03 Dec Risk Mitigation: Definition & Top Strategies
Risk is always present. This is true in life and projects alike. If we were to try and avoid all risks, it would be paralyzing—not to mention impossible. We couldn’t step out of the house, let alone embark on a project. There’s just too much that could go wrong!
Project managers don’t have the luxury of locking the door, turning off the lights and hiding in a corner. They acknowledge that nothing is guaranteed, but know you can plan ahead for problems that might arise, and have contingencies in place for when they do.
As you might imagine, there’s a process in project management that addresses risk and how to deal with it. It’s called risk mitigation. No project plan is complete without a solid risk mitigation plan. But first, let’s figure out what risk mitigation is, and what strategies exist to control risk in your project.
What Is Risk Mitigation?
Risk mitigation is a strategy that seeks to foresee risk in a project before it’s executed. It uses historical data, experience and other lessons learned from past projects to keep the impact of the risk (when it’s realized) to a minimum.
While there is such a thing as a good risk, risk mitigation takes steps to lessen the risk of adverse effects on your project. But first, you need to understand the four types of risk that can show up in a project.
This type of risk is when the cure is worse than the disease. That is, you accept the risk and do nothing to reduce the impact on the project because to respond to the risk in any other fashion would be more costly than just dealing with it. It’s a loss-leader to bankrupt your project or miss important deadlines just to resolve a risk that would be better off left alone.
Another type of risk is when you avoid any exposure to the risk. It’s the opposite course of action to acceptance. However, it’s also the most costly alternative. It usually involves time and resources to avoid, which will impact your bottom line.
This is the most common response to project risk, limiting its exposure. It involves taking an action of some kind, and is a mix of the above examples. That is, you don’t totally accept nor avoid the risk, but work out a middle ground that is financially acceptable to your company.
As the name suggests, risk transference is passing on the risk. That can be outsourcing an aspect of the project or organization to a contractor or vendor. That saves you from having to deal with the risk, and allows for a greater focus on your core competencies.
Why Care about Risk Mitigation?
The number one reason to care about risk mitigation is that the process is designed to remove or reduce negative impact on your project. Risk mitigation helps you shore up the project and increase it’s chances of success.
This speaks directly to your bottom line, protecting your budget and helping your project meet its schedule. Without mitigating risk, you’re opening up your project to problems that can cost money, time and even lead to failure.
Project managers are nothing without a plan. Why would you then neglect planning for the inevitability of issues arising in your project? Using risk mitigation means you’re taking control and helping to guide your project on the right path.
That doesn’t mean risk mitigation is foolproof. The very definition of risk contains the unknown, but it’s always advisable to create as many safeguards for your project as possible, including trying to identify risk and when it shows up in a project quickly work to resolve the issue.
Risk Mitigation Strategies
There are five basic strategies to risk mitigation that expand on the four types of risk outlined above.
The strategy of accepting risk is when the project manager and the team have identified a risk and what the consequences are. It is then decided that these consequences are acceptable. The risk is brought to the attention of the organization, so everyone is on the same page about the risk and how it might impact cost, schedule and performance.
This strategy is when you identify risk and its consequences and decide to avoid it, however, that is done in the context of the project. The project manager and the team will look into ways that they can avoid the risk’s impact on performance, schedule and cost.
In this strategy, the risk is again identified with what its consequences are and then working to control it by actions that limit or even remove the impact of the risk to cost, schedule and performance.
After identifying the risk and its consequences, sometimes the best course of action is to transfer that risk to another party. It can become a complex strategy, however, as you’re now dealing with two entities rather than one, which makes coordination more difficult.
Unlike the four types of risk, this strategy speaks to a wait and see attitude. In a sense, all strategies start this way: identifying the risk and its consequences. But sometimes action is not immediately necessary, so instead of taking on a specific strategy you monitor and review.
Risk Mitigation Templates
There are many aspects to risk mitigation. You must prepare, identify, assess, collect and track the progress until the issue has been resolved. A good way to dip you feet into this process is through the use of templates that help manage risk mitigation. We have dozens of free templates and selected three that related directly to risk mitigation.
IT Risk Assessment
IT systems must be constantly monitored to avoid system failures. If your IT goes down, the whole organization is compromised. This IT risk assessment template numbers your items outline the risk and control environment, so you have a central location to gather all the data you need to make a better decision.
Planning for risk is key to mitigating it when and if it arises in the project. A risk register template sets in place the process to respond quickly and effectively to issues as they show up. This template helps you track and evaluate your risk mitigation plan. You now have a place to collect what’s happening and see if it’s working.
Once you’ve identified a risk it becomes an issue. Now you have to assign someone to own that issue and take on the responsibility of resolving it. The issue tracking template provides a space where, once you’ve identified the issue, you and your team can brainstorm on resolving and then monitor that progress.
How ProjectManager.com Helps With Risk Mitigation
ProjectManager.com is award-winning software that organizes teams and projects to work more productively. Risk mitigation is like a smaller project within the larger project and we have the features to manage that process more effectively.
You need to find risk in your active project before it becomes a problem. Then you need to track the process to resolve it. Because our software is cloud-based, the data collected is in real-time, which means our project dashboard is giving you the most accurate high-level view of several project metrics.
We calculated the data automatically and then display them in colorful graphs and charts. You get to spot issues faster and respond to them and resolve them quickly.
In terms of resolving issues, you need to assign team members and keep an eye on their progress without getting in their way or pulling yourself away from other important aspects of the project. Create a plan and schedule to attack risk in your project with our online Gantt chart. You can link dependent tasks and even set milestones, measuring progress by how shaded the duration bar is between the start and end date of the task.
We have multiple project views, so once a team member is assigned, they can create a backlog on our kanban board. Cards represent tasks, which can be prioritized, commented on for collaboration and tagged to find easily. The board visualizes workflow, so managers get transparency into their team’s work and can shuffle resources to keep from blocking the team.
ProjectManager.com is a cloud-based software that helps you identify, track and quickly resolve risk in your project with online Gantt charts to plan and schedule, kanban boards to visualize workflow and real-time dashboards to keep track of progress. See why companies that can’t afford risks, such as the Bank of America and NASA, choose our tool. Take your free 30-day trial today.