Risk is an uncertain event or set of events that, should they occur, will have an effect on the achievement of project objectives.
'There are no risks ...'
This is a fairly common view, particularly of someone who is planning or working on a ground-breaking project that is close to their heart and is convinced it will proceed trouble-free. The reality of course is rather different and risks are unavoidable.
Everything does not always work perfectly the first time, and depending on the task, many attempts may be required to achieve the desired results. Or in some cases, many attempts may demonstrate that the existing plans or methods are just not optimal. It is important that there is sufficient flex in every project to accommodate such events.
Highlighting Risk is a Good Thing!
Risk management is a must for all R&D projects and this starts at the planning phase. It is important to understand the key risks associated with the work program, how likely they are to occur, their impact and actions that could be taken should these events arise. If the project is large enough, it is wise to appoint a risk manager who will handle risk during the planning phase and also throughout the project.
Types of Risk
Each member of a multi-disciplinary team will have a different perspective on risk and what it means for their activities. Risks are not only scientific or technical but may include others such as regulatory, environmental, cultural, financial or even managerial. Imagine the impact of a project leader leaving half way through a large-scale collaborative project. Consider the various types of risk up front, how may these influence the project at different stages? For example, it would be no good spending four years developing a new medical device if it was never going to be possible to get regulatory approval to take it to market.
How to Manage Risk?
There are many different tools, methods and techniques to manage risk. There are some key elements common to most:
- Identify the risk. Consider undefined assumptions that may be risks or could give rise to risks.
- Assess the risk. Understand the likelihood, impact and potential timing of risks that may occur.
- Plan how to address the risk. Depending on the potential impact, this may involve avoiding the risk altogether, adapting the plans or even accepting the risk (not all risks are detrimental or a threat, some may present new opportunities for exploitation).
- Address the risk. Put the plan(s) into action, address risks that are most likely and with the highest impact first.
- Monitor the risk. Adapt plans accordingly and be aware of new risks emerging as a result of corrective actions or ongoing risk management.
Good lines of communication within project teams are important at every stage of risk management.
Contingency planning and risk mitigation are often confused. Contingency is where back up plans are created in advance of a risk materialising. Risk mitigation is damage control employed after a risk occurs to reduce the consequences. Rating or weighting risks to establish which are most probable and/or have the most impact is useful to consider when contingency planning or putting mitigation measures into action.
Depending on your project, it may help to allocate a risk budget. When Plan A becomes Plan B (or C, D or E!) this can cause an increase in activities and escalating costs. Understanding the interdependencies between tasks in the program of work and also how these might change when plans are revised is also important during effective risk management.
This is just a flavour of the issues around risk management that are relevant to R&D projects. If you or your team could benefit from input and guidance around the planning/execution of project risk management, Euram can assist. Contact us at firstname.lastname@example.org.