Mistake The Benefits of Risk Management Are Not Presented to Business Owners

Business owners want results and many times do not want to be told of the multitude of issues affecting the completion of their project. They just want the project done, regardless of how a project team gets it done. Business owners tend to stay in a passive role when they should be actively operating in the project. Like a homeowner who is having a house built, a business owner needs to see the work site at set intervals throughout the build process, or the investment may fizzle away.

It is recommended that a meeting be called in the early stages of the project to present the concept of risk management and to explain the benefits of this process. Below is a list of key benefits of risk management listed in priority order:

■ An early warning system of issues that need to be resolved. Risks can be identified either before the project begins or during the course of the project. Once identified, they need to be prioritized, not only as to the effect they may have on the project but also to what level they need to be presented to management for resolution. A properly functioning risk management system can provide a daily assessment of the top ten risks affecting a project for immediate resolution. If the risks are not assessed routinely, the environment is set to allow these risks to fester. In this environment, a small issue can become much larger if not a damning problem down the road.

■ All known risks are identified. Being able to sleep well at night is tough enough these days without having to think about all the unknown risks on a project. Through a properly designed risk management system, all probable and potential issues are likely identified. Reacting to this knowledge is key, but in order to act, a risk and the corresponding resolution must first be identified.

■ More information is made available during the course of project for better decision making. By identifying all of the problems and projected solutions associated with a project, a deeper understanding of the project's feasibility can be obtained. Especially early on, this information is invaluable and can provide more confidence to business owners and the project team that the project can be achieved on time and within budget. Further, risk management normally leads to improved communication among the project's stakeholders, which can lead to improved team management and spirit. For example, a highly challenging project leads people to bond together in order to get the job done, just as passengers on a sinking ship need to stick together in order to save themselves. Finally, this information promotes a learning process for future periods during which risks (and their resolutions) can be reviewed as raw material when similar future projects are underway.

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