Risk management is a routine used by project managers to minimize potential problems that can affect the project.
Risks are possible events that can impact resources, processes, technology, or project participants during the system development lifecycle (SDLC).
The results of risk are often unclear before it strikes. Through risk management, you can estimate threats beforehand and put control measures if necessary.
Risks can arise anywhere in the SDLC. Even as organizations venture into new projects, there is a need to monitor the ones in operation. For this reason, risk management is continuous.
You can make risk assessment and management less tedious by creating a risk management protocol. It may comprise of a consistent set of tools and templates as well as training of project participants. By embedding risk management to your daily routine, your company can assume better health and overall performance.
Your 6-Step Guide to Risk Management
Uncertainties are inevitable in projects, and so is risk management. The process is about acting before a risk turns into an actual problem.
You can eliminate it, mitigate its impact, or accept it if you can accommodate its consequences. However, your course of action should be a result of careful. Here are six steps to follow to manage risks in your projects.
1. Risk Identification
It’s impossible to solve a problem that you can’t pinpoint. You can identify risks in different ways, including interviews, brain-writing, root analysis, and more.
Visualize the project as if it’s complete and running. Think about what could go wrong and note your fears down. Analyze historical data on similar projects and record any deficiencies found.
You can set up interviews with the help of the project team, colleagues, and stakeholders to gather information on issues to emphasize. Consider inviting people known for critiquing. Their opinions can divulge essential insights which could have easily slipped through the cracks.
2. Risk analysis
After populating a list of potential problems, the next step is to determine the likelihood of each. You should fill this information in your risk register as well.
During your risk assessment, you should think about the possible consequences if the risk came true. Some questions to ask yourself at this stage are:
- Can the risk lead to project failure or delay?
- Will it raise regulatory issues?
- Is there a likelihood of legal disputes?
- How does it relate to various compliance standards?
Primarily, you will want to evaluate all possible outcomes if the risk happens no matter the magnitude. The process can be tricky because there is never enough information. Find out if your industry has a risk assessment outline to use as a checklist.
You will need to compute the risk factor associated with each risk to estimate the severity of the probable impact. Qualitative and quantitative analysis techniques and tools are useful in risk analysis.
Once you analyze various risks, you should have a picture of their effect on the budget, scope, and the timeline of the project. You may also be able to define how the risks can affect the quality of your project.
3. Prioritization of Risks
Risk levels are different, and there is a need to distinguish them based on severity. Without this knowledge, you cannot determine the appropriate control measures to put in place to tackle the threat. Unpreparedness often leads to project failure or over expenditure when fixing issues.
An extensive list of risks can be intimidating, but you can handle it by classifying risks as either low, medium or high. You must address high risks as soon as possible. A situation that would be in this category in IT projects is poor data integration between the two technologies.
Medium-priority risks are worth your attention, and you can mitigate their impact with appropriate controls. Low risks may have little to zero influence. You can either control or accept them.
4. Risk Assignment
For tracking, you should assign risks to someone. Look for talented individuals in your team and let them oversee risks. Apart from monitoring, they should spearhead the resolution efforts for the uncertainties.
Failure to assign risks negates the effort of identification and prioritization. The project would ultimately suffer the maximum impact, accumulate more risks, and probably flop.
5. Response to Risk
Now you know the threats and your team is ready to resolve them. Before taking action, separate positive risks from negative ones. The latter represents events which threaten to cause harm.
A positive risk is an unplanned situation that you can exploit to benefit the project. Some people look at it as a condition that produces too much of the desired deliverables. Decide the action to take.
Create a plan to mitigate all risks that can hurt your project. The strategy can be through preventative measures or a contingency plan. Together with the risk owners, decide which approach solves the problems best.
6. Risk monitoring
The risk owner will continue tracking the risk to see how it responds. You will also have to look out for any new threats that might develop.
It’s crucial for all parties in the project to understand your risk management measures. When you are transparent, the team will be proactive as they will know what to do. Set up different channels for efficient communication with your team.
How Risk Management Relates to Compliance
Modern SDLC relies on agile development, a methodology based on the 12 principles of the Agile Manifesto. Agility, in this case, means that the software product can adapt to changes through its lifecycle. Nowadays, compliance projects are assuming the shape of agile development.
Government compliance regulations are continually developing. Therefore, you should know the policies affecting your organization and implement them in your projects. These include standards established in your industry as well as external regulations that touch your businesses.
It demands the protection of electronic medical records and health information about individuals. It also sets the limits for disclosure and usage of such information. When developing for the health sector, you must in mind data processing, storage, and security.
Another area worth your attention is the American Disability Act. It requires owners of public accommodations to make them accessible for all visitors. The regulation includes websites open to the public.
In 2014, a blind Seattle woman filed a case because she couldn’t access the resources on the district website resources. After the ruling, the district would spend up to $815,000 to make the site ADA compliant, pay legal fees, and compensate the lady for damages.
The EU’s GDPR privacy standard affects entities inside and outside the EU. You must comply with the unforgiving conditions of GDPR if you are to transact with businesses within the EU territory.
Automation for Agility in Compliance Projects
Since compliance mimics software development projects, automation can enable organizations to meet standards effortlessly. For vendors to satisfy the needs of their customers and protect their information, they must be compliant. They can generate and monitor customer risk profiles and act accordingly to maintain trust.
By providing communication tools and motivating your stakeholders, you can promote compliance in your organization. Self-assessment and audits inform the compliance department whether their controls are adequate.
Businesses should provide compliance officers with the tools they need for compliance projects. By so doing, customers and partners will rest assured organizations are at par with standards.