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What is risk? Risk is defined as an exposure to the chance of injury or loss; hazard or dangerous chance.  There are probably other words to describe it, but this works pretty well.

 I recently went on a cruise to the Caribbean. There were two things instantly working against me mentally: the recent sinking of the Costa Concordia in the Mediterranean Sea and the 100th anniversary of the sinking of the Titanic. Don’t think for a moment that my friends overlooked these two facts prior to my departure. They took every opportunity they could to rib me about it. Add to these the fact I have never been on a cruise before and this was a seven night adventure and the fact I was going to countries known for disliking Americans (Honduras and Mexico). Friends also kept telling me how sickness spreads on these ships quickly. Some might say I was taking a huge risk.

 Do you think it was risky?

Perhaps, but I say no. The reason I think it isn’t is because I practiced risk management techniques to minimize these risks or the affects. One, I did research on current vessels to ensure they are safe, looking up sailing to accident ratios. I wasn’t worried and we were not headed into iceberg infested waters. Two I familiarized myself with the ship’s layout including where life vests were located throughout the ship. I knew where to report to in an emergency and how to report one if I noticed it first. I also participated in the ship’s muster drill to find out how I was to get on the lifeboat if anything did happen. I wore a motion-sickness patch and washed my hands often to minimize other smaller risks. I also took into account that even though I was going into countries that were not necessarily great for Americans, I knew we were not going near hot-spots and would be protected fairly well. The consequences could be dire, but the likelihood was low so these were acceptable risks to take.

What does all of this mean and how does it relate to project management? Risk Management is an often overlooked part of project management. This brings me back to the definition or at least part of it: hazard or dangerous chance. Yes it is dangerous! It is dangerous to overlook such a simple process that doesn’t take much time or effort, but can save you time, money, or even your job if things go really bad. Negative things WILL happen and if you do not prepare for it, it will sink you and your project.

So how do I do it, how do I practice risk management? Follow these simple steps and at least get started. There are tons of resources available for purchase or even free in various places on the Internet. But whatever you do, don’t overlook risk management ever again. Enough with the doomsday talk, let’s get to it.

 Step 1: Brainstorm a list with your team on every negative thing you can think of that might happen. Sure, this list can be long and sometimes seem a bit trivial, but believe me, it is not. By practicing step one, you have gone beyond what most will do in this arena and it has already prepared you somewhat for what might happen simply by thinking about it.

Step 2: using a scale from 1-10 (or use whatever granularity you wish) rate how big of a deal that risk is. For example, if dealing with a paper cutter at the office, you might rate a paper cut as a 1 (no big deal). Conversely, you might rate losing a finger as a 10 (HUGE deal).

 Step 3: using the same scale as step 2, rate how likely that risk is to occur with 1 being unlikely and 10 being highly likely.

 Step 4: use some sort of math (I add the numbers together) and determine a threshold for what is acceptable and what is not. For example you can have numbers ranging from 2-20. So, you could rate any activity with a total number of 10 or under as minor risks. Likewise, you would consider anything over 11 as more severe risks needing more planning and perhaps scrutiny. Again, create your own thresholds here.

Step 5: Create your action plan. You can:

  • Accept the risk as it is, taking the chance and dealing with whatever consequences might arise (not recommended for risk totals on the higher end of your scale)
  • Avoid the risk altogether, change your plan so that this risk doesn’t even come up on the radar (these are recommended for the risks with totals on the higher end of your scale)
  • Mitigate the risk, how can you make the impact less on your team or project
  • Transfer the risk to another stakeholder or third party to deal with

Step 6: Train your team on the warning signs. Knowing what to look for is another critical part of minimizing the impact from a risk-turned-event. This step is often overlooked as well. Keep in mind, if you don’t train what to look for, the team might miss the risk coming to fruition.

However you decide to put together your plan, the bottom line is do it. I went on my cruise and had a wonderful time. I stuck to the plan, stayed safe, and enjoyed the great vacation with my awesome new bride. We got home safely and brought some amazing memories and photos with us.

 Remember, asking “What if” can help keep you from asking “What do I do now”!

 What do you do on your projects to prepare for risks? Comment below and tell me!