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In large projects there may be special employees who are responsible for risk management, but often risk management is one of the many functions of the project managers of the project. This is why you as a project manager need to know how to identify project risks and how to deal with them.
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Identify Project Risks Beforehand
When I joke that project risk management is similar to witchcraft, I mean that even if you are a seasoned project manager, still the symptoms of the project risks for a particular project might be invisible to you – or become visible only after it is too late to react.
The best approach to project risk management is to identify the project risks before you begin the project. Risk identification and risk assessment documents are an integral part of any project and they are the place where you should try to spell the risks out in as much detail as possible.
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Types of Project Risk Symptoms
If you have done your homework and have developed comprehensive risk identification and risk assessment documents, chances are that no risk will take you by surprise. If you expect a given type of risk, when you notice its first symptoms, you will recognize it right away. If you are not aware of what types of risks can arise for your present project, then when you see project risk symptoms it might be already too late to react adequately.
Many factors can be categorized as project risk symptoms. In fact, any deviation from the preliminary planning could be regarded as a project risk symptom. Here are some common signs that the successful completion of the project is at stake:
- The project is behind schedule. This is a very common project risk and depending on the reasons why a project is behind schedule the solutions vary. Some of the most common solutions for a project behind schedule are to do overtime, extend the deadline, redefine the scope, and/or include more resources.
- The project is over budget. Similarly to the previous project risk, the main point here is why the project is over budget. If it is so because of changes in scope and the client has approved this, then this isn't a project risk. However, if the reason is that your preliminary budgeting has been poor, then this might be quite of a problem because the client will hardly accept it. Try to cut whatever you can and stay within budget.
- Key components are not working. This is a risk factor especially for complex projects, where all the components are interrelated. IT project risks that stem from a key component not working are numerous and most likely the only move you have is to fix the not working component, because if you don't do it, you are stuck with everything else. This fix might require serious modifications to the project plan, mostly in terms of deadlines and milestones.
- Poor communication. Poor communication is always a project risk because even the perfect project plan can't be implemented when there is no communication between the client and the team and within the team. With today's great communication tools, such as free conference call services, communication is much easier but still it can be a problem.
- Nobody knows what is going on. When there is no adequate tracking and progress monitoring, nothing can save the project. When you don't know where you are, how can you arrive on time at the right place?
All the project risks listed above threaten the successful completion of the project. Some of these risks are critical and at the first symptoms of their existence you need to take the right measures. Otherwise, these risks can derail the project.
You may find looking at this article on how to create a risk management assessment template helpful.