Preston Smith's Corner

What are the biggest mistakes I can make in managing project risk?

September 2002 Quick Tip

This rather negative viewpoint is actually an effective one for quickly appreciating what you must do to manage the risks in your projects effectively. Here are a couple of things you should be careful to avoid as you implement a project risk management program:

Turn risk management over to your engineers In a typical product development project, perhaps three fourths of the labor comes from engineers or other technical professionals, such as chemists. Thus, it would seem logical to turn risk management over to your engineers. Engineers already have means of managing technical risk, called failure mode and effect analysis (FMEA). Unfortunately, about 90 percent of project risks are non-technical, so if you assign risk management to your technical staff, you will miss about 90 percent of your risks. Instead, make sure risk management is executed cross-functionally.

Allow risk to become subservient to budget and schedule If you attend a team or review meeting in an organization that is serious about project risk management, you will hear more about risks than about schedule or budget items. Of course, in most organizations, it is the reverse: all concerns focus on schedule and budget, and risk is hardly mentioned. This is a reactive style of management. Instead, effective risk management is proactive; it recognizes that today’s risks become tomorrow’s budget and schedule problems.

For more of these risk management tips, see our article, “Thirteen Ways to Mismanage Development Project Risk.”

(c) Copyright 2013 Preston G. Smith. All Rights Reserved.

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