The Risk Management Process: A Practical Technique for Identifying Risks

Risk management is one of the most fascinating processes you come across whether you manage projects, organizations, or strategies. Fascinating, because risk identification and assessment is a process that is both creative and systematic, using both the left and right sides of your brain.

You engage the creative and intuitive energy of your right brain where you anticipate, discover, and discover your potential risks. It’s your chance to do some divergent thinking. You are not forced to think in a certain way, or to fit your ideas into a pre-established framework. Studies show that our capacity for divergent thinking declines significantly as we age, so consider it an opportunity to exercise those brain cells that haven’t had a workout recently.

But to be effective, you also need to engage the left side of your brain. This happens when you classify risks in a logical, rational, and patterned way so that you can assess their impacts and how you should respond to them.

For now, let’s look at a practical risk management technique that helps activate those brain neurons and works well for identifying risks. Here are the four steps:

Step 1: Assemble the team. Most project teams are mixed, with a mix of senior and experienced team members pulling from their historical data banks to identify project risks; and new and less experienced members who look at the risks of the project with new eyes. Your team members are also likely to be a mix of personality types across the introversion-extroversion spectrum. Your challenge is to bring together complementary viewpoints and diversity, to generate the richness of project risks you want to identify.

Traditionally, bringing the team together involves a face-to-face session, where everyone contributes their ideas verbally. Extroverts love this approach, they shine in a social setting and enjoy the push and push back of vigorous debate. But you risk missing out on contributions from the quieter, more introverted members of your team, who value time and the opportunity to reflect on issues and are often more comfortable expressing their thoughts in writing. Therefore, try to create an environment that encourages equal contributions from all team members, regardless of rank or personality type. One option is to bring your team together online or virtually. It’s efficient and cost-effective, especially if you have a geographically dispersed team, and you’re likely to get more comprehensive input from all team members.

Step 2: Each team member brings risks. When you’ve assembled your team, either face-to-face or online, ask each team member to contribute a set amount of risk. Depending on the size of your project, 5 to 10 risks from each team member is realistic. Requesting these risks in writing has the advantage that each team member thinks individually and separately about the risks. This independent thinking, which is not directed or influenced by other, perhaps more dominant team members, leads to a more divergent range of risks, with more potential risks identified.

If your team session is face-to-face, each team member writes their risks on sticky notes that go into a central bin.

If meeting virtually or online, team members email identified risks to a central coordinator. This can be asynchronous. You can ask the team members to deliver their 10 risks to you at an agreed date, it is not necessary to do it at the same time. This gives team members the flexibility to fit this task into their personal work schedules.

Step 3: Collect and group the risks. Now is the time to move into left brain territory for convergent thinking. Once you have collected the risks, combine the duplicate risks and then categorize them. Grouping risks into categories groups them in an orderly and structured manner. It usually has 10-15 high-level categories. For example, the three project constraints: cost, time, and scope are typical risk categories. The number and type of categories will depend on the project, as well as your organization’s management systems.

Step 4: Use a mind map to show the risks visually. Mind mapping is a powerful technique for displaying a large number of risks in a neat and compact visual form. A mind map is a diagram based on a central concept. In our case the central concept is Project risks. Mind maps use a non-linear graphic format to build a framework of ideas around a central concept. Visually, think of a spider web or the spokes of a wheel.

Its high-level risk categories, such as cost, time, and scope, fan out from the central core like spokes on a wheel. And then the specific risks radiate from each category node. For example, in Time, risks can include: schedule overruns, missed tasks, and the opportunity to compress the schedule, as risks can have both positive and negative effects.

With a mind map, risks can be categorized and logged in real time during face-to-face or virtual sessions and displayed on screen, so all participants see a continuous record of identified risks. In addition to engaging your team, form an orderly summary of the risks.

Now that the risks have been identified, it’s time to move on to assessing the risks so that you can prioritize them and develop risk treatment plans.

A robust risk management process uses divergent and convergent thinking to help you extract maximum value from risk identification. If this exercise is not completed effectively, you may be surprised at how many project risks leak out of the net.

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