How do we identify and evaluate project risks?

A few projects rolled out perfectly according to plan and encountered no obstacles. Often, these obstacles are numerous, and the project team has to deal with them effectively. Learn how to identify and assess risks in a project. When creating a project plan, it is worth ensuring that a risk register is an integral part of it. Project risks are potential obstacles that may or may not arise during the project. They can negatively affect various aspects of it, such as the schedule, budget, business case, and others. A risk can impact only one or some mix of the mentioned elements.

What is risk monitoring and control on a project?

To monitor and manage risks on a project, we must first identify them. Before we go any further, it is worthwhile to distinguish between a project risk and a problem that has occurred in the project (the so-called issue).

Design risk - what is it?

Design risk is like a hurdle we can see coming from a distance. We can take steps to prevent it from showing up in our project, and even if it does, we can minimize the damage it causes. So, the key is to spot and describe these risks before they become real issues. If we don’t, and the hurdle suddenly pops up during the project, it’s no longer a risk but a problem we must deal with.

Pragmatic approach to identifying project risks

Project risk management methods vary. Identifying project risks should be worked on systematically from the very beginning of the project. When creating the Project Charter, constructing the project task plan, or creating the budget, it is worth constantly thinking about potential risks, and if any come to mind, they should be included in the risk register as soon as possible.

Another perfect approach is brainstorming with the project team and identifying and discussing project risks. You can also bet on learning from previously completed projects of a similar nature. It is a good idea to have a project management support system that will allow us to produce such a report. For example, in the FlexiProject system, based on which this article will present how to manage risks, it is possible to create project templates that already contain a summary of potential risks. This is very useful for carrying out repetitive projects. Such a summary is a hint (checklist) for the Project Manager or the Project Team. This way, they do not have to invent risks from scratch; it is enough to use the organization’s accumulated experience.

Description and estimation of risk in the project

I will present the project’s description and estimation of risk using the example of the project risk measurement card. It is an integral part of the FlexiProject system, as shown in the figure below.

The card includes such fields to be filled in as:

• Description and action plan,
• impact on the project schedule,
• impact on the project budget,
• impact on the final product of the project.

When describing a risk, you should also specify its impact on the project and the probability of occurrence. If this is done for each risk, the risks can be presented in the matrix below. The figure also shows the complete list of identified project risks.

Risk management on a project

When we identify project risks, we often give them an “identified” status. We have a description of the action plan and some trigger points that tell us when to change the risk status to “active” and trigger the previously planned action plan.

The risk must also have an owner assigned to it. When the risk’s status changes to “active,” the owner should do everything possible to minimize its impact on the project. The situation of risks on the project should be a collaborative discussion, systematically held at project team meetings and Steering Committee meetings, for example.

Reporting risks on the project

We can report using MS Excel or another Microsoft Office tool. However, if we have a sound project management system, we can create risk reports as we like and always have them available.

 

In the FlexiProject system, there is also a format in the “automatic project reviews” module where the Project Manager should concisely and systematically refer to how risks are managed on the project. Such a format is shown in the figure below.

The process of managing risks on projects is essential for achieving final success. Practice shows that many risks can be identified and managed correctly in advance. Teams that do not do this have to solve many more problems, which significantly reduces the efficiency of project implementation.