Risk Management: Collection of Tools, Strategies and Resources for the Project Manager

Get risk management tools and tips at your fingertips with this guide.

Risk management approaches and techniques empower project managers to prevent project failure by identifying, prioritizing, mitigating and managing preventable risks in a systematic fashion. The various components of risk management, used effectively, provide the project manager with a roadmap to assess the risk factors, to make informed decisions on how to mitigate them, and allocate his or her resources.

Use this guide to help you as you navigate through managing risk across any project's life cycle. We've covered important topics such as:

  • Project risks and opportunities
  • Different approaches and methodologies
  • Tutorials and templates
  • Technique overviews and explanations
  • Real-world examples
  • Sample documentation and forms

As you work your work through this material, you'll learn that all risk is not negative; positive risk is just as important to consider and respond to as negative risk. Risk is affected by anything or anyone who interacts with the overall project; so you'll find out how to handle these peripheral issues as well. Finally, we'll give you some options to help you decide how to best address the risk factors in your situation. Bookmark this page, because you will find yourself returning to it often to help you bring your projects to successful completion time after time.

Risk Identification

Risk identification is the first step in the risk management cycle.

While it might seem like identifying preventable projects risks should be a simple process, it can actually be more complicated than it appears on the surface. Before you can even start the process, you need to make sure that everyone is on the same page when it comes to a working definition of what a project risk is. If there are multiple decision makers on a project, there may very well be divergent and even conflicting interpretations of what does (and does not) constitute risk to a specific project.

Any obstacles to a project's successful completion can be classified as a risk, but you'll also need to do some identifying and classifying in areas such as:

  • Positive risk
  • Negative risk
  • Impact of future events
  • Internal risk
  • External risk
  • Conflicting project goals
  • Management risk
  • Acquisition risk
  • Development risk

In this section of our guide, you'll find expert advice and tips for performing your risk identification in a timely manner:

Risk Assessment

Assessment and treatment algorithm for overweight and obesity

Risk assessment is a part of the overall risk analysis process. In this segment, project managers think through the random variables of probable risk. The goal is to identify resources to protect and obstacles to overcome. They consider questions like:

  • What could go wrong?
  • How will the project be affected if X happens?
  • What about if Y happens?
  • What parts of the project are the most vulnerable to risk?
  • Which are the least vulnerable?
  • How could the project be compromised?

Probability and impact are evaluated. Probability is a fluid element and may have to be re-evaluated as the project proceeds. Impact is considered in terms of cost, time, quality and severity. Whether a risk is positive or negative has no bearing on the assessment process.

Once the risk assessment is done, they can develop an action plan and allocate tasks and resources. Here are some valuable tools and tutorials to use:

Risk Mitigation

Example of risk mitigation action points.

An easy way to understand risk mitigation is to rephrase it as reducing your exposure to risk. Managers identify and implement procedures to limit the project's exposure to identified risk factors. They predict the probability of a risk occurring and make action plans to reduce or eliminate the risk.

This is usually done by a three-step process:

  • Identify the risk
  • Assess the risk
  • Prioritize the risk

The final part of the mitigation portion is to allocate resources and assign tasks. A plan for monitoring those resources and task is created and implemented.

Analyzing Risk

The relationship between the three components of risk analysis.

Risk analysis can be viewed as a three-part process of risk assessment, risk management and risk communication. To put it in plain English, risk analysis is figuring the odds: What are the odds that the plane on which you are traveling will crash? Will the tornado bypass your house or rip it from the foundation?

The project manager identifies potential events as they relate to a specific project and then estimates the chances of such an event actually happening and how (or if) it will impact the project. What will be the effects? Will it compromise the project or simply delay it?

Once the events and effects are evaluated, the PM considers decision criteria and decision alternatives to overcome the preventable obstacles. Decision trees are helpful tools for this part of the risk management cycle and you'll find some real-world examples included in the following articles:

Developing Management Plans

Drought Mitigation Decision Support System

The final phase looks at the different ways of planning to manage the risk. In some cases, risk avoidance will be deemed the prudent course, while in others, risk reduction or risk transfer may be best. Risk deferral is also a viable option depending on the results of the risk identification and risk analysis part of the process.

The steps of risk identification, analysis and management will most likely need to be repeated throughout the project life-cycle. Fluctuations and variables will impact the original plan and may require modifications.

The bottom line here is that by proceeding through the risk management process in an orderly fashion, the project manager is armed with the data he or she needs to make informed decision on the best risk management plans. In this part of our guide, you'll find sample management plans and valuable tips to help you.

Templates

Successful project management requires the project manager to be an expert at balancing team, stakeholders and other project and supervisory responsibilities. Because you have so many roles and responsibilities to juggle, you can't afford the luxury of reinventing the wheel every time you need a new form or a specialized template.

We understand the stresses of your job, so we've gathered together some of our most popular templates for your use. Most can be downloaded, printed and put to use immediately. A few others will require you to design your own form, but that could be a blessing in disguise as it provides you the freedom to customize the template to your project and specification. In any event, by using the tools provided here, you'll be saving yourself time and lowering your stress.

Helpful Tools and Tutorials

This final section of our guide is jam-packed with an assortment of valuable resources for risk management. Most of them can be used as presented here or quickly modified to better suit your project requirements and needs.

From downloadable samples of forms that you can print and start using immediately to in-depth tutorials and tools, you'll find that the information provided here will become your go-to source when you need help, but are not really sure where to start looking for it.

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