by Carolyn Teasley

Created on: April 16, 2009   Last Updated: April 17, 2009

Risk Management for Project Managers

What is involved in risk management for project managers? Identifying, assessing and responding to risks in projects before they become problematic. This can cut down on the adverse effects and increase better chances of success in timely completion of projects. Although risk is considered a part of project management, it must be addressed head-on for problem solving and keep risk effects at a minimum.

Identification of risks in project management must include risk determination and how each risk may cause negative effects within the project. The easiest method of risk identification is brainstorming. When brainstorming, the project manager should enlist the involvement of all project team members to share knowledge gained from similar past project experiences. Brainstorming must be used with a common sense approach so as to not overdo what type and how many risks may occur.

Review of successful past project evaluations can also be useful in helping identify risks. They may have useful information that suggest how to minimize risks from reoccuring.

Risk assessment is the act of determining how likely the risk will occur and the level (high, medium or low) of impact it will have on the project. A risk response plan is developed to help reduce, eliminate or dealing with risks that occur. The risk assessment matrix is a valuable software tool that incorporates risk assessment with risk response planning. Standard headings to be assessed in the matrix are: Risk, Consequence of Risk, Chance of Occurrence (High, Medium or Low), Action Trigger, Project Member Responsible and Response Action Plan.

Risk assessment should be completed with the beginning baseline plan of the project, during report periods in the project and at the completion of the project. Assessment during the project will help capture any new risk factors and if any risk already noted has increased or decreased in level of occurrence and effect on the project objective. Examples of these could be unexpected increase in cost and unexpected change in project time delays. This will help keep project management in a proactive manner taking positive corrective action when necessary to keep projects on task.

Risk management meetings should occur at the beginning, during scheduled report periods while project is ongoing and at the completion of project objectives. The meetings will keep all project team members informed and up to date throughout the project. Detailed information to be included at each meeting are:

1) Project objective plus any changes that occur

2) Project breakdown as to who, what and how parts of project will be accomplished

3) Time estimates plus any changes for project sections to be completed

4) Cost estimates plus any changes

5) All the above information should be incorporated into a project schedule and budget to help keep the project on schedule in within budget.

Reference

Guido, J. & Clements, P., (2006). Successful Project Management (3rd edition), Mason, Ohio: Thomson Higher Education, pp.82-96

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