Why Risk Planning is so Important to Your Project

Having an effective risk management plan is a big key factor in any project. Having the ability to identify risks both internal and external to your project, knowing how your going to tackle each risk and the consequences those risks will have on your project will ensure you do not run into any unexpected costs to your, resources, time or budget. An effective risk management plan will be a clear document which is easy to communicate with everyone involved in your project to ensure a smooth delivery. Here is why its so important.

Helps lead to success

A well thought out risk management plan will use a number of techniques to identify a great number of risks to your projects, from environmental risks to internal or external risks as well as identifying the potential volatility of your project. It will then sort out each risk into their impact on the project, from low level risks which will have no or little effect on your project to big risks which could potentially see your project abandoned. Once we identify all risks we can plan accordingly, look to see if we can either avoid the risk all together, reduce it impact on the project, transfer the risk to a third party or if we can simply accept the risk will happen. Not all risks are “bad” for a project the Risk Management Plan will also outline opportunities that could arise in a project, we need to understand thing we can take advantage of to help move our project along and increase the chances of success. The more detailed the Risk Management Plan and the easier it is to communicate to our project team and stakeholders the higher probability we have of delivering a successful project, on time and in budget.

Communicating with Stakeholders

It is important for a project manager to handle the expectations of stakeholders and the project sponsor. We need to ensure that everyone is on the same page before the project begins and that everyone understands the risks and the strategies that will be in place should the risk arise. Without a good level of communication between everyone involving the projects risks we could run into issues such as conflicts of interest between stakeholders which will lead to delays to the project.

Ensure you meet your targets

No project is completely absent of risks. The difference between successful and unsuccessful project delivery is how many of these risks we have planned for. With the correct planning we can ensure that we have contingencies in place way in advance to deal with risks as they appear. We can even prepare for risks we haven’t prepared for by accepting there will be risks that during planning are not known to us, if we can accept this and plan with extra budget or time to deal with these “unknown unknown’s” then we have a much higher chance to finish our project within it targets. Having no plan or preparation for risks that come to fruition will steer a project off course and typically incur higher costs to both time and budget than if they were planned for in advance.

Help’s to evaluate your entire project.

Through identifying risks, you can help better understand the full scope of your project. Certain risks can help you see your project in a different light and begin to help you better understand what the true project scope will be. An example is if you have a certain set idea of what the product at the end of your project will be, you identify a major risk in a supplier of a certain aspect of your product which could lead to the project and product being abandoned. You could act to change the final product to not include the aspect which comes with huge risks, hence avoid the risk, enhancing your project chances of success but changing the final product, goal and scope.

There is a whole list of other reasons as to why having an effective Risk Management Strategy or Risk Register for your project is important and why having one set out long before the project even starts is beneficial. Project that overlook the risks tend to be the ones that either fail or incur larger costs or finish late. If you want to better understand how to identify and prepare for risks on your project, get in touch with our team.