The world we live in is full of uncertainty. Nobody can predict what is going to happen in the future. It can surprise you at any moment and catch you unaware. When this context is applied for project management, it is known as project risk. It is a critical aspect for the successful completion of a project.

"Risk" can be defined as an uncertain event or condition that can have effects on the working of a project. It is an unexpected event that can disrupt the normal workflow of a process. If you are a project manager planning the project cycle, you must take in to account the "risk" factor.

How to assess “Project Risk”?

This is possible by conducting a risk assessment. Here we can highlight all the possible scenarios where risk can take place. From there, we can look at the effects of each risk event. Here are four steps to assess risk:

1. Identify the risk event:

Create a list of the possible events that may occur without your knowledge. This can be unexpected and sudden and can make you change plans. Discuss with the team members all possible outcomes to get different perspectives.

2. Identify the time of risk event:

Highlight the time a risk event is expected to occur. This will help you take pro-active decisions keeping the project work in mind. The likelihood of a risk event happening will help you prepare an alternative.

3. Probability of a risk event:

After creating a list of all possible risks for a project, start marking them in the order you expect it to occur. For some risks there is high chance of probability while for others it might be medium or low. The decisions for risk in a process depends on the probability factor if it is high or low.

4. Impact of risk event:

It is also necessary to list the impact a specific risk event can have on a project. The risk can affect the project delivery dates, increase project scope. It can also create budget issues and disturb the workflow of the project resources. Rank these impacts in the order of severity. It can help you make informed decisions.

How to create an “Action Plan” for risk management?

We have seen how the risk can be assessed for a project, but how you respond to these risk events is also important. We present some steps to respond to risk events:

1. Risk tolerance levels:

It is very important to have an understanding of the risk tolerance levels for a project. As a manager, you can expect certain risks to occur and respond to them. In some cases, the risks associated are too high and need constant reviews.

In such cases you must discuss all possible outcomes of responding to the risks. Every stakeholder must be kept in the loop about the steps to handle the risk. The tolerance levels must be within the constraints of the project scope.

2. Handle risk events by priority:

The probability and impact of a risk event decide the priority in which it must be handled. The risk events can be a combination of high and low probability and impact. It is best to use a risk matrix to identify which events need your attention. This also helps you know what are the risks you can tolerate.

The risk events with high probability and impact for a project needs the most attention. These have the potential to destroy a project and lead to failure. This can have a bad effect on the company's reputation and lead to lack of trust from the client.

3. Be alert for "risk" signs:

While working on a project, you can expect something unexpected to occur. The signs will be evident before the risk impacts your project. Look out for these signs and take steps to safeguard the project. An example for a risk sign can be adverse weather conditions in a particular city for a project team.

If there is an indication that the weather can worsen and affect resource mobility, then it is a risk. The team members will not be able to report for work and this can disrupt normal work flow. If power is not available, then systems don't work. This is also a risk. So steps must be taken to have alternative options for project work cycles.

4. Action plan and documentation:

Keep in mind the different risk events as per the high priority and make an action plan to tackle them. The most effective response will be one where the workflow continues in spite of risk events. The action plan must detail what steps must be followed during any emergency. All the stakeholders must be kept in the loop for any decisions made during this period.

When the project handover is complete, document the action plan. This helps you to review how the project risks were handled and what steps you can take to improve them. It will serve as a guideline for future projects and help you respond to project risk as and when they occur.

These methods can help you create an effective strategy to manage project risks. Once you get familiar with the above steps, it will become a habit that can be of help while working on projects. Every manager must have a response plan for risk and include it in the project scope.