Risk Management Introduction

Each one of us will have a horror story to share of projects failing or on the verge of failing or the “mess” that we were in. One of the primary reasons for project failure is our inability to handle uncertainties at the right time and in the right way i.e. effective risk management.


Definition

Risk can be defined as an event or a situation that has a likelihood of occurrence and can cause loss (or benefit). Risk Management is the process of measuring, or assessing, risk and developing strategies to manage it. Strategies include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.


Issues in Risk Management

Many an organizations and projects do have a risk management program and plan. However, the adoption of the same has issues. Some common issues that can be observed are:

1. Ad-Hoc approach – Though the organization might be having a Risk Management framework in place, it is common to see Project Managers doing Risk Management as an ad-hoc activity; visited only at the project creation/initiation stage and from the perspective of completion of the project plan. The Risk Management Plan (RMP) is seldom revisited during the project life cycle stages or project milestones. It is done based on the experience and risk orientation of the Project Manager.

2. Isolation of the process – It is not an uncommon sight to see the Project Managers filling the RMP excel sheet, Risk Portal, etc. alone. It is seldom a team activity and seeking participation from SQA, Technical Leads, SME, and senior management is virtually unheard off.

3. Reactive approach – Risk Management is seldom proactive. Typically a project is classified as high risk only when it is in middle of the build phase or half way through the schedule. Late flagging results in reactive responses and the eminent fire-fighting exercise.

4. Communication issues – Risks are known within the team - If an event is happening for the first time and is unknown to the team, no amount of Risk Management would help ☺. The issue is free and fair communication of the same. There is reluctance on part of various members to communicate risks. The team members are not keen to share risks with team lead; project managers are reluctant to share it with client and client with business or end users. This reluctance is on account of the perception that Risks are an “evil”. We need to understand that Risks are neither good nor bad. Risks are inherent in any project and effective management of the same is a critical success factor for the success of the project.

5. Education and awareness – One observation is that Project Managers (current and would be) are not appropriately oriented towards Risk Management. Project Managers tend to lack awareness of the Risk Frameworks, Processes, Repositories available within and outside the unit and organization. Sharing learning of failed projects is very rare.