Additionally, effectively managing project risks ultimately helps the organisation in its efforts to manage its overall or enterprise risks as this will indicate where project resources should be allocated for optimum use. Many companies may not realise that not measuring the success rates of their projects also hinders them from determining whether they are progressing, if they are competitive, and if their processes and procedures are sustainable.
There are many areas where ERM and project risk management intersect but generally, project risk managers may apply the same principles of ERM when managing their projects. In both areas, for instance, identifying risks is crucial. Any project risk analysis and management guide will put this first and foremost. Qualitative and quantitative risk analysis needs to be performed; risk strategies and responses must be developed and implemented; and there must be continual monitoring via reviews, evaluation and feedback from stakeholders. ERM involves, for example, risk associated with accidental losses, finance, strategy and operations; project risk involves the same, but at project level.
It follows, therefore, that project risk managers should look to ERM for pointers when it comes to setting measures that work, and to ensure they are in place. They should, firstly, have a documented risk management strategy in place, and develop support at all levels. Certain levels of expertise are required. For project risk management to be effective, the right people have to be in the right positions. Project management teams should have the necessary skillsets, including experience of managing project-related risks. Project risk management actually carries on beyond the duration of the project; detailed documentation is therefore necessary to add to the organisation’s knowledge and experience.
Documenting failure is just as important as celebrating a project’s milestones. It is a long-term measure that helps the organisation identify pitfalls to be avoided, for future projects. Problem areas can be pinpointed, and mitigation measures can be improved based on documented evidence. This will save the firm both time and money, and contribute directly to building risk awareness at each level of the organisation.
5 The IERP® Monthly Newsletter December 2021