Project Risk

07 January 2011

With a project, risk is involved to some degree. The larger the project the greater the number of risks that could impact it and cause damage or hinder its progress. For this reason business have developed their own risk management plans.

Because of the impact potential, a project risk plan needs to be specifically designed to deal with any and all associated risks that could be present during the execution phase of your project. This will involve the identification of any possible risk that could impact your project at any point during its production run.

The project risk plan will also need to include a way of prioritizing each of the identified risks. This will allow for the correct amount of resources and planning to be assigned to mitigating the risks before they actually impact the project.

Being prepared with a project risk plan before any possible impact is a crucial element of the process in correctly dealing with this problem. One of the biggest concerns of any project manager is having an unknown risk make a major impact on their project that could cause a devastating effect.

Some managers that have a great deal of experience with a project risk plan know that not every risk can be totally mitigated away. Because of this the use of insurance to cover the financial costs of such an impact is common. This approach will not stop the risk and the damage it causes, but can help to prevent the risk from making the project’s cost run over the budget. This is one of the major reasons projects are considered a failure.

There are other instances where nothing should be done on certain risks as laid out in a project risk plan. These are rare occurrences, but do exist. The impact can be so small that just by knowing they exist and when they will make their impact is enough to deal with them.

The exact natural and make up of each project risk plan will be different for each project and company. The most important factor is to have one in place to deal with this potentially devastating occurrence that could cause your project to be considered a failure.