Risk in Project Management
Managing a project is not only about being in charge of it, leading a team, and making sure everything is delivered on time. Project management is also about risk management. And there are two types of risk in PM, positive and negative risk. But what exactly is risk?
As defined by Oxford dictionary, risk is “A situation involving exposure to danger,” or “The possibility that something unpleasant or unwelcome will happen.” Of course, in terms of project management, it is more than just possibility of loss. It is concerned with the project’s success, budget, and many other factors which are often determined by the risk management.
Yet risk is not always negative. Even though the word “risk” has rather bad connotations, the risk itself can also be positive. In today’s article, we will take a look at these two types of risks in project management.
Positive vs Negative Risk
|POSITIVE RISK||NEGATIVE RISK|
|An opportunity to the project||A threat to the project|
|You shouldn’t avoid it but enhance and get the most out of it||Avoid it and eliminate|
|Brings a positive outcome and results in project’s success||
Brings a negative outcome and may result in project’s failure
In general, positive risk is something you should always be open to and even enhance it since it has valuable consequences for your project. Whereas negative risk is the opposite and the worst case scenario for such risk is the lack of success in project delivery.
How to Manage Positive and Negative Risk?
Knowing what the risks of your project are is not enough. You have to know how to manage it in order to lead your work and company in the best direction. There are several ways os risk management, whether it is positive or negative:
|POSITIVE RISK MANAGEMENT||NEGATIVE RISK MANAGEMENT|
|EXPLOIT: Exploiting the risk is about increasing the chances of positive effects the risk may have on your project. It can include varied ways such as using the proper tools or technology.||AVOID: If you see a threat to your project, do what is necessary to lower the risks. It may include such activities as delegating tasks, changing the deadline, increasing the number of people in the team, etc.|
|SHARE: Do you see that the risk is having a big positive impact on your project but you don’t have the resources to boost it? Transfer it or share it with other people or a third party to achieve the best result.||TRANSFER: If there is someone else or a third party to which you can transfer the project, you may want to consider this strategy as your first aid. Don’t forget that there are people who may be better at handling certain negative risks.|
|ENHANCE: If you can, do everything to make the risk even bigger. Invest in better resources, people, or try to deliver your project as fast as you can.||MITIGATE: lessen the risk as much as possible to avoid its negative impact on the project.|
|ACCEPT: If there is nothing you can do about the risk and there is no other way to influence it, accept the final outcome. Wait for it to happen and learn how to work on risk management in your future projects.|
The proper risk management can bring your projects closer to success. It is important to consider every pros and con before delivering the work. The result may vary depending on the right analysis of the risk. If you do not follow the right methods, you will end up with either unsuccessfully finished project and not giving it the full potential, or with a complete failure and the project’s loss. It is worth to spend a while on analysis in order to create the best outcomes.