Much like investors needs to know about the potential benefit – and risk – of companies in their portfolio, project managers, too, need to understand the same of the projects they undertake. No matter what kind of projects or initiatives you’re working on, achieving success comes with identifying and managing risk. Understanding what risk looks like and how to engage with it can improve project success and facilitate business growth.
Here are three key things you should know about risk:
1. Not All Risks Are Bad
It’s an important to know the difference between a risk that will produce more positive than negative effects, and vice versa. If a risk is identified as having a potentially positive impact, it’s one that you’ll want to exploit, rather than avoid. Once risks are identified, their probability must be quantified in order for project leaders to make informed decisions. Having a more comprehensive knowledge about the risks – and opportunities – you’re facing puts you in a position to make a more confident decision about whether or not to undertake a project.
2. Skilled Workforce = Reduced Risk
Continued training for employees increases their ability to accomplish a company’s strategic goals. Technology, best practices, and consumer power are always changing, so you should keep employees trained to handle new challenges they’ll inevitably encounter. By improving the skill sets of employees to empower them to lead effectively and make faster, better decisions, you will reduce uncertainty associated with the risks your projects face.
3. Preparation is Key
No matter how much homework you do on a risk, there will always be some level of uncertainty involved. Managing potential risks and preparing to address the unexpected are critical elements in handling risk well. You should do your best to understand what variables could affect a project or initiative, alert others if you see negative impacts, and have a contingency plan so that if something doesn’t go as planned, little time is wasted and the impacts are mitigated.
Risks are an inevitable part of accomplishing strategic projects, but treating your projects in the same way an investor would handle a portfolio can help you get a better handle on the bigger picture and make decisions with more confidence.
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