How to mitigate risk in Project Management?
- Posted by Mustafa
- Categories Leadership
- Date April 10, 2023
- Comments 0 comment
Any predictable happening (danger or solvent) that may occur in a project is called risk. Risk is not supposed to be a specific project, but risk in project management has its own worth. It has positive as well as negative effects. In risk there is “Do or die” situation. If it goes well then you will mark the grade. In contrast to that it will flow away everything relevant to it. Risk measures uncertainty of action being implemented on a project. In any of the projects, you can’t ignore risk. To overcome risk there are some steps which we technically term as “risk mitigation strategies.”
Risk Management:
“Systematic process of identifying, analyzing, evaluating, treating, monitoring and reviewing risks to provide reasonable assurance for achieving the expected results.” The main objective of risk management in project management is to take care of anything that might deflect the project from reaching its ultimate goals. Every project needs a plan for execution. Mostly, organization has its own project risk management team which plans and monitors their projects. Project manager has key role in project management who leads the team, motivates the team toward achieving project objectives.
Risk Mitigation:
“Alleviation of danger or threat in a project.” Risk mitigation encloses loss prevention, loss control and claims management. It’s the project management team who is responsible to mitigate risk. It performs a radical analysis to cut back the probable threats and vulnerabilities. Everyone involved in a project team wants to mitigate risks and produce rewards and revenue outcomes. If risks are not maintained, budget and time both will overrun and will cut profit margins and damage personal as well as company reputations.
How does a project manager mitigate risk?
Project manager deals with various strategies to mitigate risk in project management. Project manager works from start of the project till its completion. He determines what changes may appear in future. He makes advance plan to control these risks or changes. Project manager tries his best not to raise any risk from any origin. Project manager is accountable to complete the project on time, within budget, and meet the desired results. He ensures that everything is going in the right direction. Here’re some “responsibilities of the project manager”.
- Overall project implementation ideas
- Developing an expertise team and assigning their responsibilities.
- Having checklists to keep check and balance
- Accountable for project scope
- Accountable for the overall health of the project
- Oversee the implementation of the project
- Communicate with entire organization, from the project team to the C-level
- Resolve conflicts between project team members, stakeholders, sponsors etc.
- Develop mitigation ideas
Types of Risk Mitigation Strategies:
Strategies are built to deliver better product and project’s results. Strategy creates efficiency, belief, demand of one’s product in customers’ mind. Risk mitigation strategies are of three types.
1. Positive strategies
Which leaves positive impacts on our project in a profit sense. It may be an opportunity to get positive maximum outcomes from the risk. These risks prove beneficial for the firm.
2. Negative strategies
Which leaves negative impacts on our project in profit sense. These strategies are very sensible.
3. Contingent risk response strategies
These strategies are implemented when certain events occur. The execution of these strategies depends on predefined conditions. The team has to wait for a response from high management authorities. These are warning signals. These signals could be missing milestones, work items or deadlines etc. Staffing reallocations, financial reserves, and bypass techniques to minimize the loss, and prevent a recurrence included in it.
Five risk mitigation strategies?
1. Assumption or Acceptance risk
It involves the collaboration between team members to determine possible risks and their results. Every team member must accept the risk and its consequences and contribute his experience in the mitigation of risk. Acceptance of risk is possible only by communication; when everyone is well aware of ABC of the project. For example, a project is running over budget and time. When there is good communication between the team, the project manager informs his team about budget and time and then every single member tries to work within budget and time.
2. Avoidance risk
Considering the acceptance of risk, team have to avoid those factors which creates risks. After that, team members return up with strong strategy to avoid the likelihood of the risk occurring altogether. Actually, team made a plan for the mitigation of risk but when matter of implementation comes, they analyze what problems will come while taking place. Then they utterly avoid this plan and move towards Plan-B. Avoided risks may be of performance-based, cost-based and time-based.
3. Controlling risk
Controlling risk strategy interdicts from occurrence of mishappening during project. It minimizes risks through planned mitigation. On analysis-based information, it provides us accurate data about working of the project. Managing risk is expensive. When there come any issues relevant to project deadlines, performance, budget then mature controlling strategy will definitely eliminate these risks/issues.
4. Transferring risk
When risks are not under the control of project management team, then they transfer project to a third party like insurance, stakeholders or sponsors. These parties take their commission according to their investments and actions. These risks arise due to the defective materials purchased from market merchandisers. After claiming defective materials from project team, sponsors or merchandisers replace the defective material before project completion. Transferring risk does not mitigate risk, but direct impact of the risk on company is reduced.
5. Monitoring
This method ought to be created to trace potential risks, supervise the implementation of risk plans, and assess the effectiveness of risk mitigation procedures. This process works throughout the project duration and gives us overall performance of the project. Changes may appear in the risks from time to time, to determine and have an advance plan to mitigate these changes are of much importance. If there is no heed applied to these changes, then these will significantly affect the health and life of the project. Recommending and preventing accurate actions is also involves in monitoring. This strategy is preferably a part of the project review plan.
Heeding to risk in project management, risk mitigation strategies and their implementation should be clear to us. We should take training relevant to project management and complex projects which boost our skill sets to mitigate risks in an easy and better way.
Solution:
Customize to your Business and Industry, taking your company challenges into account. Engenius (Executive Education) is a platform that is providing and facilitating employees as well as individuals with such training and programs for an organization as well as personal development. An unconventional approach to learning – project-based & experiential, assessments & group presentations. Proven track record of delivery, and not matched with any other offering in the market. Business Game Simulation – all learnings converge to it, in a real scenario to review Business Proposals as Owners. After almost 20 years of executive learning, Engenius focuses on poignant and impactful leadership skills, personalized learning, and precise and measurable growth. Find us more on our official website: https://engeniusonline.com/