In this article, we will attempt to define risk management and understand why it is essential. We will then review the main risks, their consequences and solutions, before moving on to understand how to implement a risk management strategy strategy.
Risk management: definition
Risk management involves identifying, anticipating and correcting any event that could have a negative impact on the project.
It involves identifying and analyzing any potential potential threats to the projectin order to limit their impact.
It must be considered from the outset of the project, from the preparation phase through to delivery, and extends throughout the entire project.
A proactive approach
Risk management is seen as a proactive proactive approach. It is about anticipating rather than reacting.
When a risk has been identified, we tend to talk about problem-solving rather than risk management.
Why implement risk management?
Effective risk management is essential.
No project is immune to the unexpected. So imagining all the eventualities that could jeopardize it is an important part of preparation.
Anticipate to react better
Implement preventive measures
Risk management is an essential element in project managementanticipation.
This approach involves finding solutions to situations that have not yet arisen.
It also encourages the implementation of preventive measures to prevent the risk from becoming a reality.
Avoid impulsive decision-making
If, despite all your efforts, the risk becomes a reality, you have the entire action plan at your disposal to get back on track.
The earlier you anticipate situations, the more leeway you have room for manoeuvre to act rationally and logically.
Risk management helps avoid impulsiveness and hasty hasty decisions.
Improving planning
Gaining in precision
Meticulously implemented risk management will enable you to be more precise in your preparation of your project.
Listing all potential problems and finding solutions to them, even before they occur, will make your project run more smoothly.
Adjust to the context
You have identified a risk of an increase in raw material due to a war in one of the producing countries?
You could then plan ahead and adjust the quantity ordered in advance, or take the time to research other potential producers.
Risk management therefore requires the implementation of prevention strategies to limit the impact on your project.
What are the potential risks of a project?
Problems can arise at any stage of the project, and can relate to various aspects.
Here are the different types of risk you may encounter in project management.
The 4 main types of risk in project management
Time risks
Temporal risks mainly concern timing, and in particular planning management.
Examples of time risks
The wrong timeline assessment or too short a project time are common time risks in project management.
The consequences of temporal risks
These risks can have major consequences for the project: a delay in deliverables, an overall project overrun, customer dissatisfaction or team frustration.
How to avoid time risks in a project
To avoid time risks, take the time to interview project stakeholders to ensure that your estimates are realistic.
And consider a margin!
Financial risks
Financial risks concern everything to do with a project's project budget.
Examples of financial risks
This may be due to a poor budget evaluationor an increase in the cost of raw materials or human resources.
The consequences of financial risks
Financial risks may mean finding other means of financing, or evenencroach on the budget other company projects.
To avoid financial risks, you'll need to gather as much information as possible to be precise in your estimates.
Ask your teams, rely on historical data, keep an eye on current events. And, once again, consider a margin.
Technical risks
Technical" risks can be varied.
Examples of technical risks
This may be due to a lack of lack of toolstechnical resources, or incompatibility between tools.
The consequences of technical risks
Technical risks mean that we need to look at alternatives. This is generally a costly process, requiring time for reflection and the mobilization of teams.
This can put the budget at riskbut also the schedule.
Conclusion: it's best to anticipate these issues before they become problems.
How to avoid technical risk in project management
To avoid technical risks, list your requirements at the start of the project, and make sure that your current resources are sufficient to meet them.
Regular monitoring of tools in your sector can also help you guard against technical risks.
Forget Excel, choose a complete project management tool!
Stafiz helps you anticipate risks. Predictive KPIs show you future deviations before they happen. You can then take the necessary decisions to rectify the trend.
Legal risks can have a serious impact on your project.
Examples of regulatory risks
The obligation to compliance with the RGPD or the modification of a law require adjustments that are impossible to circumvent.
The consequences of legal risks
The risks involved are non-compliance.
This can lead to all kinds of consequences, such as financial penalties or a damaged reputation.
How to avoid legal risks
To avoid legal risks, make sure you keep an active active monitoring on new laws, especially those specific to your sector.
It's also a good idea to enlist the help of dedicated, qualified professionals.
Other types of project risk
Operational risks
For example: cyber attacks, data hacking, fraud...
In such cases, a proactive approach is the best way to protect against this type of risk.
Regularly check that your systems systems are up to date and optimized.
Environmental risks
Pandemics, or any other meteorological event, can bring a project to an abrupt project to an abrupt halt.
Make sure your data is properly stored and accessibleeven remotely.
Human risks
Sudden departures of employees (change of company, burn-out, death) can have an impact on project progress, and may even require the recruitment of replacements.
Risks intrinsic to the project
Examples include unattainable targets, poor communication and human error.
Risks can therefore be of various kinds. Unfortunately, they can accumulate and cause a snowball effect.
A legal risk can generate a time risk, which triggers a financial risk. So it's vital to deal with a risk as soon as it arises.
What are the risk management steps in project management?
Example of a project risk management plan
Identify the different roles
In risk management, identifying the role of each stakeholder is essential.
This first step consists in identifying those individuals whose impact is significant for the project.
The aim is to clarify who is responsible for what in order toavoid ambiguity and to make everyone accountable.
In a project, it's generally up to the project manager who is responsible for risk management.
On the other hand, other stakeholders, such as the project sponsor, the steering committee or the operational team directly.
Conducting a risk analysis
Risk management is a collective problem. For this reason, it is not uncommon for this exercise to take the form of brainstorming, to generate ideas but also to involve teams.
We encourage you to call on your colleagues, whether those working directly on the project or others who may have been confronted with similar project contexts.
Years of experience in the field can be a valuable source of information.
To find out how to carry out a reliable and comprehensive risk analysis, follow our guide!
💡 To find out how to carry out a reliable and comprehensive risk analysis, follow our guide!
Preparing solutions requires a detailed action plan. This should include :
who is responsible ;
what is he responsible for?
how will he deal with the problem;
when?
Choosing a strategy
In risk management, there are 4 main strategies for dealing with risk.
Accept: the risk exists, you accept its presence. In this case, it's advisable to anticipate solutions so that you're ready, whatever happens.
Reduce: you define an action plan to reduce the likelihood of the risk occurring, while trying to minimize its impact.
Transfer: You try to transfer the risk to a third party: another team, another project... However, this solution is not applicable to all types of risk. What's more, it doesn't eliminate the risk; it only shifts responsibility.
Avoid or eliminate: Through thorough analysis and investigation, you seek to eliminate the source of the risk. However, not all risks can be eliminated. Indeed, on your own scale, it may be difficult to have an impact on the rising price of raw materials, or on the outbreak of a global pandemic.
What tools and methods are needed for effective risk management?
Using a risk table
The risk table or matrix is an indispensable tool for effective risk management.
Also known as risk management planThis table or diagram serves as a reference throughout the project life cycle.
Draw up a risk register
The risk register completes the risk matrix: it enables risks to be tracked.
It lists all risks, whether they have occurred and what the consequences have been.
The risk register must be kept up to date, as it will serve as a reference throughout the project, and even on other projects. It provides a detailed view of risks, and can help project managers in their decision-making.
Dedicated risk management tool
Several project management tools offer functionalities for implementing risk management.
This is particularly true of Stafiz. The all-in-one platform dedicated to project management was designed with the specific needs of project managers in mind. It offers tools such as scenario creation or real-time updated calculations.
Risk management is an essential step in project management. This exercise enables us to adopt a proactive approach by anticipating potential problems.
Tools such as risk management matrices, accompanied by software such as Stafiz, can help project managers to implement effective risk management.
By training in risk management, you help maximize your project's chances of success. What's more, you'll help reduce anxiety within your team and boost your productivity.
Frequently asked questions :
Involve stakeholders: Ensure regular communication with the team and stakeholders to quickly identify emerging risks.
Implement proactive planning: Prepare mitigation plans for critical risks before they occur.
Prioritize risks: Focus your efforts on high-impact, high-probability risks.
Automate and standardize: Use risk management tools to centralize data and track actions in real time.
Train your teams: Reinforce your risk management culture with specific training courses.
Continuous monitoring: Set up regular checkpoints to identify deviations and adjust your plans.
The criticality threshold in risk management is determined by assessing the impact and probability of risks, then classifying them in a matrix to visualize their criticality. Together with stakeholders, an acceptability threshold is set according to the project's priorities and risk tolerance. This threshold, aligned with the project's stakes, must be revised regularly to adapt to changes and new risks.
