As the project progresses, you may face some uninvited or unplanned events which are likely to hinder the growth of the project. To deal with such unforeseen situations risk and issue management is carried out in project management. The core function of risk management is to identify possible risks likely to arise, evaluate their response and prevent them from occurring. Project managers are responsible to look over these risks and carefully design an alternate path to carry the planned activities of the project. A project manager can only manage risks proficiently if he has a clear image of the objectives and deliverables of the project.
There are a variety of risks that can occur during the project. And coming out of those risks depends upon the capacity of the team. Some categories of risks that frequently occur in any project are listed below for more clarity of the team and project managers;
Budget: Sometimes you may encounter errors in cost estimation and the budget is not good enough to meet the needs of the project. This wrong estimation leads the project towards over budget by the project completion.
Schedule: Scope creep is one common reason for scheduling related issues. Or sometimes, there is natural delay or lag in completion of tasks due to unpredictable weather conditions or unavailability of some raw material for the production or construction. Such circumstances can cause the delay in the progress of the project.
Performance: At times, inconsistency in the performances can hinder the progress of the project. Moreover, the acquired talent is just not the right fit for the project specifications.
There are multiple other categories of risks that can occur in the project but can be dealt with the alternate plan of action to keep up with the normal growth of the project. Some risks are only restricted to the outcomes of the project which can be prevented with the rigorous trials and testing. Risk management is highly dependent on the skills of the project manager and the preparedness of the team to deal with unforeseen situations. If the team is ready to adapt with the change then, things are easier to handle.
Risk and Issue Management Process:
To keep the project safe from the unexpected situation the project goes through a risk management process. The project managers are focused to identify the risks, understand the severity and then make responses as per the requirement. But before all of this, you need to have a clear understanding of the organizational practices and scope of the project. Having the basic information will help you to conduct risk and issue management at a greater efficiency level.
- Identifying the problem that can potentially affect the growth of your project is to be identified.
- Assign Ownership of the identified risk to the team member who is directly going to with the risks and make out the best possible opportunities to deal with it. The whole situation is closely analyzed by that team member and early solutions or strategies to deal with risk are made.
- Analyze the consequences of the potential risk. Considering the depth of each threat, arrange in the order for the management.
- Prioritize the risks according to severity and urgency.
- Respond to potential risks according to the risk management plan. Take necessary steps to make the project risk free. Accurately planned risk response gives desired outcomes.
- Monitor the strategies made for risk Make sure that you are keeping up with the change in plan.
Rad More: Project Management Plan
Benefits of Risk and Issue Management:
Every project management tool has its own benefits. Some notable benefits of risk management
- Risk management improves communication among the team and project manager. Several conversations are held for the risk identification and evaluation.
- When the project manager studies in depth for the risk management you are likely to get into unexpected circumstances during the course of the project.
- Risk management clearly highlights the problem areas which can be resolved with different strategies.
- For risk management the project manager collects data other than the main research regarding the project which later on helps in decision
- There are greater chances of success as most of the risks are predetermined and sorted.
- Risk management keeps the team focused towards the objectives of the project.
Project Portfolio Dashboard for Risk Management as a Tool.
Project portfolio helps to organize and manage multiple projects at the same time. As a result maximize the performances and create better results. Portfolio Dashboard highlights risks with the projects and makes inter dependencies between the projects. An organization is dealing with a number of projects at a time and portfolio dashboards give an opportunity to look for the consequences of risk at once. Portfolio risk management has the same steps for risk management. It starts will the identification of risk and goes up till risk abortion.
Some portfolios risks that are likely arise are;
- Component risk: Commonly found as inter dependencies between the projects. Like;
- Outcome inter dependencies: The outcomes of one project have an impact on another project or they are related to one and other.
- Schedule inter dependencies: Date of completion or start of one project is dependent on the other project.
- Resource inter dependencies: When more than one project is using the same resources.
- Overall risk: Finding a relation between component risks.
- Structural risk: Likely to arise due to the faulty portfolio setup.
Portfolio dashboard helps to categorize the project on the basis of rating which is mentioned below;
Stop: Some projects are not in a good economic situation and no strategy to help out requires an emergency stop to keep yourself safe from further losses.
Accelerate: Projects having high economic value along with good strategy.
Must-Do: Low economic value but good strategic plan.
Monitor: High economic value and fair strategy.
Evaluate: Medium economic value and low strategic alignment.
Project portfolio management deals with both ongoing and new projects. It helps to identify the risks by the help of a dashboard and reports created by the tool. It tracks the risks and creates a clear picture of the project. The project manager finds the possible solutions of the potential risks. Keeps the team intact during the times of risks and motivates them to perform better.
Referring to figure 1 first of risk is defined in the lifecycle of the project. Then the risk is optimized keeping the risk tolerance under consideration. And in the end the project is protected by the upcoming risks. Portfolio risk management keeps the flow of the project and makes the execution better and easier.
Difference between risk management and crisis management.
Crisis management and risk and issue management are often considered similar but both terms have different meanings and ideas. Crisis can be any negative event that occurs during the course of the project. Such negative events are expected to cause great damage to an organization at various levels like market status, public standing, employee turnover etc. Crisis can occur due to some external factors or sometimes within an organization like a fraud activity within an organization. The outcomes of these crises are highly dependent on the response of the team dealing with such unexpected situations. And the whole process of dealing with the crisis is called crisis management. Any activity that can adversely impact the organization can be termed a crisis. A quick immediate response in the situation can greatly save the organization from great loss.
Whereas risk is referred to as an activity that can take place in an organization which can cause detrimental effects. There are 2 types of risks that an organization faces; strategic risk and operational risks. Both vary in their properties and impacts. Every organization faces some sort of risks and are little prepared to deal with it if the proper working for risk management is done. These potential threats can be minimized with a good risk management plan.
Some difference between risk and crisis management are listed below;
- The both terms different in their meaning first of all. Crisis management refers to the mechanism of dealing with unexpected negative events during the operations in an organization. On the other hand, risk management is a process that helps to highlight potential risks and plan ways to encounter them and minimize the impacts.
- Crisis management is a response or reaction to some hazardous event while risk management is done to handle upcoming events so termed as a proactive approach.
- Crisis management works on stress management within the organization. Whereas risk management is a much more composed and structured process which has different steps.
- A team is not at all aware about the crisis while potential risks can be identified and coping strategies can be built to run the underlying events smoothly within an organization.
Risk management and crisis management are integrals of corporate organization and by getting these two processes done as per the demand you can see marked stability in your project. Even after risk management some events are left to deal with which can be termed as unavoidable events. A team has to prepare well for the upcoming challenges as the project progresses.
Which tool Used for Create risk and issue management plan?
There are a number of software or tools that can help you in risk and crisis management. The basic purpose of using a tool is to improve efficiency. Lesser time and energy is invested when using these tools. Two common ones are listed below;
- Project Risk Register
Risk management is an integral component of project management which can be made easier with the help project risk register. Risk register can also be called as risk log which is the main part in risk management. The risk register helps to identify and track potential risks that can cause negative impact on the growth of an organization. Anything that a project manager identifies as impactful is recorded in the risk register. Dealing with large scale projects is not easy. Various things are running at once and to divide the burden these tools are incorporated in project management systems which insecure that security.
- Project Portfolio Dashboard
Project portfolio dashboard is a great tool for project management especially risk management. It gives visual representation to the project’s plan. Moreover, you can use it for the performance assessment of the team, stakeholder management, tracking and reporting. Most of the project managers prefer using the project portfolio dashboard to get a better insight of the project. It greatly helps in risk management by portraying the risks and their current status on the dashboard which keeps the team more focused.
What is a project management risk register template?
A standard risk register is set up by a project manager which has these following main column headings;
- An identification number is allotted to each risk
- Title of the risk with brief description
- Categories of risk like internal or external are mentioned
- Probability (What are the chances of the risk occurrence)
- What this the severity or impact of the risk identified
- Rating on the basis of priority
- Approach to deal with that risk
- Alternate action to deal with that risk
- In-charge of the risk
- Additional comments
How is a risk register created?
You can create a risk register spreadsheet by using the above mentioned column headings. A details regarding the data input is explained here;
- The purpose of creating risk categories is to sort them to make the further monitoring easier. You can customize these categories as per the nature of the project. Identify the possible risk categories that you may encounter as the project progresses.
- Probability and impact is an assessment method of the risks. You can do qualitative or quantitative assessment. And create a rating scale by using numerical each with a distinct meaning.
- You can also categorize risk on the basis of priority.
- You can do conditional formatting and add color on the high priority risk to gain better attention from the team.