There is an element of risk in everything we do. This is especially true when it comes to project management; not only has a business invested significant time, money, and resource into getting projects up and running, but the success of that business depends, in part, on the success of those projects.
Luckily, there is an easy-to-implement tool that can be hugely helpful in mitigating risk. Let’s look deeper into what a risk register is and how you can use it to manage project risk.
- What is a Risk Register?
- Do You Need a Risk Register?
- How to Create a Risk Register
- What Should a Risk Register Template Include?
- How to Manage Risk
- How Forecast Can Help You Mitigate Risk
What is a Risk Register?
In project management, a risk register is a tool that helps project managers identify the risks they may face when running a project. They can also be used by organizations to identify risks to the business.
The aim of using this tool is to identify risks early to limit their impact later on in the project, forming an important part of the project life cycle.
As a top-line summary, a risk register outlines the potential risks you may come across, what their impact would be on the business, the likelihood of them happening, how to mitigate each risk, and who is responsible for managing each risk.
The risk register template is incredibly easy to set up and can be created using an Excel spreadsheet or other more specialist software. Things get more complicated when it comes to filling in the blank template each time you’re planning a project, but we have some advice that should help out later in this article.
Do You Need a Risk Register?
Having a risk register can be incredibly helpful, no matter what approach to project management you and your team use. Whether your project management style is aligned with the Agile Manifesto or you’re working within Waterfall methodology, the short answer is, yes, you do need a risk register. Our recommendation is that you set one up when running any project.
While you may be able to get away with not using one, you’ll thank yourself when a risk that may otherwise have derailed your project completely is only a fleeting irritation because you planned for it in advance.
How to Create a Risk Register
When planning a project, it can feel like there are potential problems at every corner. Creating a risk register will help you feel in control by providing an overview of all the possible risks and allowing you to plan a response ahead of time.
Follow these steps, and you’ll have a thorough risk register prepared in no time:
Identify the Risks
Firstly, it’s important that you get the entire team involved in the preparation of your project risk register. While you may have oversight of the project generally, each member of the team will have detailed insight into their specific areas of responsibility. Get everyone together and brainstorm all the risks that could potentially affect the project, leaning on your team for their expertise.
Also, take the time to speak to your stakeholders to understand their concerns and any risks their involvement could bring to the project.
Don’t worry if you have a long list; when it comes to risk management, it’s better to be prepared for all eventualities.
Describe the Risks
While your descriptions don’t need to be lengthy, they do need to be thorough. Avoid being too vague by including all the essentials that define the risk. For example, if you’re concerned about running out of a material, be specific about what material and what could cause this issue. Just writing ‘materials’ here could cause problems later.
Consider the Impact
The benefit of having a project risk register is that you will have a good understanding of the real impact that the problems could have on the project and business.
If you were launching a new platform within your organization that will help store and manage user data, replacing an old, outdated system that is causing the business to lose money, hitting your time-oriented goals is essential. In this example, you may write that the impact of failing to get all stakeholder approval by the end of March would be significant delays to the project while changes are made and sections of the platform possibly rebuilt.
Devise a Prioritized Plan
Some of the risks you’ve identified will only minorly impact the project, such as delaying progress by day, whereas others will be potentially catastrophic if not managed correctly. There are many ways to prioritize your risks, such as with a traffic light system or by ranking them on a scale of 1 to 5 based on severity. However you choose to rank them, you’ll need to prioritize your risks based on how significant their impact is and how likely they are to happen.
Consider How to Handle Each Risk
The task of considering your response to each risk can be timely, but don’t rush it. This is possibly the most important part of your risk register.
Ideally, you or the risk manager will be able to jump straight into managing a risk should it happen based on the plan you’ve laid out in your risk register. As with your risk description, these plans should be concise, thorough, and well-researched as with your description.
Decide on Risk Managers
The last step is to assign a risk manager to each risk. They will be responsible for ensuring that your plan of action is put in place if an issue arises, introducing an element of accountability.
What Should a Risk Register Template Include?
Each of the below elements should be the header of its own column in your risk register. The best way to lay your risk breakdown structure out is in a chart. Here’s what it should cover:
- Risk identification: for easy identification, allocate each risk a name or number.
- Risk description: briefly summarize what the risk is.
- Impact description: briefly summarize what the impact to the project or business will be if this risk materializes.
- Risk categories: if you have a long list of potential risks, it may be helpful to categorize them. Example categories include: financial, material, and schedule.
- Risk impact: through qualitative and quantitative analysis, determine the level of impact the risk holds. You could, for example, rank this on a scale of 1 to 5.
- Risk probability: Assign each risk with a value connected to how likely you consider the potential risk is to occur.
- Risk priority: Determine the priority order by multiplying the value of the risk impact with the risk probability. This means those with the highest impact and probability will be prioritized.
- Risk response: This is a space to detail your plan for responding to the risk should it arise. You can expand on these plans in a separate document, such as a risk response plan.
- Risk ownership: Assign a member of your team to take responsibility for managing each risk — the risk manager. This will involve overseeing the risk and activating the planned response if needed.
How to Manage Risk
Things go wrong. It’s an inevitability in life and is especially true in project management. While we can’t always stop errors from happening or problems from stopping us in our tracks, we can limit the disruption they cause.
Risk Identification and Documentation
As the project progresses, be sure to check in with your team, stakeholders, and third parties regularly so that you can be aware of any risks as soon as they appear.
Log risks that do occur in a spreadsheet or other software to keep track of what went wrong, its impact, and how you resolved it. Other issues you didn’t consider may crop up. Make sure to note these down, as well as some detail on how you handled them.
The risk manager is responsible for monitoring the risks assigned to them and for implementing the agreed response if they come into play.
By dividing responsibility throughout the team, you reduce the chance of your identified risks becoming problems that threaten the project, either by increasing the costs, pushing back the timings, or negatively affecting the quality of the project outcome.
The way you or the risk manager handles each individual risk will depend on its nature. For example, if you are grappling with a supply issue, you may decide to order critical materials ahead of time or have a backup supplier on speed dial.
Once a risk has been rectified, or the time during which it could have occurred has passed, remove it from your list. That’s one less thing to worry about!
How Forecast Can Help You Mitigate Risk
Identify Issues Before They Happen
Get an overview of your project status on one screen. Our dashboards allow project managers to have a birds-eye view of how their projects are progressing in real-time. Our all-in-one project management tool is incredibly powerful and will help you catch risks before they arise, so you can limit their impact on your project.
Review Project Impact
With a wide range of dashboards to choose from, Forecast allows quickly see how delays will affect your timeline and track how your outgoings are compared to predicted costs. As we’ve said, things will go wrong, but Forecast is here to help you manage the impact.
To keep your risk level low and your success rate high, sign up for a free 14-day trial of Forecast below.