A business meeting with a project management consultant

How Project Management Interacts With Risk Management

Business projects are classified by their content or purpose and are intended to achieve objectives that are aligned with company strategy. They may be called internal, administrative, or functional projects, but all need to be properly managed to meet company expectations.

Coordinating efforts and allocating additional resources often involve extra staff working together, so developing a plan for minimising risk potential is essential. Planning ahead will ensure that the risk environment is fully understood and can be responded to quickly.

See how project management interacts with risk management here…

Risk management definition

Risk management involves the identification, evaluation, and prevention of mitigating risks that have the potential to impact on the desired outcome of the project. Risk assessment meetings that include partners, as well as all team members, will allow awareness to be raised and plans set in place to facilitate risk management tasks.

During project management, there are many common types of project risk and these include:

  • Cost – errors in cost estimation generate additional risk.
  • Schedule – not planning for events that may cause the project to be delayed is a common reason for scheduling issues.
  • Performance – events that cause the project to produce results that are inconsistent with project specifications is yet another risk.

Risk management steps

Techniques for risk management solutions include the use of project management tools. Gantt charts can help identify and assess risks during different stages of the project, and Kanban boards are excellent advanced resources for prioritising threats that may potentially cause the most damage.

Having these tools isn’t a guarantee that the project will be successful and other measures may need to be put in place. These may involve:

Hiring professionals who have expertise in managing potential threats, and can train employees in how to detect risk during the early stages. By categorising potential risks the identification process is optimised.

Managing the business cash flow forecast to take into account any risk is crucial to both the immediate health and long-term growth of the company. Without careful cash flow risk management, a business can fail due to a lack of readily available funds.

Developing a communication plan that lets the entire team know immediately a potential risk is identified. Clear communication channels incorporated into daily work schedules allow for faster response to potential threats.

Creating a framework for prioritising risks by categorising them into groups such as control, functionality, and performance, enabling an easier method of identifying and prioritising.

Analysing the risk to determine the potential effects on the project is a process that covers risk probability, risk impact, risk categorisation, and risk location. This allows an understanding of the driving factors involved and the potential impacts on the context of the overall project.

Implementing a risk response plan that consists of risk acceptance, avoidance, transfer, and mitigation. With a response such as this, you may be able to avoid risk entirely, transfer it to another party such as an insurance company, or minimise the effects of the potential risk to the project. You can develop the most effective responses to ensure the project continues to run smoothly.

By providing a leadership role during the planning stage, having the right personnel for the job, managing resources, and keeping accurate records, these key factors will ensure a successful project from beginning to end.

Get a financial planner in London

When you need the help of a professional project management consultancy in London you should look for a tailored service that establishes and meets your project needs, with certification to confirm that the full spectrum of services across every stage of your project lifestyle will be delivered. Any changes that need to be implemented will be completed on time and within your budget. As time passes your plan will be further developed and updated as ongoing information is gathered, with the best project methodology chosen for your individual business needs.