Businesses understand the importance of project risk management. Risks are acknowledged and well-respected to the point where entire plans and analyses are done to ensuring the safest possible working environment. However, as major league baseball player Walter Johnson once said, “You can’t hit what you can’t see.” How do you combat a threat you can’t find? The Answer? Use a project risk register.
What is a Project Risk Register?
Like a pastor constantly preaching their beliefs, the importance of risk management and implementation in any aspect of business resonates within the actions of entrepreneurs. However, there is a good reason why these warnings are repeated over and over again; they hold plenty of merits. Take, for example, the construction industry which is known for the various hazards that workers regularly put themselves in. Even with proper threat evaluation, the occasional accident still occurs on-site. Thankfully, we don’t need to know the answer to the question “how much more, if there were no risk analyses and reports, were done pre-construction?”
With the establishment of risk management’s importance, you may now find yourself asking “how do I evaluate threats to my business projects?” Well, one such document you can use is a project risk register. What a project risk register does is it allows you to categorize threats to your project, assess their probability and impact, and then formulates a contingency plan to effectively handle each particular situation. When done right and successfully implemented, this document preps you and your team for the worst that can possibly come, which in turn increases your probabilities of success.
The Five P’s of Risk Management
In the wise words of Steward Stafford, “The moment you think you can get in the ring with the heavyweight champion of the world and bluff your way through the fight is about the same time you see your bloody teeth on the canvas and wonder how they got there. Remember the five P’s – ‘Prior preparation prevents poor performance!” Though not a boxer himself, Stafford’s quote emphasizes on the value of being prepare. In fact, lack of preparedness is considered a cardinal sin among entrepreneurs and a corporation that fails due to it gains little pity from their community. As such, whether it’s about business, being in the boxing ring, or life in general, remember that “prior preparation prevents poor performance”.
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How to Create a Project Risk Register
Project risk registers have earned their spot as an essential document to have in corporate plans and hazard control. However, despite the seemingly easy format, that’s not the entirety of it. While it’s easy to fill a chart out with words, these were not conjured up from an imaginative mind—thorough research is required to draft a project risk register. With that said, here are a few general tips you can follow to creating the perfect document for your project.
1. Categorize Threats
Depending on the nature of your project, you will have to categorize threats based on their nature. If, for example, you’re working on company server improvement, the potential threats you have can be technical faults, human error, electrical problems, and many more of this nature. If your project is planning a pool party, then your categorize should revolve more around safety and water hazards.
2. Assess Their Probability
Whether minor inconveniences or grave threats, all hazards have a probability of happening and it’s your job to figure it out. How possible is it for someone to be electricuted to death when working with machinery? How likely is it for an in-experience hammer wielder to accidentally bash his own thumb? Know the likelihood of a situation occuring is integral to risk management.
3. Gage Their Impact
On the instance that a risk suddenly happened, what would be it’s effect and aftermath? An impact analysis can assist you in this segment of your project risk register. While the impact of a water bottle spilling over a keyboard is aggravating, replacing the keyboard is all you need to do to fix the problem. However, if a person were to get shocked and potentially die, the effects of this catastrophe will echo through your corporation.
4. Formulate a Contingency Plan
Once you know the nature of the threats, how likely they can occur, and the influence it can have over you and your company’s reputation, it’s time to formulate a contingency plan. A fine tuned contingency plan tailored to your project’s threats means that if they do occur, you and your team can easily handle the situation and make the best out of it. For it to work, however, it can’t be just general safety tips and nothing more—you need ot provide the particulars for each hazard.
Whether it’s a multimillion-dollar corporation or small business, a downfall due to lack of preparation gives mercy to no one. As such, if you want your business to survive, you need to remember two things; 1) that all business ventures have particular, and 2) taking the time to prepare for each will give you a better chance of success. Hence, fully utilize your project risk register as this may be the thin line that separates soaring triumph from a crash and burn.
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