What is project risk management? Effective project management process

Project risk management is considered an important factor, helping businesses anticipate problems that may arise, thereby preparing timely prevention plans. Please join 1C Vietnam in following the article below to learn detailed information about the definition and effective project management process.

1. Learn about risks

1.1. What are the risks?

Risk is a concept commonly used to describe the degree of uncertainty and the possibility of future loss or adverse effects. This involves events that are unwanted, unforeseen or potentially harmful to individuals or organisations. Risk can come from many sources, including the natural environment, human behavior, technology failures, financial market fluctuations, and many other factors.

1.2. Types of risks in the project

There are many types of risks that can appear during project implementation. Some common types of risks include:

• Technical risk: This type of risk is mainly related to network, software, hardware and other technical factors.
• Time risk: This type of risk involves not completing the project on time. The cause of this risk may be due to problems or delays during work implementation.
• Financial risk: Typically this risk will include poor budget management or rising costs.
• Legal risks: Related to legal issues such as copyright, intellectual property, privacy policy,...
• People-related risks: This is the risk to project staff, partners or other stakeholders.
• Environmental risks: Environmental factors such as natural disasters, natural disasters, etc. are the main issues that appear in this risk.
• Media risks: Often rumors or negative feedback from the public affect project effectiveness and the image and reputation of the business.

2. Learn about project risk management

2.1. What is project risk management?

Project risk management is a set of activities performed to identify, evaluate and manage potential risks that may occur during project implementation. The purpose of risk management is to reduce fluctuations or changes, ensuring the feasibility and ability to successfully and effectively deploy the project.

2.2. The importance of project management

Project risk management is an extremely important and indispensable aspect in the project implementation process:

• Protect project goals: When risk management is done well, project goals will not be affected by unexpected problems that may occur. This ensures that the project is completed on time, within scope and on budget.
• Optimize resources: Through accurate identification and timely management of risks, businesses can utilize resources such as time, human resources, and budget more effectively, avoiding waste when implementing a project or needing to resolve a problem that arises.
• Predict and respond: Risk management helps businesses predict dangers to prepare prevention plans and respond to problems that may occur in the future.
• Enhanced performance: When risks are eliminated or minimized, businesses can enhance overall project performance. This leads to growth, development and success of the organization.
• Create trust: Implementing effective risk management demonstrates commitment and ability to execute the project. This helps businesses build trust from stakeholders including customers, partners and project teams.
• Ensuring compliance and safety: For some industries such as healthcare, finance, and information technology, risk management is an important factor to ensure projects are implemented in accordance with legal regulations. and safety standards.
• Learn and improve: Risk management is an ongoing process. By evaluating and analyzing incidents that occur, businesses can learn and accumulate more experience to improve the risk management process of future projects.

In general, project risk management plays a decisive role in protecting project success. Enterprises that implement good and effective risk management will help optimize project results, ensure the benefits of stakeholders, and create favorable conditions for sustainable development and growth.

3. Project risk management process

To have the best project risk management during project implementation, organizations need to properly follow the 5-step process:

3.1. Identify and evaluate potential risks

By evaluating key project elements such as goals, scope, schedule, budget, stakeholders and other environmental factors, businesses can identify alternative events or situations. Changes may occur and affect project implementation. Businesses need to arrange risks into the correct classification to make the management process easier and more effective.

After identifying potential risks, businesses need to estimate the probability of occurrence and the level of impact on the project. On that basis, businesses can prepare coping plans. To accomplish this task, managers need to collect information from many sources, including personal experience, opinions, references from experts and stakeholders.

3.2. Create a project risk management plan

After identifying and evaluating project risks, businesses need to develop a risk management plan. This is an important document, which provides specific measures to manage assessed risks.

The following elements will be included in a project risk management plan:

• Provide a detailed plan: The risk management plan needs to specifically describe risks along with proposed management measures. In addition, information about the person in charge, time, monitoring methods, risk assessment and results assessment goals also need to be presented clearly and in detail.
• Identify corrective measures when necessary: All risks have a probability of occurring, so the management plan needs to provide specific corrective measures for each situation. This helps the project management team proactively and effectively solve problems when the worst situations occur.
• Clarifying responsibilities and roles: In the risk management plan, the responsibilities and roles of each member need to be clarified and specifically assigned to each task.
• Update and monitor: To ensure effectiveness in project risk management, the plan needs to be updated and monitored continuously. This requirement helps ensure quick detection of changing situations to promptly respond.

3.3. Implement project risk management plan

After the project risk management plan is created, the next step the business needs to take is to implement that plan. Main activities in this phase include:

• Risk monitoring: Identified and assessed risks need to be continuously and regularly monitored by the project management team. This helps ensure the correctness and effectiveness of risk management measures.
• Adjust the plan: While the project is being implemented, risks may change or appear. At that time, the management team needs to quickly adjust risk management plans and measures to well control newly identified risks.
• Implement corrective measures: In case risks have occurred, the project management team needs to quickly resolve them by implementing previously planned corrective measures.
• Evaluate results: After applying management measures, organizations need to evaluate the results of the entire risk management process. On that basis, the organization can learn from unsuccessful areas and improve risk management plans for future projects.

Thus, implementing a management plan is an important step, helping to put risk resolution measures into practice, thereby minimizing their negative effects on the project.

3.4. Monitor and supervise the implementation process

Enterprises need to monitor and supervise the implementation process to ensure that risk management measures have been applied properly and effectively.

This monitoring and control phase should determine whether:

• Are the risk response measures implemented effective?
• How has there been a change in the overall risk level of the project?
• Do individual risks change status? If so, how will it change?
• Are there any new risks arising?
• Is the risk management approach still consistent?
• Are risk management policies and procedures followed? How to comply?

In general, to be able to monitor and control the implementation process, managers need to accurately determine the factors mentioned above. This is also an activity that needs to be done regularly and continuously because only then can information be updated quickly and promptly.

3.5. Update project risk management plan

After a while, the project may incur new risks or some risks may no longer occur. Therefore, to manage project risk truly effectively and respond to changes, updating the risk management plan is extremely important.

The main activity of the risk management plan update phase includes identifying possible new risks, classifying and evaluating them according to their level of impact and likelihood of occurrence. On that basis, managers need to review the applied risk management measures and adjust and update detailed plans to suit new situations.

4. Effective project risk management with Office software 1C:Document Management

Office Software 1C:Document Management is a solution to automate document management, processes and comprehensive work administration. The software supports businesses in storing structured and unstructured information on a single system, helping individuals and organizations handle remote work anytime, anywhere, even on mobile devices. Not only does it meet the necessary requirements for effective digital office operations, including document management, process management, digital office management,... 1C:Document Management software also provides stability. , helping managers increase opportunities and create competitive advantages.

At the same time, 1C:Document Management is also a solution to support effective project risk management, helping to increase the flexible adaptation capacity of businesses. The software provides a full range of features to support the management of the entire project life cycle including planning, managing project work items and controlling project progress. Software is a powerful tool to help businesses reduce operating costs, eliminate redundant steps in the work process, save time and management human resources, thereby minimizing potential risks and bringing benefits to businesses. success for the project implementation.

Thus, the above article of 1C Vietnam shows that project risk management is a particularly important aspect, which is decisive for the success and effectiveness of the project. Implementing good management and correct procedures will help ensure the benefits of businesses and stakeholders. In addition, businesses can apply project management software such as 1C:Document Management software. This is a solution to support effective project risk management, helping to increase the flexible adaptive capacity of businesses. Contact 1C Vietnam immediately for advice and support on suitable solutions for your business.