Every project involves some degree of risk (“nothing
ventured, nothing gained….”),  but that risk can be controlled
with a bit of careful analysis, planning and communication.  As
a project manager (or a manager dealing with projects), it is your job
to anticipate project risks, and then to devise appropriate means to control
those risks before they can get out of hand. 

This is where the risk management process comes in, beginning
with risk identification and analysis. The starting point in the
risk identification and analysis process is full consideration of
perceived project value and complexity.  Risk analysis will
take time, and add overhead to the project schedule and budget. 
The effort and cost of any risk management effort should be
appropriately sized to the project at hand, considering priority,
value and return on investment. 

Smaller projects, of lesser
value and visibility will not demand the same attention to “risk” as
larger projects, with greater value, visibility and cost.  And,
as with all governance endeavors, the process should be sized to fit
the project. 

Common Sense Steps for Analyzing Risk

Risk analysis revolves around the question of possibility and
probability.  There are so many types of risks for IT projects,
but that fact alone does not automatically every risk is possible
for every project.  If
“possibility” is not a factor within a given project, there will be no need for further analysis.  But if a
given risk is
in fact “possible”, then the next question arises – is it probable? Probability is
a key question – the more probable the risk, the more important the risk analysis effort.

Possibility, Probability and Project Scope

Effective risk identification and analysis is predicated upon the
existence and quality of project scope and goals. If you have clearly
identified your project goals and priorities, then you will be able
to use that knowledge to assess the impact and consequences of any probable
project risks.  For example, if you view probable risk and likely
impact in context of overall project priorities, you will be in a better
position to evaluate the need for targeted action.

To that end, with your identified risks in hand (considering the
possible and probable),  you can now move on
to consider the following types of questions:

• Can this risk affect
  the quality of my product or project end-result?
• Can this risk affect project budgets and costs?
• Can this risk affect the
  project schedule?
• Can this risk affect the project planning and management process?
• Can this risk affect the stability of project work environment?

For each “yes”, you can then proceed to the next question….

Does this risk pose a sufficient threat to my project so that
further action is warranted?

If the answer is “no”, then the results of that analysis should be
properly documented, thus declaring that no further action is warranted.
Remember that the goal of risk management is not just to avoid risk,
but to also apply logic and reality to any decisions and strategies
for dealing with risk.   If, at this point, you can acknowledge risks, and logically decide
to take no further action, your goals in risk management will be realized. 

However, if the answer is once again “yes”, thus acknowledging the need
for further action, then continued assessment should proceed. encompassing
the question of impact and consequences.

• Once you acknowledge the possibility of impact, and the need for further
  action, you will then need to look at the issue of consequences. 
  For example, you may know that a delay in network card delivery could
  impact a desktop installation project, but how will that delay affect
  the overall project …. will that one delay affect the entire schedule,
  or can other parallel activities help to make up for that lost time?
• The answers to these types of questions will help you to pinpoint the
  likely consequences of a given risk.  With this information in
  hand, you can then begin to evaluate your options to either avoid the
  risk in entirety, accept the risk and move forward with the project
  without any specific risk related action, or take steps to lessen the
  risk impact (mitigate the consequences).

Of course, the viability of any risk “response” will depend  upon
project specifics and the capability of the performing organization
to execute controlling procedures.  It’s all part of having a
nimble management approach and ready-to-go management standards. 

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