Project Risk Management: 4 Options for Managing Threats to a Project
Sep 13, 2021
From American Management Association
Even with the best-planned projects—complete with clear priorities, a realistic budget, solid allocation of resources and talent, and a seamless workflow—something is bound to go wrong. Changing requirements, competing demands, and unexpected surprises often delay and complicate projects of all sizes and scopes. In most cases, project managers can prevent the worst from happening. But that requires more than just having the skills and confidence to respond to minor setbacks or even a major crisis. Project managers also need to be proactive about threats and have a good offense strategy.
Project risk management is an intentional process to help project managers find ways to reduce or eliminate possible threats to any project’s completion, on time and on budget. It’s best to try to eliminate threats before they happen, taking into account the priority, cost, and timing for each potential project management risk. Yet, when that’s not possible, dealing with a threat head-on can save a project from being totally wrecked.
A world leader in professional development, American Management Association (AMA) continually works with project managers across industries and experience levels to help them develop the insights, skills, and strategies to manage risks and keep their project on course. From the experts at AMA, here are four options to consider when deciding how you might deal with threats to your next (or current) well-thought-out project:
The first and most common response to threats is also the least stressful option: Find a way to avoid them. Let’s use the scenario of a project manager in charge of a kitchen remodeling. If, for example, the risk is that a granite countertop may crack during installation, then simply avoid this risk by changing the scope to a tile countertop.
Another risk response is transference of threats. This is often done by outsourcing the risk to an expert who’s better equipped to handle it. As the project manager for the kitchen remodeling, you could transfer the cracking risk by sub-contracting a specialist in installing granite countertops.
This response acknowledges that threats can’t be avoided altogether, but they can be reduced. As the project manager for the kitchen remodeling, you might mitigate the cracking risk by hiring three extra people to help carry that granite countertop and carefully install it.
With some projects, the most sensible response might be to accept certain threats as part of the working process. There are two types of acceptance. The first is active acceptance. So, instead of avoiding risk, you acknowledge it and create a backup plan. As the project manager for the kitchen remodeling, you could inform your client of the cracking risk upfront. You might have them sign a waiver to protect you from being held liable for the cost of a cracked countertop, and perhaps explain filler and repair techniques you could apply if cracking does occur.
The second is passive acceptance—where you just deal with the threat when and if it happens. Getting comfortable with passive acceptance of risk poses a risk of its own to project managers. Beware: It might gain you a reputation for being careless or reckless.
Project risks come with the territory of project management. Every project is unique, with different stakeholders and different stakes. So, know your options for dealing with threats in advance, and then make the best choice for your project.
American Management Association (AMA) is globally recognized as a leader in professional development. For nearly 100 years, it has helped millions of people bring about positive change in their performance in order to improve results. AMA’s learn-by-doing instructor-led methods, extensive content, and flexible learning formats are proven effective—and constantly evolve to meet the changing needs of individuals and organizations. To learn more, visit www.amanet.org.