Risk Management: The Project Benefits are Clear

Craig Schwarze _ProjectBalm_

All project managers face a perennial question: Is managing risks worth the effort? Like any business decision, the answer hinges on a cost-benefit analysis. Including a risk management component in your project plan requires significant investment and might appear excessive to some stakeholders. However, the advantages of project risk management, especially for complex projects, will far surpass the associated costs.

Here's a breakdown of the key benefits:

1. Lower Costs: Adequate risk analysis reduces overall costs and the frustration stemming from preventable problems. It reduces the amount of project rework by addressing the root causes of significant issues sooner rather than later. 
2. Project Justification: The primary objective of project risk management is to bolster the odds of achieving project goals. While success can never be guaranteed, being aware of common failure modes will markedly improve success rates. For this reason, effective risk management can help validate the feasibility of a project or highlight its impracticality.
3. Project Prioritisation: Identifying the project risk level helps managers and stakeholders prioritize the project. High-risk projects may defer to lower-risk projects that deliver similar benefits. However, high-risk and high reward projects may garner additional resources, thereby reducing the risk.
4. Project Portfolio Management: An ideal project portfolio for an organization balances lower and higher-risk projects in alignment with business objectives. Understanding project risks is crucial to achieving this balance.
5. Fine-Tuning Project Plans: Risk analysis helps identify weaknesses in project plans, prompting adjustments and resource reallocations to mitigate risks. In extreme cases, it may reveal the need for fundamental changes in the project approach.
6. Establishing Contingency: Risk analysis justifies schedule and resource contingency by demonstrating the uncertainty of project outcomes. For high-risk projects, it might help justify the idea of defining a range for project objectives rather than a single-point target.
7. Project Communication and Control: Effective project communication hinges on a solid, credible plan. Risk assessments enhance awareness of potential problems within the project team, influencing work methods to avoid difficulties. Risk data is useful when negotiating with project sponsors, helping to define objectives, budgets, and timelines.

While it requires effort and commitment, the benefits of managing project risks — from reducing costs to ensuring effective communication and control — are substantial and often vital for the success of complex projects.

Risk Register by ProjectBalm

Dealing with the emerging risk landscape is much easier when you have an appropriate tool. This is one reason we created Risk Register by ProjectBalm.

Our goal was to automate best practice risk management techniques, and do so via an elegant, usable interface that works with you, and not against you. Risk Register will help you to identify, analyse, treat and monitor risks more easily and effectively than ever before.

If you are experienced at risk management, you will find in Risk Register a tool that works the way you want it to work. If you are new to risk management, our documentation and videos will take you through the whole risk management process, giving lots of useful examples.

Risk Register is fully compatible with risk management standards such as ISO 31000, and can also be used for governance, risk, and compliance (GRC) programs such as Sarbanes-Oxley and PCI. And, of course, Risk Register allows you to easily distinguish between opportunities and threats.

Over the last few years, we've grown to become the most popular risk management solution in the Jira marketplace and we are now an Atlassian Platinum Partner. Why not try out Risk Register by ProjectBalm for yourself?

Reference. Hillson, D. (2004) Risk Doctor Briefing Note #11: The Cost of Managing Risk. [PDF] Risk Doctor. Available at: https://risk-doctor.com/briefings/