Yackity Blog Blog

Many projects get off track or even fail. Many of us have heard the familiar story that Company X spent millions of dollars on an IT project that was never implemented. One project management task that I’ve seen often neglected is Risk Management. Hence, I thought I’d blog about it

While managing projects, it is important to be able to prepare for the effects of any uncertain event affecting the project for good or for bad.

To manage risks in projects, it is important to do (1) Risk Management Planning and (2) Risk Management and Control.

1. Risk Management Planning involves:

a. identification of risks that will affect the project. During this identification process, it is important to note what the risks are and the possible triggers.

b. analysis of risks - After identification is done, analyzing the effects of the risks qualitatively and quantitatively provides a good information on the business impact of the risk event.

There are different techniques one can use. One is creating and utilizing a Project - Risk questionnaire with a scoring system. With a scoring system, one can score the risk effect. Hence, one can identifiy what are the highest risk events and create a corresponding strategy. The diagram below is an excerpt of a sample questionnaire.

Other techniques include Business Impact Evaluation, Decision Tree Analysis and if one wants to be even more sophisticated, maybe a Monte Carlo Simulation Analysis.

c. creation of Risk response - Of course, after all the analysis, a strategy on how to respond to the risk is the next logical step. This helps to avoid or mitigate the effects.

2. Risk Management and Control: After Planning always comes implementation. Risk management and control involve looking at the risks that have been identified and executing the plan. This process involves careful monitoring to ensure that the plan is implemented and improved if necessary. Workarounds and corrective action may have to be done as well as ensuring that if changes need to be made, that the triggering event does not cause an adverse ripple effect on the project.

I don't want this to be too long a blog. One thought I'd like to leave is: One must remember that the project manager needs to work with its project team, project sponsors and users to implement effective risk management in projects. After all, a project is always a team effort.