Project risks, what are they and how do you identify them?
Project risk is uncertainty of something impacting the project. It could have a positive or negative effect on the project’s objectives if the risk happens.
People tend to think of risks as something negative and to avoid. This negative classification of a risk would mean it is a threat. But risks can also be opportunities. You may have heard comments about financial investments having risk but good return. If the risk is a low probability, then the financial opportunity is something to consider. This is because of the possible financial gain and the risk occurring is low.
A risk is something which is uncertain and the outcome is not known. You can predict risk by utilizing expert judgement and past experiences. For instance, the risk of rain showers in the afternoon. A meteorologist predicts a 60% chance of rain. Your past experience tells you, the rain shower in the afternoon might not occur. Your experience also tells you, if you are going to be outside it might be a good idea to bring an umbrella.
Projects always have risks. A building permit could get delayed for approval. That is a risk. Another project risk is competing events. For example, your project team is starting another corporate initiative. This competing event reduces the amount of time allocated to your project. Another example, an investor backs out of funding your start-up. That is a risk. Risk will occur so you need to prepare.
Begin identifying risks before the project starts. A risk register is a great tool for this purpose. Risk identification and mitigation of the risk should continue throughout the project. Mitigation is a plan to deal with the risk if it occurs like an umbrella for a rainy afternoon. Some risks might never occur but having a plan to deal with the risk is always the best practice. There are other ways to deal with risks such as accepting the risk or transferring the risk. For example, insurance is a way to transfer the risk. You might never get into a car accident but it is a good idea to have car insurance.
Always plan for risks on your project and always have a plan to address the risks