You’re halfway through a crucial project with your team. Things are moving along nicely, and you can’t wait to update your boss.
But then, the unexpected happens. Your work permit gets denied, setting your project back weeks as you sort out the issue.
Your stomach drops. As you call the permit office, hold music blares in your ear while you count down the minutes to the meeting with your boss.
You sigh heavily, staring at your Gantt chart. How do you get this project back on track?!
We’ve all been there. And it often seems like this situation is unavoidable.
But what if you could do something to keep surprises from derailing your project?
That’s where a project risk management plan comes in handy.
In this article, we’ll demonstrate how to create a risk management plan in 5 easy steps to guarantee your project’s success.
What is the purpose of a risk management plan?
Risk management is a crucial part of project planning, but it’s often overlooked.
Clearly, something’s missing here.
An effective risk management strategy helps to mitigate situations that could hinder your project’s completion. Often, a risk mitigation plan is as essential to a project as having a defined scope or methodology.Risk management plans aim to identify all the potential risks that could derail your project, leading you to miss a deadline, go over budget, or experience scope creep.
By identifying relevant risks, your project team can be prepared to handle almost any unexpected snag.
But it’s not all bad — a risk management plan can also show positive risks, which you can exploit to improve project performance.
One major component of risk mitigation is defining risk responsibility.
Deciding who’s responsible for mitigating specific risk types and defining how risk will be managed are crucial aspects of good project management.
How does risk management change for different departments or industries?
Risk management looks slightly different for every industry. But, the process of finding risks generally looks the same.
Usually, the project manager isn’t the subject matter expert for every part of the project. That means you’ll need to interview multiple project team members and other stakeholders to see what types of risks to expect.
While a project manager can see scheduling or bandwidth conflicts, scope creep threats, and budget breakers, they may not know the potential risks for each step of their project.
In construction projects, for example, a project manager can expect delays from inclement weather. But, they may have to ask workers about local permit laws or unique regional concerns that could cause unexpected project halts.
More stakeholders may need to be involved in the risk assessment stage to accurately define risks for these projects.
Marketing projects can see other risks, like platform downtime or sending an email blast to the wrong list.
For projects with many simultaneous moving parts, mitigating negative risk and reaping the rewards of positive risk can take careful management during the project.
Sales teams can have strict performance metrics, and many projects can put existing good metrics at risk while striving for better performance.
On these projects, assessing the implications that a project’s testing period will have on a business’s bottom line or brand reputation can be a big part of your risk management strategy.
Product development projects can involve technology that goes beyond a PM’s experience.
Plus, many development projects may be competing for resources with other crucial projects at the same time. Understanding a team’s bandwidth, their other priorities, and how long each task will take are important parts of this department’s risk management plan.
How to create a risk management plan
Almost any project will have several risks to consider before moving forward.
Identifying these risks during the planning stage can help your team know if this project will deliver on its goals and maintain strategic alignment with the company’s goals, too.
Before you start the process of risk identification, it’s essential to clearly understand your project objectives.
When you know your goals and can provide a clear explanation of your project, your team can be on the same page about what risks may get in the way of those goals.
Take these 5 steps to mitigate risks in your project management plan.
1. Brainstorm to identify risks
Looking at past projects isn’t the only way to see risk in your next project.
While a project manager may have a good view of overall project risk, they often need input from subject matter experts to fully understand individual project risks.
Project managers may be tempted to skip creating a risk management plan because they don’t know what questions to ask their project team members to find potential risks. But this is a huge mistake.
Before or during your kickoff meeting, designate time for your project stakeholders and team members to brainstorm potential risks together.
Communicating risks openly can help your team respond and adapt to project changes quickly, which most project managers agree is the top benefit of an Agile methodology.
This discovery meeting can help solidify risks and make risk responsibility more clear. If a team member brings up an identified risk, they’re likely the right person to respond to that risk in the future.
Creating a long list of risks may seem daunting, but there’s no need to categorize or prioritize them just yet.
First, identify as many relevant risks as possible. Having multiple stakeholders in the meeting helps keep everyone on the same page about what this project will need to succeed.
Don’t forget to identify positive risks, too!
Remember: a risk is anything that could impact your project’s budget, deadline, or completion. Record all these risks in your monday.com risk register template to track and review later.
2. Analyze and prioritize risks
Once potential risks and stakeholder priorities are defined, a project manager can more clearly see which risks pose threats or offer opportunities to the project.
But while a developer may see a task deadline as a high risk, a project manager uses different tools to prioritize risk.
Treating every risk as the same can make moving forward with a project impossible.
That’s why PMs use risk analysis to prioritize which risks present the biggest threats to the project’s completion.
Looking at the risk’s impact through root cause analysis and expected monetary value analysis can help measure how each risk will affect the overall project.
These analysis types can show where dependencies may lead to breaking a budget, throwing off a project schedule, or going out of scope.
Scope creep is an undervalued risk that can quickly lose a business substantial time and money on a project. And, unless scope creep is mitigated, it can run rampant; that’s why 52% of projects completed in the last 12 months experienced scope creep.
Analyzing and comparing risks can help a project manager create a meaningful contingency plan that mitigates high-priority risks and aligns with stakeholder priorities.
Then, project managers can interview stakeholders and team members to evaluate the likelihood that the risk will occur.
Even if a risk could have a high impact on the project, it may become less of a priority if it isn’t likely to happen. But, no event is too unlikely to leave it off your risk register.
3. Decide risk accountability
In an effective project, everyone is responsible for risk mitigation.
Defining risk accountability gives everyone on the project a clear view of who is responsible for what and gains buy-in to complete projects on time and within budget.
Assigning responsibility isn’t about playing the blame game when something goes wrong.
Instead, it’s about making sure that the most qualified or knowledgeable person is looking out for a risk they’re uniquely poised to recognize.
No project manager can handle every risk to a project.
Delegating ownership of risks can help lower the probability that a project will fail, since more invested team members track each step of the project. That can make risk owners the eyes and ears on the ground for project managers.
Your risk mitigation strategy can foster collaboration, too.
While every risk may have an owner, you can support your risk owners by assigning a support team member to help each owner mitigate potential risk.
And by assigning owners and support people right in your Work OS, everyone knows who to go to if they have any questions or concerns about a risk, or think it’s status has changed.
This is a great way to encourage leadership skill development, which 79% of successful organizations say is necessary for good project management.
Having a chosen person focused on specific risk avoidance or jumping on opportunities can keep your project moving forward smoothly. This responsibility also encourages team members to report when new risks arise throughout the project.
4. Define how risks will be managed
Risks are an inevitable part of any project. But, how you handle them can make or break the success of your project.
A risk response plan helps your team know how to proceed when a risk becomes a reality.
Developing a defined way to handle and communicate risk impact keeps projects flowing and eliminates the blame game.
For some risks, you can assume how you’ll need to avoid or mitigate a threat. Garner suggestions from team members on how to best manage particular risks they’re responsible for.
In some instances, you may need to transfer or share a risk to manage it.
This may mean bringing in help from outside the project team, so it’s good to have resources in mind before the risk becomes a reality.
Positive risks can be exploited or enhanced to create more opportunities, like finishing the project ahead of schedule or gaining unexpected business from a campaign.
Often, you may need to simply accept that a risk happened and move forward.
Choosing the best strategies for managing each risk can help your team know how to move forward and stay in alignment with the overall project strategy.
5. Monitor risks throughout the project
Creating a document that only the PM looks at after the kickoff meeting doesn’t help mitigate risks. After all, only a known risk can be an avoided risk.
A risk plan is a living document, and new risks will come up throughout the project. Instead of waiting until the plan is “done” to move forward, encourage your team to stay in communication about potential risks at every stage.
You may want to schedule touchpoint meetings to identify new threats and stay on the same page.
Allowing live collaboration on the risk register document can also keep team members engaged and actively aware of residual risk to a project that may not have been clear when the project started.
Risk monitoring is one of the most valuable parts of your project plan, so don’t abandon it once the project is moving!
Keeping risk management at the forefront can help you capture opportunities and avoid the problems that derail most projects. This strategy helps develop organizational agility, which 39% of companies say is a top factor in project success.
For ongoing monitoring, It’s vital to differentiate risks from issues. A risk is a possible future event, so a strategy can be developed and applied to manage a risk.
An issue is a current situation that wasn’t identified as a risk. Often, an issue can only be accepted and managed, since it’s usually too late to use any other risk management strategies.
When issues arise, work with your project management team to find solutions that align with the overall project goals and strategy.
monday.com makes risk management a breeze
Having a plan for managing risk can define whether your project is completed on time and on budget or not.
Developing a risk response plan can help your project avoid common pitfalls and stay on track.
From risk registers to RACI charts to project trackers, monday.com can combine all the tools you need to manage risk into one platform.
No matter how many risks you have to track, we help your team work together to get the job done.
Ready to get started? Download our risk register template and create your own risk management plan today.