Establishing a Risk Register
The risk management process within an organization is a procedure aimed at anticipating and mitigating risks. The process reduces or avoids adverse outcomes and enhances the probability of achieving project objectives successfully. The primary objective of the risk management process is to proactively identify, analyze, and address potential risks that could adversely affect project schedule, cost, quality, and customer perception. A clearly defined and documented Risk Management Plan ensures a shared understanding of the risk management workflow, the involved stakeholders and teams, their specific roles and responsibilities, and the anticipated outcomes. It facilitates consistent tracking and continuous monitoring of risks until closure.
One effective tool in risk management is the risk register, which systematically identifies, tracks, assesses, and manages risks. For organizations with limited budgets and resources, selecting costly solutions may not be practical. This article offers a detailed method for creating a basic risk register using readily available systems, assisting project managers in developing a cost-effective approach to risk management. This article is designed for organizations that aim to create a baseline risk register as a preliminary step, with the intention of refining the register as the project matures and the project team gains experience.
Understanding a Risk Register
A risk register is a documented record that lists all identified risks, the probability of occurrence, the potential impact, and the measures taken to mitigate them. It serves as a central repository for risk information, facilitating effective monitoring and management. Additionally, a risk register can facilitate risk related communication and collaboration among stakeholders, leadership, and the project team. By offering a clear and detailed overview of the risks and the plans for managing them, a risk register can promote a unified understanding of the risks and align efforts towards common objectives. This can help minimize confusion and misunderstandings, enhancing the overall efficiency and effectiveness of the project.
Key Components of a Risk Register
Advanced risk management processes require sophisticated analysis and response workflows, incorporating extensive attributes and data elements to effectively manage risks. Such processes necessitate complex risk registers to support the management of these risks. For the purpose of establishing an effective baseline, it is recommended to initially implement a straightforward and modest risk register. This baseline register can be progressively enhanced and expanded as the project evolves and matures. Here are some essential data elements recommended for a preliminary risk register:
Risk Identification Number: This is a sequential number assigned to each newly created risk, serving as its unique identifier.
Risk Title: A field that provides a brief and clear description of the risk. Generally, the risk is identified by this field. However, this field is optional.
Risk Identification: This field documents potential threats that may impact the project. Each risk should be described concisely in the format, "If this occurs, then it will affect that".
Risk Description: This field is intended to document the detailed explanation of each identified risk, including its source and possible consequences. However, this is an optional field.
Risk Assessment: This field is intended to capture the results from evaluating the probability and impact of each risk using both qualitative and quantitative methods. Generally, this is presented as a dropdown field with rankings from 1 to 5 or Very High to Very Low.
For consistent and objective outcomes, it is recommended to establish ranking criteria and set clear thresholds.
Including a tooltip in the register for "Just in Time" awareness is also recommended.
Risk Mitigation Strategy: This field conveys the mitigation strategy selected to address the risk. Depending on the probability and impact on the project, one of four selections can be made: Avoid, Transfer, Mitigate, or Accept. This field is presented as a dropdown with these for strategies.
Risk Owner: This field identifies the individual accountable for overseeing the analysis, mitigation, and resolution of the risk.
Risk Trigger Date: This field captures the projected date when a risk is escalated to an issue if actions to mitigate the risk are not taken. This field is presented as a date field.
Risk Mitigation Plan: This field is designed to detail a comprehensive strategy including the specific actions necessary to reduce or eliminate the potential impact of the risk.
Contingency Plan: This field is designed to detail a comprehensive plan to resolve the issue in the event that a risk escalates to an actual problem.
Risk Status: This field is designed to capture the status of the risk. According to the PMBOK guide for risk management, the statuses include Identified, Analyzed, Monitoring, Mitigated, and Realized. Additional optional statuses such as Withdrawn, On Hold, and Cancelled may also be included. This field is presented as a dropdown menu.
Last Review Date: It is essential that risks are regularly reviewed and updated to reflect any changes in their impact or probability. This field records the most recent date on which the risk was reviewed to provide an indication of its current relevance. This field is presented as a date field.
Review and Monitoring Notes: This section is designated for documenting notes and updates from risk review meetings, including feedback and approvals from key stakeholders. It highlights how risks are managed consistently and effectively until they are resolved. This field serves as an audit log for the duration of the risk. This is an optional field.
Risk Impact: This field captures the scope of impact if the risk materializes. It is presented as a dropdown field. Some recommended options include Cost, Schedule, Quality, Security, Compliance, Customer Perception, Strategic Alignment, Stakeholder Approval, and Operations. This is an optional field.
Steps to Establish a Risk Register
Prior to developing a risk register, it is essential to define the purpose and objectives for implementing a risk management process. Subsequently, it is imperative to understand the role of the risk register that is aligned with the risk management process. The risk management process, workflow, stakeholder involvement, and procedures related to the use of the risk register must be thoroughly defined and documented within the Risk Management Plan. This approach facilitates shared understanding among the project team and stakeholders and ensures consistent implementation. Lastly, for effective implementation of the risk management process, it is essential that leadership remains committed to supporting the initiative and allocates resources to maintain the risk management process efficiently.
Follow the steps outlined below to establish a risk register:
Step 1: Identify Risk Tracking Tool
When considering options for a risk register, there are several cost-effective solutions that offer flexibility for configuration and customization. The risk register functions as a detailed list of risks. Any tool that enables the creation of a table or a list will suffice for this purpose.
The most straightforward and affordable platforms include Microsoft Excel and Word or Google Sheets and Docs. Organizations often have licenses for tools such as Microsoft SharePoint and PowerApps. Those implementing Agile may use Atlassian products like JIRA and Confluence. There are open source options such as HuBoard and Trello. These platforms provide moderate options that are both efficient and effective.
The first step in creating a risk register involves choosing a tool that aligns with the organizational needs and available resources. Consider factors such as availability, accessibility, familiarity, and consistency for effective implementation when selecting a tool.
Step 2: Define the Risk Register Parameters and Create the Risk Register
After selecting an appropriate tool, the next step involves creating the risk register by choosing the required fields and attributes. These attributes include determining whether a field is numeric, alphabetical, or alphanumeric; dropdown versus text; plain text versus rich text; character limitations; and field validations.
To create a risk register, begin by constructing a table or a list that includes the relevant fields with their appropriate attributes and their respective presentation styles (e.g., dropdown, date, text). Certain fields may require definitions and references to enhance reporting. For instance, the impact and probability fields require specific definitions for ranking and corresponding thresholds. Although these definitions are documented in the Risk Management Plan, when possible, it is advisable that the risk register provides active display of tooltips and hints, or links to reference sources for "Just in Time" use.
Step 3: Integrate into the Risk Management Process and Formalize the Risk Register
Following the creation of the risk register, it is time to formalize the register by incorporating it into the risk management process and documenting it within the Risk Management Plan. This procedure entails defining the roles and responsibilities of all participants, establishing a robust risk review protocol, and maintaining a comprehensive risk management process to effectively monitor and control project risks. However, documentation alone is insufficient. It is essential that the organization understands the process and recognizes the benefits of implementation, with strong commitment and support from the leadership. The project manager must take measures to effectively communicate and advocate for risk management to ensure its successful implementation.
In conclusion, establishing a risk register is essential for effectively identifying, tracking, and managing risks. Some organizations may face constraints in budget and resources, making it challenging to obtain flexible cost-effective solutions. Additionally, those that are new to risk management and examining various options may be hesitant to invest in expensive risk management solutions. While advanced risk management tools are desirable, it is advisable for new and emerging projects to start with a simple and straightforward tool. This allows participants to gradually adapt to the risk management process without being overwhelmed or discouraged. Start with key components outlined in this article to create a capable and economical risk register that can be tailored to the needs of any project as it matures.
Stay tuned for Risk Register templates and samples in Ganttpost.com
