Did you know that the most effective risk management takes place before the project is even started? Here is why and how:
One of the most misunderstood knowledge areas of Project Management is risk. At the theory level, there is a lot of literature talking about risk. But mostly theoretical. According to PMI’s PMBOK Fifth Edition, Project Risk Management: “includes the processes of conducting risk management planning, identification,
analysis, response planning, and controlling risk on a project.”
All true, but so theoretical. I consider it theoretical because it leaves you with principles but no actions to take, beyond generic, mechanical steps of going through the motions of project management without really getting most of the intended benefits.
After 25 years of experience working on a few high stakes projects, I only wish that businesses focus more on practical risk management before and during project initiation; when risk is highest, and businesses have the best chance to influence risks.
Risk is about uncertainty, and uncertainty is best defined through questions. Ask questions that encourage discussion of risk.
Do not ask stakeholders: “What could go wrong?” or “What are the opportunities?” Then you will get generic answers like: “We might be late” or “We might be over budget,” etc.
Instead, ask questions like: “If this project was a huge success, what would be the reason?” or “if it was a huge failure what would be the reason?” Another area to explore is “how have previous projects succeeded / failed?” Also”In our industry, how have previous companies messed up or did well on such a project?” and continue with the question: ” What can I do to make my project more like the successful ones, and unlike the failures?” Finally, ask:” How can stakeholders help me in this endeavor of dealing with risk? The owners, clients, department managers, team, PM, etc.”
With such questions you will have much better chances of identifying real risks and dealing with them effectively.
Project Risk Management is where the project succeeds or fails. Everything else in project management is there to serve risk management.