The word "risk" spelled out on dice, for the article on Risk Management in Project Management

Risk management is a critical part of any project. If risk assessment is not performed mindfully — or not done at all — projects can quickly spiral out of control and become unmanageable.

In this article, we will discuss 9 risk management tips that every project manager should know, in order to help you manage risk in projects and protect your organization from potential threats.

We will also talk about how to manage risk along the way in projects and what to do when risks are realized. And if you’re planning to get your Project Management Professional certificate (PMP), remember that risk management is an important topic on the PMP exam, so make sure you are familiar with it!

What is risk management?

According to the Project Management Institute, project risk management is:

“The process of systematically identifying, assessing and managing risks to project objectives. Risks can threaten any aspect of a project, from schedule to budget to quality.”

The goal of risk management is to identify potential problems before they cause serious issues and develop a plan for addressing them if they do occur. This usually includes creating a risk register, setting up regular risk reviews, and taking steps to reduce the likelihood and impact of any negative events that may occur.

What is risk assessment in project management?

A risk assessment is the process of identifying potential risks that could impact a project, and then evaluating those risks to determine their likelihood of occurring and their potential impacts.

Risk assessments can be conducted at any point during the project lifecycle, but are typically done early on in the planning phases to help identify and mitigate risks before they have a chance to impact the project.

There are a number of different techniques that can be used for conducting a risk assessment, but one of the most popular is called SWOT analysis.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

This technique involves looking at all four of these factors in relation to the project at hand in order to identify any potential risks.

The outcome, or “output,” of risk assessment should be information that is added to a risk register.

What is a risk register?

In a nutshell, a risk register is a list of all identified risks and their associated mitigation strategies.

This formal list includes is typically generated during the project planning phase, which means it will include all risks that have been identified to that point.

Of course, new risks surface throughout the course of the project, so the risk register is often updated frequently.

Risks are listed on the risk register document along with planned responses to them and are often categorized by likelihood and severity. Having a mindfully crafted risk register is a great way to be proactive and make informed decisions in case issues arise during your projects. The risk register can also help you mitigate risks along the way.

A risk register typically includes the following information for each risk:

  • Risk name/description
  • Risk liklihood (high, medium, low)
  • Risk severity (high, medium, low)
  • Risk response/mitigation plan

Having all this information in one place helps project managers stay organized and on top of potential issues that could arise during the course of managing a project.

The 4 main types of risks in project management

When it comes to risk management, there are 4 main types of risks that you need to be aware of:

  • Technical risks
  • Financial risks
  • Organizational risks
  • Political risks

Project managers need to understand all four types of risk so that they can properly assess and control them. Let’s take a closer look at each one:

  • Technical risks are those that relate to the technology being used in a project.
  • Financial risks are those that relate to the financial stability of an organization.
  • Organizational risks are those that relate to the internal workings of an organization.
  • Political risks are those that relate to the political climate in which an organization operates.

Risk Management Tips

Here are 9 risk management tips that can help you manage your projects:

  • 1. Make sure you have a clear understanding of the risks involved in your project before you start work on it. If you don’t understand something, ask questions until you do. The last thing you want is to be caught off guard by a risk that could have been easily avoided.
  • 2. Conduct a risk assessment at the beginning of the project and periodically throughout the project. This will help you identify potential risks early on so that you can take steps to mitigate them.
  • 3. Develop a risk management plan that outlines how you will deal with risks if they occur. This plan should be reviewed and updated regularly as new risks are identified.
  • 4. Be proactive in your risk management efforts. Don’t wait for a risk to materialize before taking action. If you see something that could potentially be a risk, take steps to address it immediately.
  • 5. Communicate with all stakeholders about risk management activities and make sure they are aware of potential risks. They need to be on board with your risk management efforts in order for them to be effective.
  • 6. If applicable, make sure you have adequate insurance coverage in place in case of a risk event. This will protect your organization financially if something does go wrong.
  • 7. Have contingency plans in place so that you know what to do if a risk event does occur. These plans should be well-rehearsed and all stakeholders should be aware of them.
  • 8. Monitor risks closely and take action quickly if they start to materialize. The sooner you can address a risk, the better off you’ll be.
  • 9. Keep up to date on risk management trends and best practices so that you can apply them to your own projects. There is always room for improvement when it comes to risk management.

Risk management is an important part of any project manager’s job. By following these risk management tips, you can help ensure that your projects are successful and your organization is protected from potential threats.

Improving your risk management skills

Like every aspect of project management, becoming proficient at risk management can take time, practice, and research. Seek out courses on risk management, or check out the many resources available elsewhere online, such as this Project Management Institute article by D.V. Pym.

Do you have any risk management tips to share? We would love to hear from you in the comments section below! And, if you’re looking for more information on risk management, be sure to check out our course on Project Risk Management. It’s a great resource for learning more about this important topic. Thanks for reading!