One thing you will learn when you take any sort of project management training course is that you need to master the art of risk management. Before you start a project, you need to evaluate the risks and you need to put plans in place to mitigate them. This can prevent your project from going completely off trail if something were to go wrong. Below, we are going to take a look at some of the most common project risks to give you a better understanding.
What are some of the most common types of project risks?
There are three main risks that could hinder any project, at any time. These are as follows:
- Performance risk – This is the risk that the project is not going to be able to produce the results that had been outlined in the project specifications.
- Schedule risk – This is the risk that the project is going to take longer to deliver than anticipated. This can also lead to problems with regards to cost estimates as well, which is the third main risk. That’s why, the reputed firms always back their business operations with the best scheduling software to avoid such risks.
- Cost risk – This relates to costs amounting to more than the projected costs. This usually occurs because of scope creep as well as poor cost estimating accuracy.
Some other risks to be aware of
Aside from the three main risks that have been mentioned, some of the other risks that you need to be mindful of include…
- Risks linked with external hazards – Examples of this include civil unrest, labour strikes, terrorism, sabotage, vandalism, earthquakes, floods, and storms. These are risks whereby it is incredibly difficult to have control over them.
- Legal risks – This relates to risks that arise because of your regulatory and legal obligations, for example, litigation and contract risks.
- Market risks – This relates to any sort of risk that is linked to the market you are operating in, for example, credit risks, liquidity, interest rate risk, commodity markets, foreign exchange risks, and competition.
- Operational risks – This relates to any risks relating to your processes or poor implementation, for example, distribution, production, and procurement.
- Strategic risks – This relates to risks that arise because of strategic errors, for instance, selecting technology that does not work or is not suitable for the project.
- Governance risks – Finally, we have governance risks. This relates to board and management performance as it concerns company reputation, community stewardship, and ethics.
Of course, there can be other risks that are unique to your project and the nature of the work that is being carried out. Moreover, some of the risks that have been mentioned above will be more relevant to you than others. This is why risk management needs to be addressed during the planning phase in order to ensure the maximum chance of success.
As you can see, there are a number of common risks when it comes to project management. This highlights the benefits of project management training. You will learn all about these risks, as well as others, and you will be prepared in terms of putting a strategy in place to deal with them.