What is Risk Managment in Project Management

As the scope of enterprise-level companies becomes even more encompassing than in the past, the different processes of risk management and project management become inextricably-intertwined. So much so in fact, that they can be combined to produce a more efficient outcome at the end of the production chain.

The Particulars of Project Management

The scope of project management is all-encompassing. It covers the development of an idea; and has measures in place that see it through to the end-game. This includes – but is not limited to – the phase initiation stage, the creation of viable timetables, the distribution of information, alterations in any of the previous, and the gathering of data to signal the completion of the project WowYar.com.

As such, anyone who is earmarked for overseeing the management of a scalable project must have robust organizational skills, as well as an analytical ability for risk assessment and mitigation.

Risk Management in a Nutshell

Before a project even begins, the risks must be identified and assessed. This stage entails analyzing the projected impact of the purported risks, as well as tracking and implementing the program. As you will see later on in this article, compliance plays a large role in helping project managers assess and mitigate the risks associated with a project.

Taking an Account of the Risks

The first part of any project manager’s job is to properly identify and then categorize the risks to which the project might be subjected. The standard methodology involves first identifying positive and then negative risks. What’s the difference between these two?

  • Negative Risk: This is the category of possible risks that will directly lead to a negative outcome for the project and thus, the business. It’s not about missed opportunities (you’ll encounter that with positive risk below); which cannot really be called a subtraction as much as a failure to utilize an addition. An example of negative risk is anything in the development chain that delays production and thus leads to adverse reactions among consumers.
  • Positive Risk: It is tempting to think of positive risk as more benign than negative risk; but it’s not nearly so straightforward. Failing to take advantage of an opportunity, in a competitive environment, can spell the death knell for a business – especially if a competitor takes direct advantage of the opening. An example could be time misalignments between product completion and the readiness of the marketing team to take advantage of this; an outstanding surplus of product could actually lead to financial losses.

The Various Responses that Project Managers Take to Risks

There are a number of possible responses one can make once the risk analysis process is completed:

  • Risk avoidance: Risk avoidance is precisely what it says – your project manager analyzes and assesses the risk, and then puts in place the necessary measures to stop it; whether this means parrying a cyber-intrusion or securing network data. Of course, not all risks can be avoided – which is why there are other alternatives for mitigating their impact.
  • Risk transference: Risk transference is often a viable option for certain risks that cannot be avoided. You “spread out the potential damage,” in a sense. Take, for example, insurance policies: you cannot stop a hurricane if your company lies in the path of destruction; however, you can buy hurricane insurance to help you with recovery. You are, in a sense, transferring the risk to the insurance company – and they are charging you a premium and relatively small monthly payments in return for carrying your risk.
  • Risk Acceptance: Risk acceptance is the most straightforward definition of the three. Generally, it is the strategy used when the risk is so unlikely, and/or the costs so comparatively small, that it is not cost-effective to mount a protective strategy against.

The project manager goes through this process in order to decide whether or not the deployment of the project can proceed. The risks must be categorized before this decision is made TodayKos.com.

Compliance and Projects

Compliance helps business managers incorporate agility into their projects by setting regulatory goals that must be met with certain tools. For example, by establishing an environment that promotes sustainable development and maximizes efficiency, it helps negative risk mitigation mesh with production.

Automation with ZenGRC Enhances Compliance Efforts

In a nutshell, risk assessment and mitigation software such as ZenGRC helps companies comply with standards like SOC 2 and SOC 3 for purposes of internal auditing. This, of course, aids in the reporting efforts that are the backbone of all compliance regulations, and lets consumers know that your project managers are competent and risk-aware. In a competitive marketplace, this is worth its weight in gold.

Author Bio

Ken Lynch is an enterprise software startup veteran, who has always been fascinated about what drives workers to work and how to make work more engaging. Ken founded Reciprocity to pursue just that. He has propelled Reciprocity’s success with this mission-based goal of engaging employees with the governance, risk, and compliance goals of their company in order to create more socially minded corporate citizens. Ken earned his BS in Computer Science and Electrical Engineering from MIT.  Learn more at ReciprocityLabs.com.

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