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Gwande
Project Manager, Zimbabwe
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Why Project Risk Management?
How do risk management processes contribute to project success? I am studying project management and would like to find out how risk management processes contribute to project success. Thanks for your ideas.
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Jaap de Jonge
Editor, Netherlands
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Reasons for Project Risk Management
A good starting point is to realize that any project is inherently risky, because of certain characteristics any project has. It's in the nature of a project to be risky. Good question anyway.
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Leonardo Santos Magalhaes, Brazil
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Reasons for Project Risk Management
Projects must produce a unique result that has never been produced in such way, so indeed the project is a risk itself.
Some projects have risk management as the core management system. Because of its nature of complexity and uncertainty, the main tasks are then those planned to reduce risks.
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Gary Bacchus
Management Consultant, United Kingdom
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Is Risk Management Enough?
Risk appreciation comes first with identification. But many times I see risk registers and logs without real time mitigation. The PMO needs to be at the forefront of strategy, planning, engagement, with strong inter-connectivity with PMs.
But what happens when a change is truly transformational?
We're seeing now less and less certainty and more emerging change and complexity. Managing risk becomes managing uncertainty. It means less of project management and more change management principles to manage the future stakeholder expectation.
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Thiagarajan, India
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Mitigates Adverse Impacts
The purpose of Risk Management is to identify potential problems before they occur, to plan risk-handling activities and invoke them as needed across the life of the product or project to mitigate adverse impacts on achieving objectives.
In short,
- Risks threaten objectives.
- Internal controls manage risks.
- Internal auditing provides opinions about whether internal controls are managing risks to acceptable levels.
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Jose Daniel Esterkin
CEO, Argentina
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Importance of Risk Management in your Project
Identifying opportunities and threats let us identify what we WANT to do (or not). And knowing our strengths and weaknesses lets us identify what we CAN do (or not).
The first step in a risk management process is figuring out what you're up against. What kinds of things threaten your ability to deliver what you've promised in your project? It all begins with the uncertainty of not knowing exactly how things are going to turn out.
In risk management, high threat potential problems are identified. Action is taken on each high threat potential problem, either to reduce the probability that the problem will occur or to reduce the impact on the project if it does occur. Or both.
Accepting a particular risk in your project means you understand the risk, its consequences, and probability, and you choose to do nothing about it. If the risk occurs, the project team will react. This is a common strategy when the consequences or probability that a problem will occur are minimal. As long as the consequences are cheaper than the cure, this strategy makes sense.
If you don't want to accept a risk in your project you must act: you must plan a response for that risks and react accordingly.
Source: The Risk Doctor's Cures for Common Risk Ailments (2014), David Hillson
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Jose Daniel Esterkin
CEO, Argentina
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Avoiding Risk Blindness in Project Management
Risk blindness is the condition by which a project team or project manager do not see the possible risks of the project. This is a psychological phenomenon common in many organizations: risk-blind people believe that other people claiming to see risks are delusional and fighting imaginary foes. Risk blindness is a serious ailment that can have a major negative impact on organizations and projects, because one on the key abilities needed to fight risk is to be real, to be objective and to be rational (not emotional) about the following question: "What can go wrong in this project?".
We can say that risk in a project represents uncertainty. This is related to the question "What certainty do we have about following the plan we've just written?".
In the case of risk-blindness, one of the causes of this phenomenon is "Wishful thinking": you want that bad things will not happen, and unconsciously you turn your wish into reality. "The provider will comply with the terms of the contract", "No team member will be retired from the project", "Sector X is going to cooperate with the project". Are you sure? Will this happen just because you want it to happen?
Recovering from risk blindness is usually a gradual process; it is common for the risk-blind to gain risk sight incrementally. Organizations or project teams that want to avoid surprises and learn to become responsive rather than reactive will recognize the need for treatment and support until they can see clearly for themselves. The first step is to analyze risks rationally and not emotionally.
Source: "Managing Risk in Projects", David Hillson, 2009.
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