Implementing Effective Risk Response Strategies on Your Projects

Implementing effective risk response strategies on your project Soumik Das NetCom Learning

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AGENDA What is Risk Common project risks Guidelines to solve project risks Risk Responses

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WHAT IS RISK? The PMBOK® Guide describes risk as, An uncertain event or condition, that if it occurs, has a positive or negative effect on a project's objective. The key element of this definition is that the effect of the uncertainty, if it occurs, may be positive or negative on the objectives of the planned endeavor. Many things are uncertain; risks are only those uncertainties that will impact the project should they occur.

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8 COMMON TYPES OF PROJECT RISKS 1.

Technology risk - The technological aspect of running a project is a complex deliverable because there is a high turnover of new and advanced technologies. The tech aspect of a project poses a critical threat to data security, organization services, compliance and information security.

2.

Communication risk - With all the communication channels and gadgets at our disposal, sometimes team members neglect the critical components of effective communication, leading to loss of data or misinformation and eventual project disruption.

3.

Scope creep risk - Uncontrolled and unauthorized change to the initial intended project scope may lead to the extra cost of additional features, products or functions.

4.

Cost risk - A shortage or mismanagement of project funds resulting from an inflated budget or other constraints is a threat to the project's completion.

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8 COMMON TYPES OF PROJECT RISKS 5.

Health and safety risk - Health and safety is a type of risk that can compromise a company's compliance rules. An organization should have its health and safety standards monitored and evaluated regularly to identify potential risks that can lead the company to losses or fines.

6.

Skills resource risk - Leveraging on internal staff is a potentially high-project risk because sometimes the project activities are staggered in different waves at various locations, requiring in-house personnel attendance.

7.

Performance risk - When a project is unlikely to achieve the results as intended, there is a perceived performance risk.

8.

External hazards risk - A likely adverse event beyond the control of the project management is a potential risk. Such risks manifest in various types and forms, including terrorism, storms, floods, vandalism, earthquakes and civil unrest.

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SIX GUIDELINES TO SOLVE PROJECT RISKS 1. Identifying the risks Prepare and review a list of all possible risks likely to disrupt the project. Ensure that the key stakeholders understand the project's objectives and design by conducting a series of brainstorming sessions. A conclusive report from the meetings should indicate all levels of risks .

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SIX GUIDELINES TO SOLVE PROJECT RISKS 2. Prioritize and report the risks Because the risks have varying impacts on the project, select and develop a workable mitigation strategy that can cause the highest loss. It is prudent to structure a scale and rank the risks to focus their input from the highest threat so that an in-depth discussion with the project steering committee can focus their input. Reporting the risks also helps the project managers keep track of every activity, which provides an accountability platform

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SIX GUIDELINES TO SOLVE PROJECT RISKS 3. Link the possibility of each risk with its impact Each risk can contribute to a low, medium or high impact. As a team, you can develop a probability matrix that measures the risks versus the impact. Such a matrix or an application will assist in decision-making regarding the likelihood of risk compared to its effect to establish timely measures. Linking a risk to its potential impact is also essential because it provides the management with a roadmap to the project's activities for an effective monitoring purpose.

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SIX GUIDELINES TO SOLVE PROJECT RISKS 4. Develop and cultivate responses to the risks By completing a project risk response strategy, you avert a potential threat from happening or minimize the adverse effects should the problem be unavoidable. It is also prudent to regularly review and monitor the risks to ensure that opportunities to stop a potential threat are not missed.

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SIX GUIDELINES TO SOLVE PROJECT RISKS 5. Have a contingency plan for each risk In case a risk occurs, the team should have a quick and reliable contingency plan ready for action. The plan should neutralize or prevent further damage and prevent a continuation of a crisis. Bring all stakeholders into the planning and implementation of a contingency plan. A contingency plan should seek to answer the following questions: What should be done to reduce a likelihood of a risk?

What should be done to manage risk if it occurs?

What should be done to utilize effectively the opportunities brought about by a risk?

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SIX GUIDELINES TO SOLVE PROJECT RISKS 6. Record and track risks alongside their associated tasks Recording the risks in terms of their associated task or process level helps the management track potential risks. It is important to record the identified risks in the risk register and store them in the project's central server throughout the project. Because each task may have a different individual to monitor, it is easy to track each potential risk and develop a response. The records also allow the stakeholders to focus on the prevailing situation concerning the project progress.

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RISK RESPONSES There are four possible risk response strategies for negative risks: 1.

Avoid – eliminate the threat to protect the project from the impact of the risk. An example of this is cancelling the project.

2.

Transfer – shifts the impact of the threat to as third party, together with ownership of the response. An example of this is insurance.

3.

Mitigate – act to reduce the probability of occurrence or the impact of the risk. An example of this is choosing a different supplier.

4.

Accept – acknowledge the risk, but do not take any action unless the risk occurs. An example of this is documenting the risk and putting aside funds in case the risk occurs.

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RISK RESPONSES There are also four possible risk responses strategies for positive risks, or opportunities: 1.

Exploit – eliminate the uncertainty associated with the risk to ensure it occurs. An example of this is assigning the best workers to a project to reduce time to complete.

2.

Enhance – increases the probability or the positive impacts of an opportunity. An example of this adding more resources to finish early.

3.

Share – allocating some or all of the ownership of the opportunity to a third party. An example of this is teams.

4.

Acceptance – being willing to take advantage of the opportunity if it arises but not actively pursuing it. An example of this is documenting the opportunity and calculating benefit if the opportunity occurs.

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