The Risk Management Process-A Practical Technique for Identifying Risks

Risk Management processRisk management is one of the most fascinating processes you encounter if you manage projects, organizations or strategy.

Fascinating, because the identification and assessment of risk is a process that is both creative and systematic, using the right and left side of your brain.

You engage your right brain creative, intuitive energy where you anticipate, uncover and discover your potential risks. It’s your opportunity to do some divergent thinking. You are not constrained to think in a certain way, or to fit your ideas into a pre-set framework. Studies show that our capacity for divergent thinking reduces significantly as we get older, so consider it an opportunity to exercise those neurons that haven’t had a workout any time recently.

But to be effective, you need to bring the left side of the brain into play as well. This occurs when you categorize risks in a logical, rational and patterned way, so that you can assess their impacts and how you should respond to them.

For now, let’s look at a practical risk management technique that helps get those brain neurons firing and works well for identifying risks. Here are the four steps:

Step 1: Get the team together. Most project teams are blended, with a combination of more senior and experienced team members, who mine their historic data banks to identify project risks; and the new and less experienced members who look at project risks with fresh eyes. Your team members are also likely to be a mixture of personality types across the full introversion-extroversion spectrum. Your challenge is to bring this diversity and complementary viewpoints together to yield the richness of project risks that you want to identify.

Traditionally, getting the team together involves a face-to-face session, where everyone contributes their ideas verbally. Extroverts love this approach, they shine in a social environment, and enjoy the thrust and parry of a vigorous debate. But you run the risk of missing out on contributions from the quieter, more introverted members of your team, who value the time and opportunity to reflect on issues and often feel more comfortable delivering their thoughts in writing. So aim to create an environment that encourages equal contributions from all team members regardless of their rank or personality type. One option is to bring your team together online or virtually. It is efficient and cost-effective, especially if you have a geographically dispersed team, and you are likely to get a more complete contribution from all team members.

Step 2: Each team member contributes risks. When you have assembled your team, either face-to-face or online, then ask each team member to contribute a set number of risks. Depending on the size of your project, 5 to 10 risks from each team member is realistic. Requesting these risks in writing has the advantage that each team member thinks individually and separately about the risks. This independent thinking, which is not led or influenced by other, perhaps more dominant, team members, leads to a more divergent range of risks, with more potential risks being identified.

If your team session is face-to-face, then each team member writes their risks on post-it notes which go into a central container.

If you are meeting virtually or online, team members e-mail their identified risks to a central coordinator. This can be asynchronous. You can request team members to deliver their 10 risks to you by an agreed date, it does not need to be done at the same time. This gives team members the flexibility to fit this task into their individual work schedules.

Step 3: Collate and group the risks. Now it’s time to move into left brain territory for some convergent thinking. After you have collected the risks, you combine any duplicate risks and then sort them into categories. Grouping risks into categories, groups them together in an ordered, structured way. Typically you have between 10 and 15 high level categories. For instance, the three project constraints: Cost, Time and Scope are typical risk categories. The number and type of categories will depend on the project as well as your organization’s management systems.

Step 4: Use a mind map to display risks visually. Mind mapping is a powerful technique to display a large number of risks in an ordered and compact visual form. A mind map is a diagram based on a central concept. In our case the central concept is Project risks. Mind maps use a non-linear graphical format to build a framework of ideas around the central concept. Visually, think of a spider web or the spokes of a wheel.

Your high level risk categories such as Cost, Time and Scope fan out from the central core like spokes on a wheel. And then the specific risks radiate out from each category node. For example, under Time, risks might include: schedule overruns, tasks omitted from the schedule, and the opportunity to compress the schedule, because risks can have positive as well as negative effects.

Using a mind map, risks can be categorized and records kept in real time during face-to-face or virtual sessions and displayed on screen, so that all participants see a running record of the risks identified. As well as engaging your participants, it forms a tidy summary of the risks identified.

Now that risks are identified, it’s time to move on to assess risks, so that you can prioritize them and develop risk treatment plans.

A sound risk management process uses divergent and convergent thinking, so that you extract the maximum value in identifying risks. If this exercise isn’t completed effectively, you might be surprised at how many project risks slip through the net.

For busy professionals who need to meet continuing professional development requirements and boost their career opportunities, our online courses provide a flexible and cost-effective way to achieve this by providing anywhere, anytime access and a supportive online community. Continuing Professional Development offers a series of online project management courses to advance your project management skills and your career. Our Risk Management Online Course will give you the practical skills to develop a comprehensive risk management process. You can purchase it separately, or as part of our bundled course Project Management Essentials-Part 2.

Risk Management Online Course

Take this risk management online course to help you understand and manage risk. Comprehensive risk management is pivotal to successful organisational, business and project outcomes. Risk management not only uncovers threats but, just as importantly, it can reveal golden opportunities. These opportunities can make your project smarter, faster and more profitable. Read more …

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Risk Management Online Course

Take this risk management online course to help you understand and manage risk. Comprehensive risk management is pivotal to successful organisational, business and project outcomes. Risk management not only uncovers threats but, just as importantly, it can reveal golden opportunities. These opportunities can make your project smarter, faster and more profitable. Download Risk Management Course Read more…

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About the Author

Vivian Kloosterman is the founder of Continuing Professional Development which delivers online learning courses over the web. Advancing personalized learning has been identified as one of the 14 biggest challenges facing our world in the future, and Vivian is particularly focused on creating interactive, engaging e-learning courses for professionals that are practical and relevant to help them meet CPD requirements. She is a professional engineer with 30 years of business, governance, management and technical experience.

Comments

  1. JOSHUA says:

    this work is carefully done and it has added a value to knowledge

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