How to Assess Project Risk

All projects involve some level of risk. The purpose of assessing project risk is not to find that you have no risk in your project. Rather, it is designed to understand it, prepare for it, and mitigate it as best as possible.

Risk analysis is the name of the process designed to help you assess and monitor your project risk so you can take necessary precautions and keep your project on track. Here, we’re going to look at how you do it.

Understanding Project Risk

First, to assess risk, you must know what it entails in a project. Risk is typically defined as any uncertain condition or event that can have an impact on the objectives of the project. Not every risk will present an issue worth addressing, but it’s still important to assess them.

The Importance of Risk Management

In large-scale projects, project risk management should be considered a crucial part of the planning process. Risks can change the characteristics of the project as a whole, leading to regulatory issues and other noncompliances that can lead to litigation.

Aside from helping prevent this, project risk management can reduce exposure and minimize the impact of any uncertain or negative events. But in order to benefit from risk management, you have to know your risks.

Identifying Risks

The first real step of risk analysis is taking the time to identify what those risks are. This is typically done by sitting down and looking over the project plans and potential events that can alter them, step by step.

It’s important to get the team involved in this process, as they may be more likely to see certain risks from their perspective than you are.

Calculate Probability

How much effort you go into preventing and preparing for a risk should, in part, be determined by how likely it is to happen. You only have so many resources, they should go towards those risks that are more likely to happen. This way, you can separate them into high, medium, and low-probability risks.

Predict Impact

As well as probability, you should consider how much of an impact a risk would have on the overall project. Even if one specific type of risk is slightly less probable than others, for instance, you should still put some preparations for it in place if its potential impact is significant enough.

Working with Your Risk Analysis

Once you have completed the above, you can start to put your project risk management practices in place. This can include certain backups and security provisions, as well as simply changing plans to account for the more likely interruptions, such as workers taking sick leave. Once you do, you should be a lot more prepared for the uncertainties that come with every project.

Chris Turn