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Project Risk Management is an Art, and an Art worth Your Learning

September 30, 2008

Never, ever attempt to do project risk management alone. It’s far too dangerous an activity to perform by yourself. One of two things will happen:

  1. You won’t identify all the project risks, or worse yet,
  2. You’ll identify so many project risks that you’ll be paralyzed into inaction.

Both outcomes are undesirable. Project risk management is an exercise that requires group thought and self monitoring to ensure project risks are identified at the right level for the project you're managing.

In organizing a county fair, you might identify and document a project risk that the automated watering system on the municipal oval may play havoc with your guests on the big day. That’s a valid project risk that can be mitigated. Conversely, worrying that Aunt Mabel has enough flour to bake her famous blueberry muffins is not a project risk that you (as the head of the organizing committee) should concern yourself with.

That’s lesson number one in the basics of project risk management – keep it at the right level. Then with careful delegation, your project risks will be manageable, and therefore they will be managed.

Lesson number two (in this two lesson series) is that project risks have two characteristics:

  1. Likelihood (of the risk event occurring), and
  2. Severity (the fallout if the risk does “come true”)

Consider the project risk management graphic at the top of this article with respect to the following scenario:

  • Parachuting: The likelihood of your parachute failing to open is very, very "Unlikely". The Severity of outcome should your chute not open is "High" - or even extreme in this case (we won’t dwell here).

The punch line? You’ll need to action something immediately for any project risks falling into the top right quadrant (where project risks are both likely and the outcomes are severe). But the real art of project risk management lies in the identification and mitigation of project risks that fall into the top left quadrant (magenta) - this can be where the real trouble lies.

Slingshot has developed a free white paper covering a number of project risk management and project planning tips and tricks that will guide your efforts as you consider an ERP system selection and implementation project.

To your project risk management success,