Risk – Potential future event which may have an impact on the business or project objective.
Issue – A known problem that will affect the objective if not managed.
Uncertainty – An unknown outcome due to lack of definition or knowledge.
Risk Management is the process in which you identify & evaluate risks to your business while considering the various stakeholder impacts. Acknowledging and considering the TECOP acronym can go a long way to successfully mitigating risks by studying and understanding the following factors technical, economic, commercial, organisational, and political. By doing this you can map out a whole catalogue of risks to ensure as many risks are mitigated as possible.
It’s important to understand the various risk categories, to ensure each risk is approached in the correct way. Risks can be easily split up into various different categories, including but not limited to business and operational. Each risk is considered in accordance with their specific risk category to ensure proper respect is given to each risk.
Poor Risk management can have catastrophic consequences for organisations, potential repercussions include jail time, fines, expenses associated with resolving previously unmitigated risks, and damages to company reputation and brand image.
Below is an example of a risk matrix, your team have the flexibility to tune and tailor these matrixes to suite your projects and associated risks. Typically, the scales on each axis refer to the probability and impact of each risk. This example approaches the process with impact mapped out along the X axis and probability mapped out down the Y axis. Referring to the matrix-coloured traffic light system. Red is associated with a high threat, amber associated with a moderate threat and green with low. Be sure to adjust the scale in relation to your project!
The mitigation process is arguably the most important step in the risk management process, by effectively mitigating risks, project teams can experience a vast majority of the benefits mentioned below.
By now it’s clear that an extensive risk management process is a no brainer! However, just in case you weren’t already convinced, here are some of the benefits.
The most significant benefit bar none is the capability to significantly reduce the potential for future unwanted expenses, by mitigating risks early your company can save money in the long run by reducing the likelihood of unexpected costs, from unmitigated risks. Additionally, inclusive risk management processes can improve both your project team’s productivity and consistency with the introduction of information inclusivity! Strong risk management can also improve company brand image and reputation, as strong mitigation can provide external stakeholders with an improved view of your organisation.
Prism Energy are ideally suited to support your team through the risk management process. We have a team of experts who can help you with risk management processes, risk reviews and full cost & schedule analysis. While our project management software options effectively support project teams through the risk management process.
