Once project risks have been defined it becomes critically important to measure these risks as to their potential for occurrence and their impact on the project. This step is critical because without detailed risk metrics, a project manager may overlook harmful risks that could result in serious or even fatal damage to the project. Skipping risk metrics can also result in time and resources being dedicated to the mitigation of low likelihood, low risk events which cost more to manage than what the actual event would cost if it was to happen.
Risk metrics can be developed by taking these four actions:
- Get risks on the table as early as possible – Managing risks only as they occur is a sure way to court disaster throughout the project.
- Include standard risks such as funding and resources but be sure to address threats that are specific to the project. Getting a handle on project specific risks is as easy as asking what risks exist for each aspect of the project and what the overall damage would be if that risk was to occur.
- Measure the risks on the list. Metrics can include the potential for occurrence, the financial damage caused by the event, and the harm done to the company’s brand or reputation. These metrics can help to prioritize threats and determine the amount of time, money, and resources which should be dedicated to the mitigation of each risk.
- Monitor risk metrics. Risk metrics change over the course of a project, especially if the timeline is a long one. Risks which were considered high priorities at the beginning of a project can diminish over time while risks which weren’t on the radar at all can become extremely important. Monitoring risks metrics enables managers to allocate resources where they belong while moving resources away from shrinking threats.
Measuring risk metrics ensures that a project’s greatest threats are given the greatest attention while lesser risks are managed at a level commensurate with their potential to do harm to the project. When handled by experienced professionals like Dmitrij Harder’s team at Solvo Group, this process can save money while protecting projects from their greatest threats at any given time.