Risk management is a project management process that you develop to identify, assess and control all sorts of risks. These threats could potentially harm entire sectors of your business, such as financial, legal, strategic, product, etc.

Some of these risks include:

• Uncertainty.
• Legal liabilities.
• Management errors.
• Natural disasters.
• Product failure.

All of this can happen without expectations. This is why there should be a person in charge of recognizing all the unforeseen events that could occur. If you can’t predict them, you can’t measure how badly your company will take those events.

Who knows, it may have a small impact on your budget, but if you don’t take it seriously, it could be worse than expected.

Risk management is crucial for businesses and organizations. With more complex organizations, uncertainty, and a current global economic crisis, you must be prepared to take action against an external or internal issue.

When creating a risk register, you must first analyze which categories you want to address.

Here are the main risk categories you should consider for your business:

1. Safety risk: Safety risks are those related to physical, ergonomic, or biological dangers that could hinder your business.

2. Operational risk: They refer to those that affect daily operations and business performance.

3. Reputational risk: Some companies think reputational risks are the worst. They are related to how the market perceives a business. Most of the time, you can’t recover after having a bad reputation. This affects both the stakeholders and employees alike.

4. Strategic risk: The strategic risks are related to external situations that could – or could not – affect your business.

5. Financial risk: This category considers the risks related to your cash inflows. It includes exchange rates, bad financial management, and other situations where you don’t have enough cash flow.

6. Compliance risk: It includes regulations and law risks. This category is crucial if you are developing an international business.

Once you know in which categories your business falls, you can make a risk analysis.

Analyzing a risk event is as important as having a risk management plan. However, only a few project managers track risks or prepare a risk rating. Because of that, your business could be exposed to potential project risks.

But why should you consider a risk analysis in your company?

Risk Mitigation

As one of the main reasons for doing a risk assessment, mitigating risks helps you plan how to proceed in case an issue occurs.

When you do a risk analysis, you mitigate risks and reduce collateral effects from the risk event. To do that, you must create a contingency plan after doing the research.

Managing Expectations

Part of the work for the project team and project manager is ensuring that the stakeholders are happy with the strategies' development.

Give detailed intended outcomes, assume the risk probability and control the identified risk with a solid project planning strategy.

Major companies know that stakeholders can be both a curse and a blessing. So, the person responsible for their expectations must learn to control the shareholders’ reactions.

Risk Ownership

If you already have identified risks from your risk registers, it’s time to assign a risk owner to each one of them.

Each process is different, so you must delegate as many risks as necessary. When you know who is accountable for the process, you can go straight with them and ask for risk status.

This is the proper way to manage risk and improve the process execution.

Types of Risk Analyses

There are two types of analyses:

• Quantitative risk analysis: This analysis focuses on data that you can use to determine how dangerous a risk is to your project. It will also measure if the project is worth it or not through a risk score. Taking this analysis helps you measure potential project risks before developing your business.
• Qualitative risk analysis: Qualitative analysis is entirely different from quantitative. Instead of using data, numbers, or a risk score, this analysis measures the big picture and is more general. You can also identify risks and have a risk breakdown structure. However, it’s not as exact as the quantitative analysis.

Once you find a specific risk – or a potential risk – that you want to mitigate, you can make response plans to mitigate them.

Part of your job as a risk owner or a project manager is finding out if those risks affect your business positively or negatively.

To determine the risk impact, you must use a risk register to address possible risks. Once you do that, you can evaluate the potential impact on your company based on historical data and similar risks.

You will have to execute an action based on how you evaluate potential dangers. To do so, use the Risk-to-reward ratio to measure the likelihood of an outcome.

The risk management process helps you determine risk priority and sets up strategies your team members must take to solve problems.

Here’s how you a management process to find potential issues:

1. Find Risks

The first step is to find risks that could harm your business. Use research and documentation in general to find a risk event occurring in your organization. For this, use the project schedule, management plans, resource planning, etc.

Add a risk description and more information related to the industry to establish a risk priority.

2. Analyze Issues

Analyzing risks means that you have to prioritize them. And to do that, you must consult it with the stakeholders.

Assign risk priority and risk category based on:

• The highest probability of happening.
• Consequences if it happens.

Once you have this essential data and any additional information, you can use a risk matrix to define how critical your concerns are. With this in mind, every project manager can decide how to proceed.

3. Create an Action Plan

Once you have addressed issues in your risk register, you can develop strategies to mitigate or take advantage of the risks. It all depends on whether they are positive or negative.

The project manager must also use this plan to devise contingency action and prevent a derailment of intended outcomes.

4. Prevent Risks

With your eyes on new risks, you must use resources to prevent them and ensure the project’s lifecycle.

Track problems with an identification number, measure how they progress. As a project manager, your responsibilities are:

• Developing risk strategies.
• Overseeing positive and negative results.
• Collaborating with team(s) members to prevent risks and the likelihood of occurrence.
• Bringing helpful information from stakeholders.
• Anticipating business complexity.
• Delivering progress on point and following deadlines.

To record and save all the project risk information, you need a Risk Register form.

This is the main management tool that you’ll use to collect information about risks. You can then put them into a risk log, organize them, include a brief explanation, and assign .

The risk register is a simple spreadsheet where you can add everything that can occur related to risks. You can share this information with other stakeholders and everyone with power for decision-making to monitor the possible dangers.

Before starting a project, you must assign someone to update the risk register and take notes about potential risks.

Not because of regulatory compliance, but also because identifying issues and creating a plan to avoid the highest impact is a task you shouldn’t take for granted.

As such, the project manager usually addresses all the risks or delegates a person with the background using a risk register.

When you create a risk register form, you must include the following: 

• Name.
• Research and Brief description.
• ID Number.
• Category.
• Probability (Medium, low or high.)
• Obstacles.
• Risk impact.
• Implementation approach.
• Risk rating.
• Following actions.
• Risk owner.

With these fields in mind, you can put your effort into creating the risk register.

You will need project management software to create a risk register spreadsheet. A good option could be the entire Microsoft Office suite. 

This package includes multiple productivity features like Word or Excel, where you can create documents, databases, and spreadsheets for your current or next project.

You can download the software for free from the official Microsoft website and install it on your computer. After that, you must activate Office with a Microsoft Office 2021 suite CD Key.

This serial number will give you access to all MS features for a lifetime, including cloud storage using OneDrive.

Now, once you get the right tools, this is how you create a risk register form:

• Go to Excel and create a new document.
• Give format to the cells.
• Add a file name like “project” Risk Register.
• Include a last review date field that you’ll update every time you enter the document.
• Add ID number, risk name, description, and other important information.

If you don’t have a risk owner assigned to the file, you can designate someone else to take care of it.

Moreover, if you don’t want to create this risk management tool from scratch, you can use Excel templates that will help your reporting skills.

There are some template examples you can use as references:

Template #1

Risk identification and assessing project risks are part of the daily lives of project managers.

A risk response plan is the only way to identify potential risks and build a strategy to avoid them. This simple risk register will help capture all these dangers and ensure that the project stakeholders are happy with how the work is progressing.

Use the risk management templates we left above, analyze risks and start making the changes you need to make according to your new plan.