As well as being an integral part of great project management, risk management is one of the most natural and important skills to learn and include in our daily lives. It helps us foresee, plan around, provide for, protect, learn and benefit from probabilities we might encounter in the future.
It’s funny that a risk manager in a project doesn’t need to have too much knowledge about project management skills, however, a project manager cannot succeed unless they understand the fundamental processes around risk management.
If anyone holding a position of leadership in project management doesn’t recognise risk management as the primary influencer of their project’s success or failure, they will not prioritise it at the start of their planning. This is a profound mistake, as they will find themselves having to prioritise it at some point along the journey, whether it’s halfway through, or at worst, near the end of the track and, consequently, severe loss can occur.
A common mistake that amateur project managers make is to estimate a specific percentage as a contingency without allocating that against specific risks. Seasoned project managers capture these risks at the onset, with their treatments, resources, and allocated budgets and it can be the differentiating factor between a failed or successful project.
Why is risk management so important for projects?
All projects are risky as they are unique and complex. They are built on assumptions and dependencies, involving change and people, which means definite uncertainties.
When you assume a position of leadership in managing a project, it carries with it a weighty responsibility to identify, proactively manage and provide for all possible risks that might occur, both positive and negative. For us, when our clients put their money on the table, they are placing their trust in our hands. They believe that we can plan whatever path is needed for their projects to materialise and succeed. We are the experts they’re hiring.
Becoming your own risk manager
Considering the importance of risk management when undertaking a new project in work, we thought we’d use our expertise to put together six questions every budding risk manager should ask themselves. These six questions might equally apply to an undertaking outside of work, so go ahead and try them out!
Asking and answering these six essential questions, whether relating to a personal dilemma, project process or organisation decision, will set you on a course to success.
1. What do we want to achieve?
Consider and write down your vision, goals and objectives.
2. What might affect me?
Identify things in the future that could hinder or help you.
3. Which are the most important out of the things that I have just identified?
Prioritise your risks into two categories: (a) How likely is it to happen? (b)If it happened, what effect could it have on our goals?
Risks are positive and negative, so include both threats and opportunities.
4. What should we do about it?
Be proactive. This will keep you from being a victim of uncertainty. Design solutions that will avoid, minimise or offer protection from bad risks, whilst maximising and exploiting your good risks.
5. Did it work?
Review your actions and modify your approach. Keep it fluid and flexible as life happens all the time.
6. What changed?
There’s a dynamic element to projects, life and business. Take the time to spot the differences between the ‘then’ and ‘now’ of your project’s journey.
These are intuitive questions that anyone can ask in any important situation and if we build our risk process around these, it becomes an easy, natural process. Whether a complex or simple project, the next time you think about risk management, remember that it’s easier than you think. Ask, answer, plan, implement, and review!
It’s always a good idea to look at the past and learn from history, from the good and the bad. Identifying failure as a learning curve will give us the tools we need to avoid the same mistakes. Recognising success empowers us to build strong again, and to share those principles with others, so they can benefit, too.
If an avoidable incident or eventuality (a risk) happens once, it’s understandable. When it happens twice, it’s unfortunate. However, when that same thing happens three times, it’s unacceptable!
Start to Notice Patterns
If you are experiencing the same problems happening in life or in projects, and it has been going on for years you need to take stock! Risk management is about uncertainty and managing the probability of an event occurring, however, when the same thing happens every time, there is less uncertainty and it’s probably going to happen again! A repeated risk must be included in the project’s planning and management with great clarity.
Leadership in project management must learn from their past experiences by capturing the knowledge and building it into future processes. The lesson is not learnt until it’s put into practice the next time. Lesson-learnt reviews don’t save us from making the same mistakes. So don’t stop at the point of identification… take action!
What Are the Odds?
One of the founding fathers of risk management was Pascal, a philosopher and mathematician from France. It all started when he was playing games of chance with dice and cards. He encountered the problem of how to decide on the final winner when the game was interrupted midway. How could they predict who would have won? This led him to develop an interest in probability theory (a branch of mathematics concerned with the analysis of random phenomena). The outcome of a random event cannot be determined before it occurs, but it may be any one of several possible outcomes and the actual outcome is considered to be determined by chance.
However, knowing the past makes you understand the present and helps you to predict the future. You can then take the necessary preventative action or put the correct insurance in place to prevent any potential losses, thus reducing the possibility of a wholly negative outcome and introducing a positive one.
As George Santayana said, ‘Those who cannot remember the past are condemned to repeat it.’
By bringing together a team of project professionals and a vast reserve of strategic expertise (including risk management), Coron empowers busy leaders to transform underperforming projects into purposeful successes. We support businesses on a flexible, part-time or project basis with people focussed solutions improving all aspects of project performance.
Get in touch today to find out how we can help you to manage your project to the utmost and drive meaningful value and measurable results.
