Project Risk Assessment Basics

The success of any project depends to a large extent on overcoming any and all risks to that project. You cannot be too careful. Knowing the risks is half the battle and being able to avoid or overcome such risks completes the picture. Should you be concerned about risks? Yes, indeed.

In creating the list of risks to your project, the first issue to confront is the availability of staff members who are able to contribute to your risk assessment. If not all staff are present or able to contribute, you should rectify this situation as soon as possible and, in the meantime, regard those areas of risk in which staff are missing as being of a worst case scenario.  Never assume they don’t have something to contribute to the risk assessment because you will find some team members have a wide and varied background for identifying risks.

You can categorize your risks as suits you, your business and type of project, but divide your ‘basics’ of project risk assessment into three areas – system, people and process.

You need to determine the degree of complexity involved in each aspect of the project, that is, rate its importance in the overall scheme of the project, and then determine if your actions to avoid such risks will take a major, medium or minor effort.

Typically, a risk assessment will have two ratings against it, a Probability, so the likelihood that the risk will occur and Consequence, so if it does occur will be have a small or a catastrophic impact on the project.  The combination of these two will help you understand if overall you are dealing with a high, medium or low risk.

With a specific list of possible risks and a rating for each, you are in a position to outline a program of actions to eliminate or greatly reduce such risks actually eventuating.

The system aspect of your project involves the operation of equipment and software. The people aspect involves all personnel engaged in the project either as team membersor impacted parties and the process aspect involves the means to reach the end product, the final result. Project management processes are included in this. What risks directly influence the possibility of the target not being met? What are the risks if the target is not met? Have you ensured adequate insurance to protect your business should a worst case scenario situation arise?

Your strategies to mitigate risk must contain the specific requirements of all parties involved in the project. What are their responsibilities, targets and expected outcomes?  And not only must these specific documents be created; they must also be sighted and signed off by all relevant parties.

Risk is by nature uncertain.  But whether it is likely, unlikely, possible or probable risk exists and must be taken into account. Any lack of due diligence in the area of assessing risk to a project can have catastrophic consequences.

One definition of risk is that it is the probability of the risk happening multiplied by the cost should such a risk actually happen. If you apply that definition, you will quickly discover the potential financial outlay your project could incur.

Remember that risk assessment of a project will include risks within and outside your business. New competition and a changing economic climate are both risk factors outside your business but each can cause harm to your project. Then staff leaving or equipment failing are both internal risk issues yet both are potentially damaging to your successful project outcome.

Risk assessment to your project is not a static operation but an ongoing process designed to see your project delivered on time, on budget and to a high quality. You need a structured approach to risk assessment which is part of risk management and the avoidance of disaster.


Useful Products

Project Management Methodology and Process
An entire Project Management Methodology for Project Managers. Every phase, activity and task within the Project Life cycle is described in depth, helping you to deliver projects faster and more efficiently than before. If you’re a Project Manager, Consultant, Trainer or Student, you can use this methodology to improve your project management success.

Project Management Templates
This Project Management Template  kit includes all of the templates you need for projects covering the entire Project Life Cycle.It helps you to start up, plan and execute projects quickly and easily.

The Project Risk templates help you to prevent risks from occurring as well as minimize their impact.


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