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Sunday, July 8, 2012

Overview of Communicating Project Risks

In the previous section we covered the “Risk Identification” process in our Risk Management Framework. So, you have identified all the risks that can impact your project. What would you do next?

Take a moment and think logically before you read on…

After we identify all possible risks that may affect our project, the next logical step would be communicate to all people involved in our project that we have identified risks and here they are. Isn’t it?

This is exactly what we are going to cover in this section which deals with “Communicating Project Risks”.

Do you remember that we spoke about Risk Tolerance in one of our earlier chapters? If a project or organization is tolerant to risks, then they tend to take up high-risk activities whereas if the tolerance is low, only guaranteed outcome activities are taken up. Part of being an effect project manager as well as a risk manager is, understanding the stakeholder risk tolerance and the organizational risk tolerance. Though stakeholder risk tolerance and organizational risk tolerance can have a great deal of impact on your day to day decisions, do you think that your own risk tolerance will not play any part in those decisions? Well, if you thought so, am sorry to say that you are sadly mistaken. No matter how hard we try to concentrate on the stakeholder or organizational risk tolerance, unconsciously we will let our own tolerance levels to influence our decisions at least to a slight level. So, it is important that we gauge our own tolerance levels up front to avoid any surprises…

Trivia:
Analyzing our own risk tolerance is not part of the RMP Exam syllabus and nor is it covered in this blog. It is just something I thought you should know because it plays a decent role in our decisions and is something many people overlook as a non-existent factor.

Factors that Impact Risk Communication

Risk Communication is a fairly complicated topic because there is no set baseline as to what is or is not part of communication. One of the senior managers in my company once told me “The job of a PM is 80% communicating and 20% everything else”. Something that is so critical always has factors that impact it and risk communication is no different. The factors that can impact the communication of risks are:
a. Risk Attitudes and
b. Psychological Factors

Before we can go any further, I want to quickly provide a few pointers about the Communications Management knowledge area.

Though Project Communications Management is not directly part of the Risk Management knowledge area, communicating risks and regular updates to stakeholders is an integral part of risk management. So, it is extremely important that we have a good understanding of the communications management knowledge area. So, I suggest you go through all the topics related to project communications management in the PMBOK at least once before you finish your RMP Exam preparation. You can also revisit the chapters that were focusing on communications management during our series on the PMP Exam preparation. They are:

1. Project Communication
2. Planning Project Communication
3. Project Communications Management as part of Project Initiation
4. Communications Management as part of Project Planning
5. Communications Management During Project Execution
6. Communications Management during Monitoring & Controlling the Project
Armed with all this information, let us now dive into the factors that affect risk communications one by one.

Prev: Section Summary - Identify Risks

Next: Factors that Influence Risk Communication

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