Project Management Tips and Techniques - Managing Risk (Part I)
Tom Mochal

Each month, Tom Mochal presents a set of project management tips and techniques for handling various aspects of planning and managing a project. Tom has over 23 years of IT experience. He has developed a comprehensive, scalable project management process called TenStep, which can be viewed at www.TenStep.com. 

Risk refers to future conditions or circumstances that exist outside of the control of the project team that will have an adverse impact on the project if they occur. In other words, whereas an issue is a current problem that must be dealt with, a risk is a potential future problem that has not yet occurred. 

Successful projects try to resolve potential problems before they occur. A reactive Project Manager tries to resolve issues when they occur. A proactive Project Manager tries to resolve potential problems before they occur. Not all issues can be seen ahead of time, and some potential problem that seem unlikely to occur, may in fact occur. However, many problems can be seen ahead of time. They should be resolved through a proactive risk management process.

Here are some additional techniques for managing risk on a project.

• Once a risk has been identified, there are a number of options that the Project Manager might consider for responses. 
   
  1. Leave it: In this approach, the Project Manager looks at the impact the risk condition would have on the project and decides that nothing needs to be done to mitigate the risk. 
      
  2. Monitor the risk: In this case, the Project Manager does not proactively mitigate the risk, but monitors it to see whether it is more or less likely to occur as time goes on. If it looks more likely to occur, then the team must mitigate it at a later time. This approach can work for serious risks that are not likely to occur. Rather than put a plan in place immediately, the Project Manager creates a plan only if it looks likely that the risk will occur.
      
  3. Avoid the risk: Avoiding the risk means that the condition that is causing the problem is eliminated. For instance, if a part of the project has high risk associated with it, then the whole part of the project is eliminated. 
      
  4. Move the risk: In some instances, the responsibility for managing a risk can be removed from the project by assigning the risk to another entity or third party. For instance, outsourcing this function to a third party might eliminate installation risks. 
      
  5. Mitigate the risk: In most cases, this is the approach to take. If a risk has been identified and is a concern to the project, usually proactive steps must be taken to ensure that the risk does not occur, or to ensure that the effect (impact) of the risk is minimized if it does occur. 
      
• Everything in life has some degree of risk. Make sure that you work through a risk evaluation with the project team and the customer. There is no reason to hide or shy away from the exercise - the customer does not expect the project to be risk free. 
   
• Risk is not necessarily bad, since it is a feature common to all projects. All projects have some degree of uncertainty due to the assumptions associated with them and the environment in which they are executed. Although the risks cannot be eliminated entirely, many can be anticipated and resolved ahead of time.
   
• If an event is identified as a potential risk, there has to be some level of uncertainty involved. In other words, if an event has a zero percent likelihood of occurring, then it would not make sense to identify it as a risk. It is not even a low risk. It is not a risk at all. On the other hand, if an event is 100% certain to occur, then it is not a risk. It is not even a high risk. It is a fact.