Effective Tips For Risk Management

By Daniella Rand

Managing risk is few upwardly mobile professionals’ idea of a good time. But it’s arguably the most important aspect of project management. In the sporting world, it’s said that defense — not offense — wins championships. Substitute “defense” for “threat mitigation” and you’ve got a ready-made slogan for business, too.

Of course, knowing that you need to anticipate and parry threats before they mushroom is one thing. Effectively doing so is quite another. 

Fortunately, risk management isn’t rocket science. Even if you’re not the most careful person around, it’s well within your capabilities.

Daniella Rand

6 Effective Tips for Better Risk Management

As your next project gets underway, try out these six effective tips for better risk management.

1. Conduct a SWOT Analysis Before You Begin

Before your project kicks off, conduct a thorough SWOT analysis to set a baseline risk posture. “T” is indeed for “threat,” but the goal here isn’t just to identify the risks you’re most likely to encounter. You’re also looking for hidden opportunities — and, in this framing at least, “O” comes before “T.”

2. Assign a Process Owner (If It’s Not You)

In more blunt terms: Figure out where the buck stops if and when it all goes sideways. The hope is that things never get to the point that someone needs to be held accountable, but fortune does favor the prepared.

3. Give Non-Owners Narrow Domain Authority

For practical purposes, the ultimate process owner won’t have direct responsibility for every moving part of the project. Make sure roleplayers have some skin in the game as well — and are intimately familiar with the biggest risks facing their remit.

4. Rank Discrete Threats By Probability and Severity

Zoom out and rank the threats you’ve identified by the relative likelihood that they’ll actually occur and the severity of the risk they pose to your project. Where it’s not possible to assign a precise value, educated guesses will have to do.

5. Assign Mitigation Resources Accordingly

Your team can’t be everywhere at once. Based on the numbers you’ve crunched, assign mitigation resources where they’re most likely to be needed — without completely shortchanging risks with a low but non-zero chance of occurrence.

6. Develop Best-, Middle-, and Worst-Case Scenarios for All Realistic Threats

For each realistic threat, develop three distinct scenarios: a best-, middle-, and worst-case. Those with a laid-back temperament might be inclined to assume the best and resist preparing for the worst; those predisposed to catastrophizing may do something like the opposite. Your goal is to strip away the emotional aspect of threat preparation and go where the facts take you.

Pick Your Battles, Control Your Exposure

These risk mitigation tips will help reduce your organization’s exposure to knowable risks, and may well make the difference between a particular project’s success or failure. But let’s be clear: They won’t completely insulate you from downside risk. Nothing can.

Nor can these tips guarantee that you won’t face “unknown unknowns,” those dreaded threats that by their very definition are not within your power to anticipate.

Between now and the (hopefully) successful completion of your project, you’ll endure plenty of moments of high drama and suffer through more than your fair share of sleepless nights. You owe it to yourself to pick your battles, control your exposure, and keep looking on the bright side, even when things seem their darkest.