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Risk management is an essential part of any project. It involves pinpointing potential risks, assessing them, and putting strategies into play to mitigate them. In this post, we show you the 9 best methods for how to identify risk in project management.
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1. Brainstorming
To successfully manage and identify risk, begin with brainstorming. Bring everyone on your team together to discuss the project, any risks they preempt occurring, and the best ways to deal with them.
An affinity diagram can be one of the best ways to organize your project management risk assessments. An affinity diagram provides a visual representation of your data points and how they connect.
To create an affinity diagram, you start with specific ideas and then expand into broader categories. Here’s how:
- Figure out which specific risks may arise during your project by brainstorming them with your team
- Add these ideas to cards or sticky notes
- Separate these ideas into categories — consider how these singular ideas are similar and can be connected to other ideas
- Make a series of “affinity cards” and use them to create a specific statement for each group
- Add your related ideas to the group with the most relevant affinity cards
- Order the groups based on the threat level (whether financial, practical, or otherwise), and the likelihood of it occurring
With this, you’ll have a clear visual representation of the level, type, and probability of occurrence of the different risks you may encounter throughout your project.
2. Interview Team Members
Once you have a clear perception of the risks that may arise during your project, it’s time to uncover more details with team interviews. Interviews are a great way to approach risk identification.
They can give you the opportunity to undertake a deeper dive into the type of risks you may encounter and the best ways to potentially deal with them.
Each team member has unique insight into the risks ahead and may have interesting ways to help deal with them that other team members may not have considered.
Be sure to make notes that you can refer back to while moving forward with your risk management plan.
3. Create a Common Risks Checklist
Risk checklists are another essential way to keep track of and help mitigate project risks. This checklist includes historical risks that you and your team have encountered in the past with projects.
They give you a source of knowledge to help you guide your risk management plan moving forward and give you something concrete to refer back to throughout the course of your project.
Risk checklists account for different types of risk — including business, relational, financial, and technical. Alongside charting your risks, your checklist should cover the best way to handle them.
For example, your checklist for:
- Mitigating financial risks may include budget constraints and funding requirements and sources.
- Relational risks may be dealt with by ensuring you have clear leadership roles and processes in place to handle disagreements.
- Technical risks are one of the main categories of risk you need to be aware of when doing a risk analysis.
Checklists are highly sought-after in project management. Unsurprisingly, most of the best project management apps let you create checklists.
4. Review Project Dependencies
Project dependencies occur throughout the course of a project and refer to anything that needs to happen before you can move ahead with your project or a particular task.
Project dependencies can rely on various factors, such as:
- Having the right frameworks and guidelines in place,
- Undertaking revisions and providing feedback, and
- Ensuring other deliverables have been completed.
How do project dependencies impact risk? If you know what you need to depend on to move seamlessly through each stage of the project, then you can identify any potential risks that may arise.
5. Assumption Analysis
When dealing with risk, it’s also important to get a clear sense of the assumptions each stakeholder holds. Assumptions are something you believe will happen but don’t have any clear proof of.
It’s important to talk to your team to understand the assumptions they hold about the project, as these assumptions or inaccuracies can lead to problems or risks occurring throughout the project.
Say someone assumes that it’s someone else’s job to report issues as they arise — rather than on both or the rest of the team. Such an assumption could easily derail the success of the project.
6. Use Cause and Effect Diagrams
A cause and effect diagram or fishbone diagram is a visual tool used to chart risks and their cause and effects. To create a cause-and-effect diagram, simply:
- Place a known risk at the center of your page.
- Add branches (in the style of a fish bone) and add the potential causes of the problem to each branch — I.e., finances, communication breakdown, or outdated technology
- Add sub-branches to each category to highlight factors that may influence each of these (e.g. conflict may be rooted in a lack of clearly defined roles or in a manager’s disorganization).
This is easily one of the best risk analysis methods out there. You can use one to help gain an understanding of how risks may impact your project, team, and wider organization.
7. SWOT Analysis
A SWOT analysis is one of the most commonly used tools and one of the stronger risk identification techniques. It’s a fast and easy way to learn the strengths and weaknesses of your team.
SWOT stands for strengths, weaknesses, opportunities, and threats — all of which combine to give you a clear view of the different elements of your team that may impact your project.
Here’s how these factors influence your project and level of risk:
- Strengths — Refer to things your team does best and how they can use these skills to ensure the project goes to plan and to help successfully avoid any risks along the way
- Weaknesses — Highlight what your team struggles most with and how this can play into the type and level of risk you may experience
- Opportunities — This refers to areas where your team can grow
- Threats — These refer to the risks that may derail your project, showing you what you need to look out for
8. Use a Risk Assessment Tool
If you’d like to improve your risk assessment and management approaches, then investing in a risk assessment tool can be one of the best ways to go about it.
There are several different types of risk assessment tools that you can use to manage different areas of risk. These tools rely on different frameworks — such as decision trees and risk matrixes.
Take risk matrixes, these risk assessment frameworks provide a visual overview via a chart of the different risks you may encounter during your project and code their likelihood in different colors:
- Red signifies a high probability of the risk occurring,
- Orange indicates a medium likelihood of the risk occurring,
- Yellow indicates a low likelihood of the risk occurring.
These tools can help you get a clear overview of your risk profile and give you an opportunity to gain new insights into the risks you might face.
In addition, AI and machine learning tools are changing risk management as we know it. As such, 55% of companies have reportedly adopted AI.
9. Create a Detailed Plan
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You have the analysis behind you, now it’s time to create a detailed plan to implement all you’ve learned. To create a great plan following your project risk assessment, you need to:
- Define your goals and project deliverables — what would you like to achieve with your project? What tangible results will you see once you wrap?
- Define your success metrics — how will you measure success?
- Set your budget — how much will you spend throughout the course of your project? What are your budget limits?
- Define roles and responsibilities — who is doing what? Who is responsible for other team members? How will you communicate with each other throughout the project?
- Define your milestones — which important milestones do you need to hit to make sure your project is successful and delivered on time?
- How will you mitigate risk at different stages of the project? List the strategies you will use and when you will use them.
Read More: How to Create a Project Plan
Why Risk Analysis and Prevention is Key in Project Management
Risk analysis and prevention are key to successful project management because risks can seriously derail your project and cause far-reaching repercussions.
Here are some of the main risks you need to be mindful of when undertaking risk analysis in project management:
Common Risk Analysis Mistakes to Avoid
There are several risk analysis mistakes you may run into when prepping for your project, these include:
One of the biggest risk analysis mistakes you may run into is failing to identify risks early enough. This can leave you unprotected and catch you off guard when risks seemingly arise out of nowhere.
While your energies are best placed focusing on the risks that are most likely to occur, it’s still important to focus on the rarer risks that may still happen throughout the course of your project.
That means factoring risks with both a high, medium, and low probability of occurring and making sure you have plans in place to mitigate and tackle each one.
Just relying on one or two stakeholders to identify and plan for risk is one of the biggest mistakes you can make during your risk analysis. Each team member can have unique and valuable insight into the risks you may face throughout the project.
As such, it’s important to include each team member in your brainstorming process and make sure everyone is interviewed.
While focusing on just one or two methods to fulfill your risk analysis can save you time and get you started on your project faster, it can leave you vulnerable to improbable planning.
It can also increase the likelihood that a risk may occur and may negatively impact your project and business. We recommend trying to include several strategies in your risk analysis plan.
You can spend forever building out your risk analysis and brainstorming ideas to help mitigate or address risks as they arise. However, you need to have clear “if, then” rules in place.
This ensures that your team immediately knows what to do when a risk arises. “If, then” rules chart a direct response to any risk that arises e.g. if an environmental risk arises, then construction teams must stop work, isolate the risk, and contact the project manager.
Conclusion
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Risk management is a foundational aspect of any project project plan. With the right risk management plan, you can help plan for any potential risks and put strategies in place to help mitigate them.
Looking for the best project management tools to help fulfill your next project? Take a look at our post on the best project management software currently on the market.
FAQs
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References
- The State of AI in 2023 (McKinsey)
- Global Risks Report 2024 (The World Economic Forum)
