Where do you start managing risk?

Every business venture carries risk. Kim Wasson describes five factors to consider when diving into risk management. 

Today’s guest post is by Kim Wasson, a principal at thoughtLEADERS where she teaches our course on Risk Management.

You know that managing risk is important. You know that the difference between dismal failure and a simple adjustment can be as straightforward as being prepared. You’re ready to start wrestling with risks.

But – where do you start? How do you even know what the risks might be?

It’s hard to know what might ruin your beautiful plan if you don’t have a good grasp of what the plan really is. Before you dive into risk management, be sure you know what you’re aiming for in these five dimensions:

Schedule: When do you need to be done? Be as specific as possible. ‘ASAP’ is a vague and moving target, so avoid that one. If your schedule is ‘Second Quarter’, know whether that means April 1 or June 30. It can be helpful to have both an optimum date and a drop-dead date.

Cost: How much are you willing to spend? A big range isn’t helpful for this exercise, so be conservative and pick a number. Cost can be in dollars, person-time/effort, equipment, anything that can translate to the price tag.

Output: What do things look like when you’re done? If you’re creating a product, what does it do, how big is it, what does it look like? If it’s an event, what is the runtime, décor, speakers, music, food – anything that has to do with what comes from your effort.

Quality: Quality often gets lost in the shuffle – moved aside to be sure the other goals are met. That’s not good news. Your first instinct may be to say you want absolute quality – probably realistic if you’re creating a medical device, but not so much for a recruiting event or a business software product.

Intangibles: There may be things that don’t fit into the other four goals, things like reputation. It may help to think of these in the reverse as well – what could be affected if we don’t make our other goals?

Now you have a plan to work with.

First, go through the plan yourself and ask yourself what could go wrong that could keep you from reaching each one of your goals. What could make the project late? (Rain? Freeway accidents? Resources not available? I’ll be honest with you, ‘pandemic’ wasn’t on anyone’s risk list a few years ago, but it does show up fairly often now) What could end up costing more? (Gas prices go up, resources are more expensive, the scope of the project increases) . Do this for each of the five areas and you’ll have a starter list.

Once you have your own initial list, hold a brainstorming session with folks who have knowledge about the plan and experience in what could go wrong. Don’t show your own list to this group until after you’re done brainstorming – it will help make the final list complete.

After your brainstorming session you may have a large and somewhat scary list of things that could go wrong. In the next blog post, we’ll help you pare down the list to the risks that make sense to address and track.

If you’d like to learn and practice a step-by-step process, check out ThoughtLeaders LLC’s Risk Management class!

– Kim Wasson is a principal at thoughtLEADERS where she teaches our course on Risk Management. If you’re interested in the course, please contact us. Kim is also the author of The Socially Intelligent Project Manager: Soft Skills That Prevent Hard Days (CLICK HERE to get your copy).

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