Measuring the Effectiveness of Risk Management Plans and Strategies
Avoiding Risk
Although identifying risk is an important part of any project strategy, strong leaders often find ways to avoid risk altogether. In some cases, avoiding a risk may require changing some or all of a project’s plans and assignments. During monitoring and evaluation, project stakeholders will examine whether a project’s effectiveness has been improved or impaired by a manager’s decision to avoid risk.
However, project managers should understand the vision and the environment of their organization before making risk aversion their primary strategy. In many organizations, leaders are recognized for embracing risk and delivering high returns on initial investments. In other companies, projects may not even gain approval unless stakeholders can be assured that they face no risks.
Minimizing the Effects of Risk
Regardless of the demands of stakeholders and project sponsors, project managers often have to make difficult decisions about the level of risk they can afford to tolerate. Again, project stakeholders and senior company officers will examine how team decisions to embrace or to overcome risk helped to achieve overall goals.
Project managers can minimize risk using any of the methods already discussed in this series: delegation, communication, and authoritative decisions. Most importantly, project managers should be able to communicate the specific rewards a project gained by taking an aggressive approach to risk management. This way, stakeholders who would have preferred a more passive aversion technique can feel secure about why a decision was effective in the long run.
Highlighting Risk During Project Evaluation
During the evaluation phase of the project cycle, managers must make sure that they tell the story of a team’s approach to risk effectively. Otherwise, they face one of any project’s biggest risks – that their hard work will be unappreciated or that their efforts will be deemed ineffective.
Performance experts understand that telling the right story about an experience can alter the evaluation of a project. For instance, if a project manager failed to identify risks and felt the consequences early on, their project would likely receive a poor evaluation, even if they achieved a reasonable outcome. On the other hand, a project manager that can provide specific details of the risks their team overcame to reach a goal can earn a far higher evaluation, even if the project in question was delayed.
This post is part of the series: Risk Management
Although companies use the phrase “risk management” to refer to numerous initiatives, project management professionals focus their efforts on predicting the events that might cause projects to fail. Appointing a risk officer, tracking risk, and reporting risk contribute to overall effectiveness.
