Every project is susceptible to risk, no matter how hard you try. Failure does not have to result from risk. With some planning and foresight, you can manage project risks before they become a problem.
Let’s take a look at the different types and steps you can use to manage them in your projects.
What is project management risk?
Project management uses the term risk to describe an event that could have a negative effect on a project.
It is easy to assume all risks are bad. However, these impacts can have a positive and negative impact on your project. It’s not about what the outcome will be, but how uncertain factors could affect your plan.
Different types of project risk
Project management involves many types of risk. How can you identify which type of risk in project management?
Let’s start by defining the two largest categories of project risk: internal & external.
Internal risks are within your company and are easier for you to manage and reduce.
External risks are situations that are not within your control. These risks are often beyond your control as a project manager, or team leader.
What are the most popular types?
After completing a few projects, it will become apparent that there are more risks associated with your project.
These are the three most prevalent types of risk you should be aware when managing a project.
Cost risk is anything that could impact your ability to stick to the project budget, regardless if it’s due scope creep or unrealistic project estimates.
Any factor that could impact project deadlines is called schedule risk. These include unexpected delays in supply delivery, unexpected features requests, and extended sick leave.
Performance risk can affect the project’s goals and outcomes. This could be due either to a lack or overworked staff or misaligned expectations.
Other types of risk could also affect your projects.
These are just some of the risks associated project management. These additional risk categories may be necessary depending on the size and type of project you manage.
Operational project risk is anything that could disrupt production or stop a project from delivering. These are issues that your stakeholders or team create and can have an effect on project timelines or budgets.
Governance risk can impact leadership, decision-making and the frameworks used to manage a project or business.
Strategic project risk can have a negative impact on your ability to achieve organizational and project goals in both the short-term and long-term.
Market risk can impact your ability to finance a project and/or compete in the market.
Legal risk refers the legal, contractual, or regulatory guidelines or consequences to which your project or organization may be exposed.
External hazards are major events that are difficult to predict or prevent. These include natural disasters, global pandemics, as well as strikes and crimes.
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Create your free planCreate your free plan5 risk management tips for your projects
It can be scary to consider all the possible risks that could impact your projects. Let’s now talk about some simple steps that you can take to reduce risk.
It is possible to eliminate all risks from a project. These tips and tools can help you manage risk better.
1. Find alignment around the project