Risk Management: How to Identify Project Risks

One of the most important tasks in project management is the ability to identify risks. Identifying the probability and impact of project risks as well as potential risks is crucial. Identifying risks in the beginning of a project can impact – either positively or negatively – in the overall process and outcome quality right down to customer deliverables. At the beginning of each project, project managers should analyze each project for the certain and uncertain risks, the impact and probability of each, as well as risk plans for each.

Typical risks include budgets, scheduling and timing, resource availability, and data resources and availability. Budgets are an area where many companies and organizations struggle with today. Many project managers feel the pressure to put projects together and make them happen on small budgets. Unfortunately, projects that have limited budgets are also the high risk projects since it typically means that resources will be limited throughout the duration of that project. Limited resources can range from personnel to physical project materials.

Scheduling and timing is another common risk area. In addition to limited budgets, project managers often find themselves trying to make projects work in what seems like an impossible amount of time. This could be directly related to the budget risk. Tight project milestones and deadlines can be extremely problematic. This may mean risking the project’s overall outcome quality as well as delivery time to the customer or client. It is always a good idea to risk plan this portion up front that way team members and/or resources are aware of tight delivery times and project milestones.

Resource availability is another risk area that requires thorough analysis and planning. As mentioned briefly above, resources can relate to personnel, physical project materials, technology, or even project documentation. Resource availability is another area that can also tie into limited scheduling and budgets. For example, if you have a rush project that you need to recruit staff for, availability may pose a risk if you are unable to find resources available to meet tight deadlines. In addition, limited budgets may also hinder project managers from hiring resources and the ability to pay rush fees.

Data resources and availability can pose another risk. Sometimes project managers are faced with projects where experience, knowledge, or data is lacking. For example, a construction company that specializes in building houses or office buildings may not have any knowledge or experience in constructing a ski complex. In these cases it may be necessary to consult expert interviews in order to gain knowledge on how to go about the project efficiently. Furthermore, it is important that once a new project is complete to properly document and archive the project so that should another similar project come up in the future the project manager will have something to reference.

It is true that project managers encounter many risks when managing various projects. Most of the risks can be categorized in one or several of the areas mentioned above. Once a project manager has identified where the project’s risks fall under, he or she must then calculate the probability of the risk as well as the impact that it can have on the particular project. Finally, the project manager will need to analyze the risks and put together a plan of action as well as discuss them with essential team members. Risk planning is a portion of risk management that should not be overlooked.

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