Risk management is a highly effective method to identify and reduce or, to some extent, eliminate the risks in a program before their occurrence. It makes you aware of the steps you have to take before the project launch and during its execution.
The number of changes that you have to make to secure your project reduces to a great extent. It increases the project quality, reduces its completion time, and its functional benefit. Despite so many benefits, companies hesitate to implement risk control systems. And the reason being they are influenced by several risk management misconceptions.
We will now look at the top ten risk management misconceptions that need to be addressed as soon as possible to promote a secure work environment.
1. Project Manager is not Accountable for Risk Management
There is a myth that the project manager’s role is limited to supervising the project and explaining its benefits to the public. Anything that revolves around this role only needs to be identified, assessed, and resolved.
But if the risks involved are not identified at the right time, it might lead to project delay, or even if the risk involved is considerable, you might have to close down the project.
2. Unable to Identify Risk in a New Project
Project managers and team members often lose confidence while starting working on a new project. They have the perception that they have not attempted something similar in the past and therefore do not understand the risk identification process.
Now, what can team members do in such a situation?
Even if they had not worked on the same project before, they could answer the following questions to overcome this perception:
- Are the end goals of the project similar to any previous project?
- Did any other department in the company accomplish a similar task?
- Do you have access to the record of key learnings from the earlier projects, both completed and unsuccessful?
If your company has no access to any risk management learnings from previous projects, you can take help from outside. You can approach risk management experts or collaborate with other companies in your field who might have accomplished similar tasks.
3. Little Knowledge of Risk Management
Every company knows about the potential risks that might be involved in a project. And the senior executives might be indirectly involved in solving those risks. But they do not recognize that they are doing risk management. Hence company’s senior executives think whatever they are doing is enough and do not acknowledge problem-solving as a part of risk management.
4. Only Major Risk needs to be Worked Upon
Most of the time, project managers and team members view that the risk they have identified is too small to take care of. It is not the right decision. Risks can be small or big. A team that is aligned with the company’s goals will always consider small risks and create a risk control strategy to ensure the project’s successful completion.
There is no doubt that more enormous risks require more attention, but many small risks can give nightmares to any team. Hence, you should provide all types of threats, both small and big, equal attention to ensure the project’s success.
5. Implementing Risk Control System for Every Risk
It is not valid as sometimes you cannot control the occurrence of a risk. You can only plan what to do if the trouble takes place. You cannot mitigate or stop it from happening. So, when the risk occurs, you do not have to think about what to do, as you had already planned when everything was smooth. Now you have to execute that plan.
6. Risk Management is not Required for Small Projects
Projects, whether small or big, need proper assessment. They both are a part of the company’s goals that need to be executed successfully to improve company’s financial and market value. So, if your company is working on only small projects, not big ones, not identifying risks can lead to a massive loss. And sometimes, this loss is irreversible.
7. Risks need to be Managed at the Beginning of a new Project only
This risk management misconception is wrong as risk identification and management is not a one-time activity but an ongoing process. If you have invested enough time identifying the possible risks before starting the project, the number of risks that occur during the project execution can lower to a great extent.
However, it does not mean that threats will not happen. You have to continuously keep an eye on new risks that might pop up and devise ways to lessen their effect. The same risks may keep on occurring from time to time. So, you have to remain alert throughout the project life-cycle.
8. Risks need to be Handled when they Occur
Risk management is about managing risks before they occur. The whole concept is to identify risks beforehand and create a strategy to eliminate or lower their occurrence. If a risk occurs, it does not remain a risk. It becomes a problem that is too difficult to solve.
Every project manager knows that managing this kind of situation is a stressful activity. So the focus should be on evaluating potential risks and create a risk control system before commencing any project.
9. Unidentified Risks Pose no Threat to the Project
If you cannot identify any risk or do not know how to mitigate it, it does not mean that you will hide it. If the risk gets identified at the initial stages, the risk management team can work on methods to lower its occurrence.
Also, even if you identify risk, it does not mean that a well-defined mitigation plan will come with it. You cannot know everything beforehand, but team efforts and subject matter expertise of the project manager and risk control team still matter.
10. Risk Control System does not add any Value
Many times managers and senior executives overlook the benefits of implementing a risk control system for cost-saving purposes. It is expected for the teams to present an estimate for risk management for every project. But companies seldom set aside separate funds for risk evaluation and mitigation.
They do not understand gow much beneficial it is to focus on problem avoidance. Even if you cannot eliminate the risk creating a plan beforehand to handle it helps in better project management and its successful completion.
To Sum It Up
After reading all the risk management misconceptions, we hope you will implement risk control systems in your future projects, whether small or big. Risk management not only enhances project security but also promotes team communication that improves project quality.
Organizations must focus on having a backup plan to avoid project failure. They should also organize risk management training sessions for their teams or allow them to get CRISC certified, one of the most sought-after risk management certifications worldwide.
Here we have tried to debunk several myths associated with risk handling. If you have come across any other myth, do share it in the comments.