What is Risk Management? I want to give simple view from perspective someone who has to manage risk day to day across major projects. This is real risk management, hands on.
Of course, “Risk” and “Risk Management” will have variations of the same general meaning depending on the circumstances. It is also depending on context to which it is apply. But in principle, all risk management will follow more or less the same process. So, what is a Risk? A risk can be any influence on an expected or planned outcome that changes that outcome. In child-talk, it’s anything that could stop you getting what you want or expect. Here’s an important note: Risk hasn’t happened yet. If the outcome has already changed as a result of a risk “happening” then it’s no longer a Risk. It’s an Issue and has to be managed differently.
What is meant by risk?
A risk is something and anything that could happen that will impact or change a desired or planned outcome. There are so many different ways to state this that, as simple as concept is, it can easily get confusing. Let me give you an example; “If it rains today then the field trip has to be cancel” – the risk is that it may rain. The impact is that the planned trip will have to be cancelled. Risk Management is recognizing the risk potential analyzing the probability and impact and either mitigating it. Also preparing alternative options that will allow the original plan to succeed. On some of my projects in Asia I’ve had to seriously consider the impact of rain on project outcomes. This really tested my teams Risk Management ability. It helps me a lot to get knowledge about how can I do my work properly.
How to be calm in risk management?
I had stressful time managing risk by the hour. Decision to roll back move to old office or proceed and hope we got everything in before typhoon hit. Every 15 minutes for the first half of the weekend. That was Risk Management like I never had to manage before. Risk Management is critically important to project work. So, the meaning of “What is a Risk” should, I hope, be graphically clear now? Risk Management is the process of managing risk as it relates to specific circumstances. The techniques, tools and processes use to manage risk are quite pragmatic and common-sense. But we all know that there’s no such thing as “Common Sense”. So the best way to get consistent framework around managing risk is to learn some best practices. They are based on industry proven templates and methodologies. I’m not here to push one methodology or best practice against another.
I have my personal preferences based on my industry and experience. But I know and have seen many other project managers use varying techniques and tools in Risk Management. In a follow up article I will talk more specifically about Project Risk Management. I’ll share some templates and examples and hopefully stir up some discussions too.