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Risk management for projects in uncertain times

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What could possibly go wrong?

We all know that risk management is an important part of project planning. But for many people it was seen as a useful add-on to consider when planning rather than an essential skill we all need to master. For all of us, project planning recently has been dramatically different. Covid-19 has changed what we do and how we do it. We have had to adapt our projects, change the results we were aiming for, or in some cases put entire projects on hold.

Risk management is like a lifeboat in this sea of uncertainty. It helps us plan for, adapt to and take control of events that happen to us. Here we explore the key steps to effective risk management.

What is risk management and why does it matter?

Risk management enables us to minimise any potential problems that may affect our project. Because our projects aim to create change, they involve uncertainty, and uncertainty is the very nature of risk. Risks are any events that might impact our results, our stakeholders, our timetable or our resources.

The most common reason for not planning for risks is people saying they are too busy. But risk management isn’t a nice-to-have, it is invaluable to ensure the success of our project. It sounds negative, but it’s not, it’s preventative. Risk management is vital to project planning because:

  • by identifying risks and taking steps to prevent problems we can avoid obstacles that might derail the project.
  • our team members will be much happier if they don’t have to continuously firefight to fix problems that could have been avoided.
  • when problems arise, if we already have risk plans in place, these plans help us feel in control, stay focused and address the problem, developing our confidence.
  • risk management creates transparency and builds trust. Being honest about the uncertainties that exist can help people genuinely engage with the project and recognise they have a responsibility to deal with them.

So how do we work towards addressing the unknown? It’s sounds like a philosophical paradox, but it’s not. It involves four practical steps.

Step One: Identify Risks

The first step is to answer the question What Can Go Wrong? Consider what might get in the way of your results being achieved, what might affect the people involved or affected by the project, what could slow down or stall your activity plan? What could go wrong from a financial, environmental or technological perspective?

Get input from the project team, your manager and others that have done similar work before. Use and expand on previous experience.

For example, in 2010 volcanic ash emitted in Iceland led to the largest air-traffic shut down since World War 2. The closures caused millions of people to be stranded across the world. Charities that were holding events with international attendees had to rapidly replan what they were doing. Whilst volcanic eruptions are unlikely to be on many people’s project plans, all international charities now have a more generic “an incident prevents people from flying in and attending” as a risk for any projects that involve international events.

Similarly, before Covid-19 few of us had “a global pandemic forces national lockdown” on our list of project risks. But moving forward we will need a more generic risk “an event prevents face to face interactions” for our projects.

We don’t know what exactly might happen, but we know it’s happened before and could happen again, so we need to be prepared.

Step 2: Assess risks

Once we have compiled a list of potential risks the next step is to assess the risks and work our which ones we have to pay attention to. For each risk we need to ask:

  • what is the likelihood of this risk occurring?
  • what impact would it have on our project results if it did happen?

You can use a score for these assessments. Some people use a green, amber and red scoring system, where green is low likelihood or impact, amber is medium and red is a high likelihood or impact. Or we can use a number system from 1-5, with an associated explanation for each number so that the numbers mean the same to everyone:

Scale Likelihood Impact
1 Highly unlikely: I have never heard of this happening before Minimal: the impact on the project will be negligible
2 Unlikely: This has never happened to us, but it could do. Low: this will have a negative effect that can be fixed
3 Possible: This has happened to us before but is not a certainty. Medium: This will jeopardise the project, but is probably ‘fixable’
4 Highly possible: It is almost certain that this will happen. High: this will seriously jeopardise the project
5 Certain: This is definitely going to happen. Catastrophic: this will irreparably damage the project

If any risks score a 4 or 5 on both likelihood and impact, we definitely need to plan for them. However, it is also worth planning for any highly impactful risks even if they not very likely, as they could seriously derail the project.

Step 3: Plan to manage risks

calm man in safety gearThe next step is to create risk management plans for the risks we have assessed as problematic:

  • What could we do to prevent the risk from happening? What activities would that involve? Can we afford it?
  • What could we do to minimise the impact of the risk on our results? What activities would that involve? Can we afford it?
  • What is our contingency plan if the risk does happen? What activities would that involve? What do we need to do now to prepare ourselves for those activities?

Most contingency plans need activities embedded into the project from the beginning. For example, if we are worried about international visitors not being able to attend our event, we might buy insurance in case of event cancellation. We might prepare for moving some or part of the event online which would affect the speakers’ preparation and our marketing materials.

Step 4: Monitor risks

The final and most important step in risk management is to monitor the risks throughout the life of the project. At regular intervals we need to ask:

  • Are our risk management activities happening? Are they working?
  • Is the likelihood or impact of our identified risks increasing or decreasing?
  • What new risks are emerging and what do we need to do about them?

Things will inevitably change during the implementation of our project and it is crucial we adapt to these changes. We also need to be attuned to subtle signs that new risks are emerging – if a key stakeholder or supplier isn’t responding to us, this could indicate potential problems are brewing. It is easy to dismiss these signs as simply annoying. Instead we should consider the impact if they continue and take appropriate action.

Risk Management is Project Management

Risks are an inherent feature of all projects. For that reason, risk management is a central element of effective project management. It needs to be a thread that runs through the heart of our approach to projects.

Managing risks helps us to understand how our project will work best and enables us to take control, even in the midst of uncertainty.

What’s next?

To learn more about risk management and to gain a suite of tools and skills to plan and deliver successful projects, take a look at our Project Management training programme.

If you’d like to discuss specific challenges you’re facing regarding managing projects and how we could help, contact us online or call 020 7978 1516.

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Charlotte Scott

About Charlie Scott

Charlie specialises in leadership development, team facilitation and strategy development. Charlie worked for over 20 years in the not-for-profit sector. Before joining =mc ten years ago, she created and...