risk when planning your next project:
#1. Identify and Analyze the Risks
The obvious first step is to identify what the potential risks to your project are. However, that’s often easier said than done, particularly with more complicated projects involving stakeholders from multiple departments. For example, the finance department is primarily concerned with financial risk, while marketing teams will be more concerned with keeping project timelines on track in order to align their marketing strategies with customer expectations. Chances are, not even the most experienced project manager will have a complete understanding of how every different department or business domain perceives risk.
Before you can effectively identify the risks, it’s vital that your project has a clear objective or deliverable, as well as a deadline for completion. For larger or more complex projects, you can break down these objectives into smaller and more manageable tasks. This allows you to not only make them more accessible but also to manage risk on a more granular basis. For example, with a large-scale project, there might be multiple dependencies involved. It’s important that you have a clear picture of these to identify potential disruptions to your project cycles.
When mitigating risk, pragmatic project managers tend to gather all their stakeholders together to define risks as a team before analyzing their potential impacts. Every risk should be logged and stored in a centralized location to ensure complete transparency.
#2. Prioritize and Assign Risks
Once you’ve identified risks and determined their potential impact and probability, the next step is to assign them to an appropriate risk owner. A risk owner is the individual(s) responsible for a particular risk. They’re also the person who other team members will refer to if they’re the first to identify an issue while the project is in progress. Designating risk owners ultimately ensures there’s always someone accountable for a given risk. Without a risk owner, there’s greater opportunity for risks to fall off the team’s radar and incidents going ignored. It’s important to understand that enterprise risk management (ERM) doesn’t manage risks by itself. Rather, it’s a process for identifying and analyzing risks so that risk owners have the information they need to make informed decisions.
Ideally, there should be a team or individual in the organization who is accountable for every risk. If there isn’t, the entire organization will own the risk, which increases the likelihood of it going ignored. When choosing a risk owner to be responsible for high-impact risks, it’s essential that they are clear on their responsibilities and what’s expected of them. Moreover, risks shouldn’t necessarily be assigned to the highest accountable person in an organization. With project management, it’s important to choose the person who will be most closely involved in the given risk domain.
#3. Empower Persistent Communication
It should come as no surprise that effective risk management is grounded in clear communication, especially in the case of projects involving stakeholders from various business departments. When communicating risk to different levels and teams in a business, it’s important to tailor your message to the individual or team receiving it. It’s also important to establish a consistent form of communication that ensures everyone’s on the same page. Project management and team communication platforms can provide that vital foundation, while also ensuring complete transparency.
Risk communication should also have a dedicated role throughout the lifecycle of your project. It should factor in during project meetings where everyone on the team has the opportunity to discuss issues that may have arisen or are at risk of arising. Project managers should also provide the tools necessary to ensure persistent communication throughout the entire duration of the project. To keep your team involved and informed as well as give every team member a chance to report issues, you should establish clear communication protocols. For example, you might have a dedicated messaging channel where team members can report problems which, in turn, sends an automated alert to the relevant party.
#4. Maintain Complete Audit Trails
Last but not least is the need to maintain complete transparency in your communications. This is important not just for mitigating risk, but also for identifying the source of any issues that do occur. With a transparent and accessible communications platform at your disposal, you can keep a finger on the pulse of your projects, identify trends, and gather the insights needed to continuously optimize your project management strategies—all while reducing risk.
Using the right communications tools can work wonders for mitigating risk. Consider, for example, how much harder it is to communicate risk and collaborate over urgent matters if your team is using a disconnected mix of channels like email, instant messaging, and word-of-mouth. With a single, unified system, you can keep project information and communications pertaining to it in one place—a single source of truth (SSoT) that eliminates ambiguity, along with single points of failure.
Overall, risk management is a key aspect of project management that helps to ensure that projects are delivered on time, within budget, and to the required quality standards. For best results, project coordinators should carry out a risk assessment early on during the planning and execution phases, and then on a regular basis throughout the project’s lifecycle thereafter.