Good Practice: The project manager's task is to identify the most severe project risks and plan to minimise them. Throughout the project, you should continue to focus on the significant risks facing the project, which will change over time. This approach helps to keep the focus on the areas that need addressing. As a project manager, you should consider using a risk mapping approach:
Identify the project objectives.
Prioritise the objectives.
Identify the key risks to missing those objectives.
Take preventive action.
Track and update risks monthly using a risk log.
There are four risk management techniques you may use to manage the risks of your project:
Avoidance: Use an alternate approach that does not have the risk. This model is not always an option. Some programmes deliberately involve high risks in the expectation of high gains. However, this is the most effective risk management technique if it can be applied.
Control: Controlling risks involves the development of a risk reduction plan and then tracking the plan. The key aspect is the planning by experienced persons. The plan itself may involve parallel development programmes, etc.
Assumption: Simply accept the risk and proceed. However, there can be a tendency within organisations to gradually let the assumption of a risk take on the aura of a controlled risk.
Risk Transfer: This means causing another party to accept the risk, typically by contract or hedging. Liability among construction or other contractors is often transferred this way.
Never expect initial risk management plans to be perfect. Practice, experience, and actual loss results will dictate changes in the plan to allow different decisions to be made in dealing with the risks being faced. In order for companies to succeed in the twenty-first century, they need to excel in all aspects of their business, which includes risk management, so they can fulfil their own and their customer's goals. 1
Reluctance to focus on risks.
The steering committee not wanting to be presented with 'threatening statements about project failure' and only wanting to hear good news.
Waiting too long and taking a reactive approach to risks.
Note: To run away from risks is to miss the whole point. To ensure project success, you need to take the right risks and be aware that that is what you are doing.