How to Manage Risk in a Project
Once you have identified the risks that may affect your project, the next step is managing them. The first thing you should do is determine your project's risk tolerance. If you're considering how to manage risk in a project, start with these steps:
Step 1: Determine your “risk tolerance”
How much risk can you take on before you consider abandoning the project? This is an essential conversation to have with your stakeholders.
Step 2: Decide which risks to manage
Once you’ve determined the project’s risk tolerance level, you can start to identify which risks are worth your time and attention. Even if a risk has a high probability of occurring, if its impact is small — say it would add $200 to your project costs and your budget is $50 million — you may choose to ignore it if counteracting the risk isn’t a good use of your time and resources.
Step 3: Identify project risk triggers
What cues might indicate a particular risk is imminent? Determine the factors that may act as catalysts in bringing your risks to life.
Step 4: Create an action plan
If a risk occurs, what’s the most effective response? What will your team do, and who’s responsible for what? Make sure you’ve thought each piece through and everyone on your team knows the plan. You may be wondering how to mitigate risk in project management. Think about what can be done to reduce the probability of a risk occurring, or minimize its negative impact. For instance, can you provide hand sanitizer during flu season? Or spread important tasks among the team so progress can be made even if some members are out sick for a few days? You’ll never be able to completely eliminate uncertainties, but having a plan in place can keep small problems from growing into full-blown catastrophes. Note that risk management isn't something you do once — it's an ongoing process you should keep up throughout your project.