What is project risk?
A project risk is an uncertain event that may or may not occur during a project.
Contrary to our everyday idea of what “risk” means, a project risk could have either a negative or a positive effect on progress towards project objectives.
Imagine next summer turns out to be very warm and sunny. For a team working on a project to launch a new ice lolly, this would likely be a risk with a positive effect. For a team organising the inaugural Summer Ice Sculpting Championships, the opposite would probably apply.
Project risk management
Risk management in project management starts with identifying project risks.
There’s no way to account for all possible project risks, so we need to focus on finding the most impactful ones via a few key avenues of research. These include:
Interview stakeholders to find out about risks which have affected the organization or team’s previous projects.
Identify external risks using a situational analysis framework such as PESTEL (Political, Economic, Social, Technological, Environmental, Legal).
Analyze your project planning documentation to identify inherent risks of the project.
Create a shortlist of project risks, good and bad, and plan for how the project would navigate the potential effects.
Once a project is underway, a more active phase of project risk management begins.
As long as the risk has not yet occurred, the project manager can simply monitor the risk until the project ends or the risk expires. This should be done within the project management dashboard.
If a known project risk does occur during the project, the project manager should then use measures devised during project planning to mitigate negative effects and maximise positive effects.
Project risks can be good or bad for the project. With proper planning, they can become even better; without it, they can become even worse.