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Risk management: how to apply it to a project

risk management

Every project is susceptible to risks, especially in the planning stage. That is why, on this occasion, we are talking about risk management. Know the step by step necessary to carry out good risk management.

What do we call risk management?

Risk management is a proactive strategy to anticipate the potential risks of a project going off track. Although unforeseen events may arise outside of planning, they will be fewer if good risk management is carried out.

In a nutshell, a risk in a project is anything that could affect its success, whether it be planning, budgeting, quality, performance, security, features, etc.

The best strategy is to be proactive, anticipate unexpected situations and create an action plan to get the project back on track.

4 steps to good risk management

1. Identify potential risks

Create a list: include all the possible risks identified, regardless of the severity of each one. Try not to forget any of them. It has the opinion and suggestions of all those involved in the project.

2. Analyze the risks

To prioritize them, it is advisable to measure the probability of their occurrence and the impact on the project if they do occur. We suggest you avoid imprecise percentages, it is better to use the HIGH-MEDIUM-LOW categories and the HIGH-MEDIUM-LOW indicators to calculate the impact. In the end, you will have a table with four columns:

  • Risk ID.
  • Detailed description of the risk.
  • Probability of occurrence.
  • Impact on the project.
3. Develop an action plan

First of all, you have to decide which risks you will choose to draw up an action plan. Said plan will be a response consisting of actions to be taken in the event of the risk occurring. For this, you will have to create another table with:

  • Triggers: ID of the risks related to this action plan.
  • Impact analysis so that the current situation is fully understood in the event of an occurrence.
  • Person in charge of supervising the actions to be carried out.
  • Detailed list of the actions that must be carried out to get the project back on track, without leaving room for doubt.

It should be noted that several different risks could be associated with the same response action plan. Also, it is good to clarify that it may not be necessary to prepare an action plan for risks with very low impact and low probability of occurrence. This would be left to the discretion of each project leader. If the probability of occurrence is very high, but the impact is medium or low, evaluate each case.

Surely you will have to develop an action plan for the risks of:

  • High impact, regardless of the probability of occurrence.
  • Medium impact and high or medium probability of occurrence.

To finish, we recommend that you clearly define where you are going to save the action plan. It is always advisable to save it in different places and formats.

4. Monitor

You must constantly verify that the identified risks do not occur. Also analyze if the situation has not changed, giving rise to new risks that you should add to the management plan.

Monitor the list of risks and analyze if it has changed. Check if the impact of the risk has not changed, the probability of occurrence, or if there are new items that you have to consider.

In conclusion, whenever you manage projects, remember the importance of good risk management. Prevention and resolution are key actions to manage projects successfully.

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