A 5-step project risk management strategy for threat mitigation
Tempo Team
As tempting as it is to think, “It’ll be different this time,” no project is challenge-free.
Something always goes wrong, and while that might seem pessimistic, it’s a pragmatic and empowering approach to project management. Because once you embrace this truth, you can identify, assess, and mitigate project management risks — essentially putting your team in the driver’s seat.
The mitigation plans put in place during the project’s initial phase allow you to take thoughtful, considerate action instead of reacting when a risk materializes. And while not every threat you identify will come to pass, your team can proceed through the project roadmap with optimism, knowing that if something deviates from the plan, you’ll have the resources and support necessary to bring it back in line.
What’s risk management?
Any unexpected event that can affect your project’s timeline, performance, or budget — for better or worse — is a risk. And there’s no part of a project that isn’t vulnerable, including:
Personnel
Processes
Resources
Technology
If you aren’t proactive and risks go unaddressed, they become issues that your team must deal with, or they can derail the entire project.
Risk management, then, is the process of identifying, analyzing, and responding to threats during the project planning process. Its purpose is to reduce the likelihood of occurrence and to mitigate risks before they become larger issues.
The extent of risk mitigation in project management depends on the size and complexity of your initiative. Prioritizing threats within a risk matrix designated as high, medium, and low could be enough for a straightforward undertaking. And managing risk for an intricate project with many moving parts may require detailed planning and developing a mitigation strategy for every individual threat.
8 common project risk examples
You’ll encounter many types of risk in project management, and recognizing them is the first step toward choosing the right tools and protocols. Here are eight of the most common types.
1. Scope risks
Often referred to as scope creep, this risk occurs when initial project goals are ill-defined, business needs evolve, or stakeholders attempt to change requirements mid-project. Planning a project without a change control process risks:
Poor quality outcomes
Increased costs
Delays
Project failure
2. Performance risks
Sometimes, despite your best planning efforts, a project doesn’t perform as expected. It’s difficult to mitigate this particular risk. Still, you can create contingency plans to address factors like miscommunications and time crunches that could impact deliverable quality, potentially leading to poor performance.
3. Budget risks
Rising costs are another common project management risk caused by unrealistic and inaccurate budgeting or cost estimations during project planning or, once work has begun, scope creep. You can control your budget by creating a detailed list of project requirements from team members and establishing a contingency fund.
4. Project schedule risks
Also known as a time crunch, this risk becomes a reality when you’ve underestimated the time it takes to complete tasks or the entire project in the planning phase. Your schedule may also feel the impact when other risks come into play, like scope creep or stretched resources.
5. Resource risks
Similar to a time crunch, resource risks happen when you don’t have enough assets to complete the project in terms of:
Time
Skills
Materials
Budget
Tools
As the project manager, you’re responsible for procuring and allocating resources and communicating their availability to the rest of the team. Consultation with stakeholders early in the planning phase can give you the information needed to avoid stretched resources.
6. Operational risks
Any time there’s a change in an organization’s structure or process, it can impact your ability to deliver a project. A shift in roles or new internal communication strategy can create distractions that impede the team’s ability to work.
7. Communication risks
Communication is essential to create clarity around project goals and outcomes. Without it, team members and external stakeholders could misunderstand or miscommunicate project scope and timelines, resulting in:
Poor project visibility
Siloed workers
Budget overruns
Missed deadlines
Pivoting project direction
Disappointing performance
8. Strategic risks
Errors in strategy can lead to another form of performance risk, impacting your team’s ability to do their job adequately. An example would be choosing a supplier whose capacity to deliver a part fails to meet the resourcing requirements for the project.
When conducting a project risk assessment, remember that threats tend to cascade. One risk occurring could cause others to appear down the line. Instead of managing one, you’re coping with many, increasing the chance of project failure.
Negative versus positive risk
Risks don’t always adversely affect your project. Unlike their negative counterpart, positive risks can lead to unforeseen benefits. You can leverage them to your advantage, provided you identify and address them in your project plan.
Some positive risks you might encounter include:
Your team completing the project early
The project coming in under budget
Having to upscale production because you underestimated customer demand
The government enacting a new policy that works to your project’s advantage
Considering positive risks during project planning prevents opportunities from becoming setbacks. To ensure you cover all eventualities, create a management strategy that considers doing one of the following three things when positive risks crop up:
Exploiting them: You need to review potential positive risks to determine if they benefit the project’s outcome and, if so, take steps to increase their probability of occurrence.
Sharing them: If they occur, your project team may not be equipped to take full advantage of the opportunity. If so, enlisting others can yield a greater positive return than addressing the risk independently.
Leaving them alone: Sometimes, there’s nothing you can do. In that case, depending on the nature of the risk and its context within your project, it’s best to let the situation evolve and see what happens.
How to manage project risk: A 5-step process
Implementing a systematic risk management process ensures you’ve covered all your bases. It’s best to start early during project planning to be sure you have time to plan your response and gain stakeholder input.
1. Create a project roadmap
Leverage your project management software to establish a visual roadmap that defines all tasks, dependencies, resources, and assignments.
2. Identify risks
Considering your project roadmap, use a risk register to identify potential threats early in the project planning process so you can track and deal with issues as they arise. A risk register:
Logs all threats
Analyzes risk consequences
Details plans and who’s responsible for dealing with them
Designates severity
3. Prioritize risks
Once you’ve created your risk register, prioritize each threat according to likelihood, project impact, and effect on the business. Your prioritized list will make it easier to organize an action plan.
4. Create mitigation and contingency plans
Now, develop mitigation and contingency plans based on likelihood and impact. Mitigation prevents risks from materializing, while contingency plans address them once they become issues. Involve your stakeholders to create solutions that best work for the risks affecting them, and research past projects to see how your predecessors addressed similar threats.
5. Track progress
Monitor your risk register and adjust your plans to reflect changing circumstances that shift likelihood and impact. New risks can also present themselves, so staying on top of developments is essential.
Risk management best practices
The best mitigation starts with excellent tools and strategies. Try a few of these to streamline your risk assessment and management process:
Conduct a SWOT analysis: Consider your team’s strengths, weaknesses, opportunities, and threats to identify how to leverage the positives and mitigate or improve upon the negatives.
Brainstorm with the team: When identifying risks and solutions, bring together a diverse group of stakeholders to encourage creativity.
Continuously check in: Many risks arise from poor communication, so ensure stakeholders have access to all project documentation and receive regular status reports and updates to keep their work on track.
Effective risk management with Tempo
Creating visibility around your project plan is a big part of project risk management. Let Tempo help with Strategic Roadmaps, an easy-to-use software that builds audience-friendly, visual project roadmaps. With Strategic Roadmaps, you can keep risks under control by noticing delays earlier and tracking mitigation and contingency plan progress. Sign up today.
