How to Effectively Manage Project Risks - Slide 2

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Identification of project risks is not a one-time only event. As projects progress, new risks will become evident and must be addressed accordingly. It is imperative that project managers take full advantage of the skills and experiences of subject matter experts, and other project managers of similar past projects.

The challenge facing risk management teams is knowing where to begin the process of risk identification. Typical risk sources that should be examined are poorly defined product requirements, design drift, exceeding technical capabilities, accepting an unproven technology , making too many changes to an existing product, limited availability of needed skills, project deadlines and budget/funding limits

To avoid this phenomenon, the project manager can take advantage of any one of the following risk identification tools — process flowcharts, analogous project comparisons, risk checklists, work breakdown structures, brainstorming, Ishikawa diagrams, affinity diagrams, and risk breakdown structures. Each of these tools enables the team to focus on parts of the project rather than the project as a whole. By doing this, the focus is more concentrated and more likely to give better visibility of potential project risks.

Risks can be foreseeable and unforeseeable. In both cases, astute project managers are prepared with some means of dealing with them. Many risk management plans address only foreseeable risks and fail to address the unforeseeable ones. For that reason, project planning must include a degree of schedule, cost, and scope margin.

Michael Taylor, a project manager with more than 30 years of experience, suggests that the most effective way to manage project risks is to adopt a process that systematically deals with the overall problem of uncertain events and conditions that might affect a project’s objectives. This process involves the following five steps.

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