Risk LinkedIn

What are risks?

4 min read19th of July 2020

To borrow a concept from Heraclitus, running a project is like stepping into a river – you cannot run the same project twice, for it is not the same project and you are not the same project owner. Every project is unique. Even when launching a well known and often used process, project conditions offer infinite iterations of variables that influence outcomes and trigger uncertainty. 

The reasons that make the execution of a familiar and repeatable project different are without limit. These forces of change are called risks and they are the uncertain events that can have a positive or negative effect on project objectives. Examples include a new project owner, a shift in market conditions, changes in regulations, seasonality, or stakeholders. 

The word ‘risk’ has a generally negative implication in its everyday use, but it would be a mistake to ascribe the same quality to risks in project management. They’re simply uncertain events that could impact the project; a risk that will negatively impact project outcomes is a threat and one that will have a positive impact is an opportunity. Suggested strategies to generate the best possible outcomes for project opportunities and threats are:

Opportunity
  • Enhance
  • Exploit
  • Ignore
  • Share
Threat
  • Accept
  • Avoid
  • Mitigate
  • Transfer

Researchers have found that one of the main causes of project failure is inadequate or non-existent risk management. Planning appropriate risk management strategies is complicated by their theoretical nature. By definition, they do not yet exist which makes response planning is equally theoretical. However, by leveraging lessons learned from prior projects, common risks can be added to project templates to get a head start. When a risk becomes certain, it will evolve into something material or definite such as a change request, issue, or benefit.

The strategic approach to managing risks should be modified and deployed on an as-needed basis and leverage the decision-makers’ best judgment in order to effectively minimize/neutralize threats and maximize/amplify opportunities. Having access to expert judgment and lessons learned is an invaluable resource when strategizing for the project’s greatest advantage. Using the best available knowledge to deploy a risk management strategy, while not an absolute guarantee of success, dramatically increases the chances of a favorable outcome not only for the risk but for the project as a whole.

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