The answer to how risk management is important to project success is
best illustrated by the fact that no project has ever succeeded without
proper risk management. In other words, project management into which risk assessment has not gone in is as good as a doomed one.
Risk management’s importance to project success can never be
overstated. Success at any project is unthinkable and unimaginable
without proper and critical
risk management. Risk management
is a means by which the risks that accrue into a project are foreseen,
assessed and mitigated, so that the project does not run into hitches at
later stages, from where it would be all but impossible to rectify the
same.
Understand what risk is, first
The
answer to the question of how risk management is important to project
success has to start with a basic understanding of risk. In the context
of
project management, risk,
as we all know, is the occurrence of a danger or an unwanted, undesired
event in a project. It succeeds or is the next stage of a hazard, which
is described as the potential for or the possibility of an event to
cause danger.
How risk management is important to
project success is to be understood from the standpoint of the fact
that absolutely every activity, not only something concerning project
management, has a risk. There are risks in simple and completely mundane
activities such as brushing one’s teeth or putting a baby to sleep.
Diligence and thoroughness are important elements of risk management
In order to manage a project successfully, the first step is carrying out
risk management thoroughly
and diligently. Risk management, if done properly, is the first and
most fundamental aspect of success in a project. It is mainly about
taking identifying, analyzing and mitigating risks in a business
vis-à-vis its strengths and weaknesses.
It is accepted in the discipline of risk management that risks cannot
be completely eliminated. However, having a sound risk management plan
helps to anticipate and be prepared for risks. The ways in which this is
done mainly depends on the kind of project which the organization is
carrying out, and the risk manager’s ability to understand it in its
fullness and implement risk mitigation strategies effectively.
Palpable benefitsRisk management’s importance to project success is illustrated by the following benefits of carrying out a Risk Analysis:
The stages of risk managementGiven the importance of risk
management to project success; it is important to understand and
implement risk management in its stages:
Planning:This
involves understanding the importance of risk management to project
success by planning the risk management in terms of its size. It is
generally true that the bigger the project from the operational,
logistical and financial perspectives; the greater the risk, and vice
versa.
Preparing: The next stage of risk management is to prepare for
it. The right knowledge of the project in all its detail helps project
managers to prepare for any exigency and for taking steps to mitigate
its effects.
Measuring the result: Judicious
and farsighted project managers measure the fallout of a risk
management activity by what it fetches. If a risk management activity
has accrued a certain expense that cannot be justified in the light of
the benefit it brought, then such a risk management action is not
effective and has not understood the importance of risk management to
project success.
Evaluating the impact: A
risk management plan
may have been planned, prepared and executed very diligently, but risk
managers ask what impact such an action had on the project, and
eventually, on the organization. How many resources did it consume? How
much time did it take? What kind of risk did it mitigate and what was
the impact of this risk, had it been allowed to continue? These are some
of the questions insightful risk managers ask. This perceptiveness is a
result of their sharp understanding of how work management is important
to project success.