Risk Assessment In Project Management

While managing a project, project managers often face risks and need to know how to conduct a risk assessment in project management. A proper risk assessment includes taking a closer look at the different processes involved in a project and having a risk assessment meeting with the project team to identify and remove all the risks from the projects. 

What is risk assessment 

Risk assessment is done in a project to ensure that the team does not meet with any surprises during the execution of the project. However, no one can remove all the risks from a project, but one can forecast some uncertainties in the project and remove these for successful project completion. 

Need for risk management in project management

Every project manager needs to learn risk management through PMP® online training. A proper project risk assessment is needed for  - 

Focused and conscious identification and management of risks. 

Identifying the risks so that project managers can get desired results with the minimum number of surprises and deviations. 

Effective communication of a project's issues for an organization and the stakeholders involved in the process. 

Proper team building as team members are more likely to buy in, and the team's acceptance will increase. 

Risk assessment in project management is not the project manager's sole responsibility, but the entire team is responsible for risk assessment. The following team members constitute the risk assessment meetings. 

• Project team members 
• The project manager who acts as a chairperson during the meeting
• People identified as key to identifying possible risks in a project are also called upon. 
• Subject matter experts are not formally part of the project, but their insights may help in project risk assessment. 
• Project sponsors, if there are any, can participate in the meeting too.

Risk Identification

Risk identification in a project is done by analyzing the project life cycle, and special emphasis is put on key milestones in the process. While some risks are visible to the team, others need a thorough evaluation to uncover, but all of them are predictable. The project members need to evaluate different risk sources and categories to identify risks in a project. 

Risk sources

Project managers can look for risks in the following risk sources - 

• Risk repository - a risk repository is the collection of data containing the list of risks faced in the completed projects. This list gives team members a list of potential risks that can occur. 
• Risk checklist - This is a list of questionnaires prepared by the team based on their experience in project risk assessment to identify potential risks.  
• Expert judgment - Risk identification is also done by discussing ideas and interviewing project members and experts in the field. 
• Project status - A project status includes project meeting reports, progress reports, and quality assessments which give insights into the project and helps catch potential risks. 

Categories of risk in project management

By knowing the different risk categories in project management, one can find out areas in a project prone to risk events. 

• Technical - Risks arising from a project's requirements, interface, and requirements. 
• External - These risks are because of the market, suppliers, contracts, and customers. 
• Organizational - Organizational risks come from logistics, resources, and budget issues of the project. 
• Project management - This type of risk arises from a project's estimation, control, communication, planning, and scheduling. 

Some examples of risk assessment

Risk assessment is done in various sectors, and some of the applications of it are as follows - 

Safety managers who help identify the different types of health hazards in a healthcare facility practice health and safety risk assessment. 

Workplace risk assessment is commonly done by school administration and managers at the office to find a lack in productivity and morale of workers. 

Construction risk management takes place on construction sites to ensure that stakeholders adhere to all safety precautions and take safety measures at work. 

Fall risk management is done by nursing staff to ensure that their facilities are compatible with the needs of the elderly and is safe for them to use. 

Tools used for risk assessment

Various tools are used in risk assessment, and they can be easily incorporated into a company process. Some of the most common tools and methods of risk assessment in project management are - 

• Decision tree 
• Failure modes and effects analysis or FMEA
• The bowtie model
• Risk matrix
• Failure tree analysis
• Analyses of operability of hazards
• What if analyses
• Phases of risk assessment

Risks cannot be mitigated by analyzing each risk and dealing with them separately. For effective risk assessment, risk needs to be identified, categorized in groups, evaluated, and documented to be put forth in a risk assessment meeting. Let's examine the steps involved in risk assessment - 

Step 1 

Determine the possible risks in the project and see the impact they will have if they would materialize.  

Step 2

Now that one has a list of all the risks see who might get most affected by it. Some possible targets of risks are business operations and reparations, IT systems, and other infrastructure. 

Step 3 

Assess all the hazards and the preventive measures that can be taken to protect the assets that are most exposed to the risk. Some hazards can be property damage, financial loss, and legal repercussions. 

Step 4 

Take a record of all the findings and keep the risk assessment results in a place that can be used to make strategies to tackle risks. 

Step 5

Conduct a review of the risks involved and update the list of potential threats. This will help in updating strategies to assess risk and prevention of hazards. 

Also Read:Organizational Process Assets

Conclusion

Risk assessment in project management is important, and it is essential for the smooth functioning of projects. However, risk assessment is not an easy task, and one needs to enroll in an online project risk assessment course under PMP online training to use it effectively in project management. Enroll in the PMP online training at StarAgile today.