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Why is Risk Identification so Important in Project Management?

Why is Risk Identification so Important in Project Management?

With all of the knowledge and experience we have with regard to risk as a project management community our performance is not good.

Sure there are some companies and organizations that excel at it but for the most part our risk management as part of managing projects has serious opportunity for improvement.  You may think that is a bold statement but it is easy to make because I regularly survey project managers from Anchorage Alaska to Amsterdam.

The graphic below shows the results from a recent survey from the PMI Delaware Valley Chapter from a Risk Management Training course conducted at their Professional Development Day this year.  Look at the data – 55% Poorly or Disastrous!  39% Adequate!  And this from project managers attending training…  the greater project management population may be even worse!

Now there are many things you can do to successfully manage project risks.  There are a lot of tools you can use to successfully manage risks.  All of the success of any risk management tool, method or process you use hinges on effective Risk Identification.

You cannot manage what you do not know about.

If a risk materializes that you had not identified you are strictly in a reactionary mode and most likely not prepared to deal with the circumstances and have a limited number of options.  So doing a good job of identifying all the risks is necessary to be proactive when it comes to managing risks.  As a project manager you should prefer the proactive approach where your plan influences and drives circumstances rather than letting circumstances influence and drive your plan.  Another aspect of risk identification is understanding what you have identified.

How much good can identification do if you do not understand what you have identified?

Understanding the risk is part of the identification process. A risk poorly identified means the project manager will struggle or fail to communicate this risk to high level stakeholders or team members.  They will not understand the magnitude or an aspect of the risk. If  risk materializes they are woefully unprepared for it, because even though it was identified it had not been properly understood.

The sirens song here is that often there is not a price for this lack of understanding!

This is because most risks don’t materialize and as a result a price is not paid for the lack of understanding and planning.  Therefore, sometimes through no fault of the project manager, stakeholders have been lucky on previous projects or activities and feel like thorough risk identification and understanding is a waste of time.

Not until they are burned, victimized or become a statistic does the importance of risk management come to the forefront.

Risk identification allows you to create a comprehensive understanding that can be leveraged to influence stakeholders and create better project decisions.  Good risk identification creates good project communication and good communication creates good decisions.  Risk identification is the foundation of good risk management and no fancy tool or spreadsheet will overcome poor risk identification.

If you know the beginning well, the end will not trouble you. African Proverb

Learn comprehensive Risk Identification techniques in only one hour with my online training course.  Click here and use coupon code RISK for a 50 percent discount and pay less than $25.  This is what others have said about the course:

“Dr Brown did it again, this course should be titled risk management made easy. Indeed Dr Brown is a great communicator who guides you in step by step tutorial style on how risks should be managed. I truly enjoyed the course. It also gave me the tools needed to shine in the area of risk management instead of shying away from risk identification. I recommend it to anyone particularly Project Managers. This course is worth every penny and some.”  F. Whitfield – MBA, PMP, CSM

Great course!  I appreciated the comprehensive course notes available in PDF format on the first slide.  The risk letter, addressed to the project team, was very informative and will be added to my toolbox.  As always I enjoy the format of the training; using real life examples bring it to life.”  S. Deets MBA, PMP

Posted by Dr. James Brown in Risk Management Strategies and Tactics and tagged , , , .


 

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