So Using One of These Risk Management Paradigms, How Can You Take the First Steps?

Managing programmatic and technical risk involves more than making lists and checking them twice, it means actively “mitigating” risks with the same project management processes used to deliver the project: 

• Risk is the possibility of suffering a loss  
• Risk management provides the mitigations to address the possibility of suffering a loss  
• A risk adjusted plan identifies risks (probability of occurrence) and mitigations (cost and duration) that maintain the cost and schedule baseline  

Let’s start with some core project failure modes: 

• The defined project deliverables are not feasible given the time, cost and technical measures  
• The project deliverables are feasible, but their timing and resource objectives are inadequate for delivery  
• The project deliverables are poorly planned and behave in chaotic ways for cost, schedule and technical measures    

Let’s look at the four standard approaches to “handling” the risks. Identifying, analyzing, planning, and monitoring are important as well. But let’s start with the end in mind – how do we handle the risk? 

• Avoid: alter the approach to the problem and bypass that path in the project network.  
• Transfer: assign the risk to team that can mitigate the risk  
• Assume: assume the risk with no further action other than to watch for a change. 
• Mitigate: the risk by executing the tasks needed to reduce its likelihood and any consequences from its outcome.  

Before ending this article, let’s look at the next most important activity. “Communicating” the reduction of risk. One powerful approach is to show physically how the risk is being reduced with the passage of time. This is a sample from the Active Risk Manager (ARM) tool.

The key here is to show not only the starting status of the risk, in this case RED, but to show explicitly when the risk will be reduced. With this approach, risk management follows the Tim Lister advice:

Risk Management is How Adults Manage Projects

The next article will show you how to perform the other activities in risk management and construct the picture above in simple Excel spread sheet extracted from Microsoft Project.

This article is part of a series by Glen on risk management. See Glen's bio on the Meet the Experts page. He can be reached at Lewis & Fowler or at his blog, Herding Cats.

Filed under Risk Management