By Sylvia Moses
Project risk assessment is an essential part of any project management plan. This guide shares 6 key steps in assessing project risk.
Running a project can sometimes feel like the plot of a Final Destination movie. No matter how much you prepare for it, disaster is always right around the corner.
Anything can – and often does – go wrong during a project. Stakeholders disappear on extended vacations, key employees leave, and unforeseen economic conditions cut your budget in half.
So much of project success depends on spotting and eliminating these risks.
How exactly do you figure out which risks to look out for and which to ignore? And once you’ve spotted these risks, how do you create plans to counter them?
I’ll answer all these questions and more in this guide to project risk assessment.
Risk in Project Management
As we’ve noted earlier, risk management is one of the pillars of project management. Without a suitable risk management plan in place, you can’t say that your project planning is complete.
Because it is enshrined so deeply in the project management doctrine, it is also easy to trivialize risk management. Far too many PMs see it as a purely academic exercise, tacking it onto a project plan without understanding what it entails.
So let’s go back to the basics and ask: What is risk in project management?
Every decision you take during a project invariably creates a potential risk event.
Think of something as simple as file storage. If you decide you store your files locally, you create a risk event: what if your local storage fails?
To counter this, you might create a backup in the cloud. But this is inherently risky: what if the cloud storage company goes under?
So as an additional safeguard, you might opt for a second long-term storage with a more reliable partner like AWS.
Thus, your single decision – store files locally – creates multiple risk events you have to respond to.
This applies to virtually every decision in a project. If a stakeholder goes AWOL on email, you need to get a hold of them on Skype. And if they go missing on Skype, you need their phone number.
And so on.
Whether you create a contingency plan for each and every risk associated with a decision will depend on two things:
- The likelihood of the risk event occurring
- The impact the risk event would have on the project
This is the essence of project risk assessment: evaluating and prioritizing risks.
I’ll dig into this deeper in the next section.
6 Key Steps in Project Risk Assessment
The formal process of project risk assessment can vary from organization to organization. However, regardless of which methodology you follow, there are a few steps common to all of them:
1. Learn to differentiate between controllable and uncontrollable risks
A meteor crashes into Earth and destroys the datacenter where you store all your files.
Can you really avoid this risk?
Of course not.
Every project has some risk that is controllable and some that is not. You can prepare for the former, but with the latter, your risk mitigation plan will mostly …read more
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