ERM offers many important benefits including prevention of work-related injuries, agility when challenges arise, effective resource planning, a pre-emptive team ready for accident contingency plans, and to learn how to plan for risk management in projects, we invite you to read the rest of the article.
What is risk management?
Risk is part of each organization's work, where each new project comes with new risks, and it is important to identify and mitigate them for the smooth operation of your business, the overall risk management process can help you in it.
Project risk management is a logical series of practices through which decision makers plan, implement procedures and control results in order to maintain project implementation under certain conditions (a set of time, cost and quality criteria).
Project risk types
Project risk can affect the time and resources needed to complete the project, and four types of risk can be identified that need risk management:
Financial risks: high costs, inaccurate budget projections, increased employment and materials, reduced sales and challenges in securing funding.
Strategic risks: These risks result from strategic errors, such as the selection of a project management methodology that is not suitable for the project, efforts based on a company's culture that needs to be modernized, high turnover of staff, or investment in technology that is difficult to use or expensive.
External risks: External risks occur outside the control of the project team, such as changing laws and regulations, market volatility, stormy weather, missing deadlines by vendors, labor strikes, civil unrest, vandalism or damage, and supply chain issues.
Positive risks: Unexpected opportunities but have a positive impact on your project, such as completing tasks ahead of schedule or within the budget, outperforming original goals, increasing efficiency using a new tool, or taking advantage of policy change.
Why is project risk management important?
Risk management is a very important part of project management because it can significantly increase the project's chances of success. Developing and adhering to the project management plan is very useful:
- Help you avoid major disasters
- Risk management increases your revenue by reducing your costs
- Ensuring the successful completion of the project
- Risk management gives you a competitive advantage
- Increased sense of accountability and responsibility
- Help you discover new possibilities
Steps to manage successful risks in your project
1. Identify risks and prioritize
The first step in the risk management process is to identify all potential risks to your organization, as there are different types of risks such as market risk, environmental risk, etc.
Try to identify as many risks as possible and classify them based on the four types mentioned above in (Risk Types paragraph) to simplify your risk management strategy.
In terms of prioritizing risk, each risk's likelihood and impact is used to determine its own risk levels, which means setting a high, medium or low priority for each risk based on the factors it identifies.
2. Conduct risk assessment and analysis
Once you have a list of specific risks, evaluate each one in depth to determine the likelihood and potential impact, the assessment process should take into account events that are highly likely to occur and which may cause the most damage, and this information is necessary to create a project risk register, which will be a key component of your planning as your project progresses.
During the risk analysis phase, you will explore the likelihood of each risk, as well as the potential impact of each risk on your project, you can start putting this risk list in the risk register.
The risk register is a written document (often presented as a table) that lists potential risks, along with their likelihood of occurrence, potential impact, mitigation actions to prevent them, and contingency plans if they occur, also prioritize known risks that are likely to cause the greatest harm to the project as a whole, and the project manager must maintain and reassess the risk register regularly.
3. Risk control and plan adjustment
Risk management is not a one-time routine work and risk management is "done". It is an ongoing process. Risk must be monitored to see how it evolves over time. Therefore, your risk management plans must be reviewed as necessary to keep pace with these changes.
Risk control in ownership should be included in your risk register, and your plan should be reviewed on a regular basis to verify that appropriate prevention measures remain in place.
Dealing with uncertainty can be difficult, creating your own risk management strategy in advance can be helpful in your project's success, and with the right business plan, you can make sure you're well prepared for any situation that comes your way.
4. Risk Control
You should look at what you're already doing, what controls you already have, ask yourself:
Can I get rid of the danger altogether?
If not, how can I control the risk so that the damage is unlikely?
If you need more controls, consider:
- Redesign of function
- Replacement of materials, machines or process
- Organize your work to reduce exposure to materials, machines or process
- Identification and implementation of practical measures for safe functioning
- Provide personal protective equipment and make sure workers wear it
Put the controls you set in place. You are not expected to eliminate all risks but you have to do everything "practically possible" to protect people from harm. This means balancing the level of risk with the measures needed to control real risks in terms of money, time or trouble.
Conclusion:
Risk management focuses on anticipating what may not go according to plan and establishing the necessary procedures to reduce uncertainty to an acceptable level, risk can be perceived either positively (positive opportunities) or negatively (negative threats), and in both cases risk must be managed effectively.
Other topics:
Implementation of government projects
Automation of automated processes
References:
1. < < Insurance technology for risk management to launch AI solutions > >, captiveinternational.
2. < < Risk management is key to overseeing the implementation of innovative technology > >, businessinsurance.
Add New Comment