Understanding the nature of project risks allows for the most efficient response when problems arise. It is thus incumbent on project managers to develop a thorough understanding of individual risks on a case by case basis for the purpose of analysis and prioritization.
This analysis of risk occurs at two different levels which can be defined as “cause” and “effect”. The “cause” side of this equation examines the events which could occur in advance of a defined risk which then turns into an event. The detailed listing and project-wide awareness of potential causes can help to circumvent issues before they arise.
The analysis of the “effect” of materialized risks can assist both in dealing with problems that arise as well as prioritizing them. The level of priority can be influenced by the anticipated magnitude of an event in terms of added costs, extended timelines, or decreases in the quality of the end product.
Prioritization of these risks is critical due to the simple fact that certain risk events have a much greater impact on a project’s development than others. Planning for greater allocations of resources, manpower, capital, etc. to handle the large scale risks in a project can be the difference between the success and failure of a project. The next step is setting criteria for lesser risk events which may not derail a project but can impact the level of profitability and ultimate success of the project.
Dmitrij Harder of Solvo Group, Inc. has a broad range of experience in analyzing and prioritizing project risks so that they can be handled in the most efficient manner possible.