![\"Project](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2023\/10\/Project-risk-management-cover.png\")
<\/figure>\n<\/div>\n\n\n- \n
- Project risk management is the process of identifying, analyzing, responding to, and monitoring project risks.<\/li>\n\n\n\n
- Project managers should keep tracking risks throughout the project, no matter if they\u2019re positive or negative.<\/li>\n\n\n\n
- Having a strong risk management plan helps prevent negative risks, deal with issues, and take advantage of positive risks.<\/li>\n\n\n\n
- Strategies for dealing with threats include avoiding, escalating, transferring, mitigating, and accepting the risks.<\/li>\n<\/ul>\n\n\n\n
What is risk management in project management?<\/h2>\n\n\n\n
Risk management is the process of identifying, analyzing, responding to, and monitoring risks over the course of a project.<\/strong><\/p>\n\n\n\n
The term project risk<\/a> refers to both opportunities and threats. Opportunities are positive risks, and threats are negative risks. Meanwhile, a negative risk that has already occurred is called an issue.<\/p>\n\n\n\n
\n
\n\nFree project management software<\/h2>\n
Start managing your project\u2019s tasks and risks with Plaky.<\/p>\n\n
\n Try for free<\/a>\n\n Learn more<\/a>\n <\/div>\n <\/div>\n\n\n\n \n ![\"Illustration\"](\"https:\/\/plaky.com\/learn\/wp-content\/themes\/cake-learn\/src\/images\/plaky\/banners\/default.png\")
\n <\/picture>\n <\/div>\n<\/div>\n <\/p>\n\n\n\nTypes of risk in project management<\/h3>\n\n\n\n
We can categorize risks in project management<\/a> into 4 main types:<\/p>\n\n\n\n
- \n
- Organizational<\/strong> \u2014 Mismanaging elements of day-to-day business operations, such as processes, staff, and resources, can pose a risk to the company\u2019s projects and products.<\/li>\n\n\n\n
- Financial<\/strong> \u2014 Costs are one of the main project constraints<\/a>, and they can get out of control easily. Managers must keep an eye on the budget and schedule as any delays can cause additional costs and project failure.<\/li>\n\n\n\n
- Technical<\/strong> \u2014 The hardware and software that the teams use during the project must be functional so that no issues hinder the project\u2019s development.<\/li>\n\n\n\n
- External<\/strong> \u2014 Market fluctuations, competitor\u2019s activities, and government regulations can greatly influence the project\u2019s course, so they have to be monitored constantly.<\/li>\n<\/ul>\n\n\n\n
\n\ud83d\udca1 Plaky Pro Tip<\/strong><\/p>\n\n\n\n
The latest data shows that a significant 34% of project managers don\u2019t implement risk management in their projects. Check out the latest numbers here:<\/p>\n\n\n\n
- \n
- Key Project Management Statistics to Learn From in 2025<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
Why is risk management important in project management?<\/h2>\n\n\n\n
Project risk management is an important process as it helps you:<\/p>\n\n\n\n
- \n
- Anticipate and manage change,<\/li>\n\n\n\n
- Improve your decision-making,<\/li>\n\n\n\n
- Implement lower-cost preventive actions instead of higher-cost reactions to issues,<\/li>\n\n\n\n
- Increase the chances of realizing opportunities,<\/li>\n\n\n\n
- Raise awareness of the uncertainty of outcomes, <\/li>\n\n\n\n
- Improve resilience, and more.<\/li>\n<\/ul>\n\n\n\n
Instead of simply predicting possible outcomes, project risk management aims to develop the means to achieve project objectives<\/strong>.<\/p>\n\n\n\n
Our collaborator, Tres Roeder<\/a>, the PMP, PMI-ACP-certified founder of Roeder Consulting, claims that risk management should be performed both before starting a project and throughout the project:<\/p>\n\n\n\n
\n\n![\"Tres](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2023\/12\/Tres-Roeder.png\")
<\/figure>\n<\/div>\n\n\n\n\n\u201cAt the early stages, risk management will help the team identify and understand the variable forces that will impact the project. It\u2019s more important to understand the project\u2019s sensitivity to each of these risks than it is to perfectly predict the exact timing or magnitude of the risk.<\/em><\/p>\n\n\n\n
If the risk could be predicted, after all, then it would not be a risk at all and would simply be added to the project plan. During project execution, it is important to re-evaluate the risk picture on a regular and ongoing basis. Things change.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n
6 key risk management steps<\/h2>\n\n\n\n
You can successfully manage risks in any type of project by following these 6 steps:<\/p>\n\n\n\n
- \n
- Identify,<\/li>\n\n\n\n
- Analyze, <\/li>\n\n\n\n
- Prioritize,<\/li>\n\n\n\n
- Assign risk owners,<\/li>\n\n\n\n
- Respond, and <\/li>\n\n\n\n
- Monitor risks.<\/li>\n<\/ol>\n\n\n\n
Let\u2019s dive deeper into each step.<\/p>\n\n\n
\n![\"Risk](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2022\/04\/Risk-Management-Process.jpg\")
Risk management process<\/figcaption><\/figure>\n<\/div>\n\n\n #1 Identify risks<\/h3>\n\n\n\n
Identifying risks usually starts with brainstorming possible risks<\/strong>. This process should include:<\/p>\n\n\n\n
- \n
- Your project team, <\/li>\n\n\n\n
- Stakeholders<\/a>, and <\/li>\n\n\n\n
- Outside experts. <\/li>\n<\/ul>\n\n\n\n
You can include all the identified risks in a risk register \u2014 a document used for tracking all potential risks for an ongoing project.<\/p>\n\n\n
\n![\"Risk](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2022\/04\/Keep-track-of-risks-by-making-a-risk-register-in-Plaky.png\")
Keep track of risks by making a risk register in Plaky<\/figcaption><\/figure>\n<\/div>\n\n\n \n\ud83d\udca1 Plaky Pro Tip<\/strong><\/p>\n\n\n\n
Project risks are often confused with project assumptions \u2014 read this blog post to learn the difference:<\/p>\n\n\n\n
- \n
- What Are Project Assumptions? + How to Manage Them Effectively<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
#2 Analyze risks<\/h3>\n\n\n\n
Once the risks are identified, it\u2019s time to analyze them in a qualitative and quantitative way to understand individual risks better<\/strong>.<\/p>\n\n\n\n
Qualitative analysis evaluates various characteristics, such as:<\/p>\n\n\n\n
- \n
- The severity of the impact on the objectives,<\/li>\n\n\n\n
- Manageability,<\/li>\n\n\n\n
- Timing of possible impact,<\/li>\n\n\n\n
- Relationship with other risks,<\/li>\n\n\n\n
- Likelihood of risks occurring, etc. <\/li>\n<\/ul>\n\n\n\n
Qualitative analysis is often represented in the form of a table known as the risk assessment matrix<\/strong>.<\/p>\n\n\n\n
The risk assessment matrix evaluates the degree of risk likelihood and severity. The more potential risks your project suffers from, the greater the benefits of creating a comprehensive risk assessment matrix. Regardless of the size of the matrix, once you have it, you can determine where each risk slots into. <\/p>\n\n\n\n
Assess each risk’s level for your upcoming project with our customizable template: <\/p>\n\n\n\n
Get our risk assessment template<\/a><\/p>\n\n\n
\n![\"Example](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2022\/04\/Example-of-a-risk-assessment-matrix-table.jpg\")
Example of a risk assessment matrix table<\/figcaption><\/figure>\n<\/div>\n\n\n While qualitative analysis mostly relies on guesswork, quantitative analysis takes a much more scientific approach to risk analysis. It uses empirical data to make accurate predictions related to the severity of the impact of certain risks.<\/p>\n\n\n\n
The biggest advantage of quantitative risk analysis is that you can get tangible, numerical answers to different questions, e.g., how much a certain risk will affect the:<\/p>\n\n\n\n
- \n
- Project budget<\/a>, <\/li>\n\n\n\n
- Project timeline, <\/li>\n\n\n\n
- Project scope<\/a>, or <\/li>\n\n\n\n
- Project resources<\/a>.<\/li>\n<\/ul>\n\n\n\n
The downsides to quantitative analysis are that it requires extensive data collection and is challenging to do.<\/p>\n\n\n\n
Acquiring the data is easily done when your current project shares similarities with previous projects. But if you\u2019re embarking on a project that is unlike anything the company has ever done before, then you won\u2019t have enough data to do proper quantitative analysis.<\/p>\n\n\n\n
In addition, quantitative data analysis is complex, and it often demands using specific software to compute. If something requires twice the effort but only yields a 10% improvement, then it\u2019s simply not worth the effort in most cases. <\/p>\n\n\n\n
This is why most managers opt for qualitative analysis only and avoid quantitative analysis. <\/p>\n\n\n\n
\n
\n\nManage your risks with Plaky<\/h2>\n
Identify, analyze, and manage risks using custom tags for likelihood and impact in Plaky.<\/p>\n\n
\n Sign up<\/a>\n\n Learn more<\/a>\n <\/div>\n <\/div>\n\n\n\n \n ![\"Illustration\"](\"https:\/\/plaky.com\/learn\/wp-content\/themes\/cake-learn\/src\/images\/plaky\/banners\/features.png\")
\n <\/picture>\n <\/div>\n<\/div>\n <\/p>\n\n\n\n#3 Prioritize risks<\/h3>\n\n\n\n
When prioritizing risks<\/strong>, keep in mind the following concepts:<\/p>\n\n\n\n
- \n
- Risk appetite<\/strong> \u2014 the amount of risk an organization is willing to expose itself to in pursuit of its goals. An organization that is unwilling to take any risks is unable to grow, whereas one that takes all risks recklessly is doomed to fail. <\/li>\n\n\n\n
- Risk tolerance<\/strong> \u2014 the uppermost limit of a company\u2019s risk appetite. <\/li>\n\n\n\n
- Risk threshold<\/strong> \u2014 the level of risk exposure that spurs the organization into action. Risks below the threshold are, in most cases, simply accepted. When a risk crosses the threshold, it must be addressed. <\/li>\n<\/ul>\n\n\n\n
#4 Assign risk owners<\/h3>\n\n\n\n
At the end of the day, the project manager<\/a> is the one bearing accountability for the project as a whole. However, more often than not, they aren\u2019t the ones actively monitoring all potential risks. Instead, they assign risks to different team members<\/strong>.<\/p>\n\n\n\n
In most cases, team members have risks assigned to them based on their project roles<\/a> and responsibilities.<\/p>\n\n\n\n
By assigning risks to team members, project managers can focus on more pressing matters while keeping a fresh pair of eyes on the status of each risk.<\/p>\n\n\n\n
This way, the team can also assume a more proactive approach toward project completion.<\/p>\n\n\n\n
#5 Respond to risks<\/h3>\n\n\n\n
Whether you use qualitative or quantitative analysis to determine the risks\u2019 threat levels and prioritize them, you need to create a response plan<\/strong> for each. How detailed the plan is will depend on the risks and projects in question.<\/p>\n\n\n\n
It\u2019s also helpful to determine what constitutes the risk trigger for each risk \u2014 an indicator that a potential risk has either turned into an issue or is about to.<\/p>\n\n\n\n
Risks that score higher on the risk assessment matrix naturally warrant more detailed response plans, but this is ultimately the choice of the project manager in charge.<\/p>\n\n\n\n
The main point of having a risk management plan is to allow the team to assume a proactive approach toward:<\/p>\n\n\n\n
- \n
- Preventing negative risks,<\/li>\n\n\n\n
- Dealing with issues that could not be prevented, and <\/li>\n\n\n\n
- Capitalizing on positive risks.<\/li>\n<\/ul>\n\n\n\n
#6 Monitor risks<\/h3>\n\n\n\n
Monitoring risks is an ongoing process that spans the entire project timeline<\/a>.<\/p>\n\n\n\n
It allows the project management team to:<\/p>\n\n\n\n
- \n
- Reevaluate the status of the previously identified risks,<\/li>\n\n\n\n
- Identify any secondary risks, and <\/li>\n\n\n\n
- Determine the need for reassessment.<\/li>\n<\/ul>\n\n\n\n
At the end of the project, the periodic audit findings should help identify lessons learned<\/a> for all future projects regarding:<\/p>\n\n\n\n
- \n
- Appropriate levels of resources,<\/li>\n\n\n\n
- The time needed for the analysis,<\/li>\n\n\n\n
- Use of tools,<\/li>\n\n\n\n
- Level of detail, etc.<\/li>\n<\/ul>\n\n\n\n\n
\ud83d\udca1 Plaky Pro Tip<\/strong><\/p>\n\n\n\n
Like tracking risks in Excel? Check out our Excel risk management template in the post below and tailor it to your liking:<\/p>\n\n\n\n
- \n
- Top 16 Automated Project Management Excel Templates<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
Negative risk management strategies<\/h2>\n\n\n\n
There are 5 possible responses to negative risks, i.e., threats:<\/p>\n\n\n\n
- \n
- Avoid<\/strong> \u2014 In many cases, avoiding the risk means shutting the project down because it exceeds the company\u2019s risk tolerance.<\/li>\n\n\n\n
- Escalate<\/strong> \u2014 Escalation is appropriate when a certain threat is outside the project scope or the proposed response exceeds the project manager\u2019s authority. In such cases, threats are escalated to the appropriate level (the enterprise, portfolio, or program level).<\/li>\n\n\n\n
- Transfer<\/strong> \u2014 Transferring the risk is a response plan that seeks to mitigate risks stemming from third parties by using contractual obligations, insurance, guarantees, or penalties.<\/li>\n\n\n\n
- Mitigate<\/strong> \u2014 Risk mitigation strategy refers to taking precautions to minimize the probability of risks that can\u2019t be transferred.<\/li>\n\n\n\n
- Accept<\/strong> \u2014 For risks that rank low on the risk assessment matrix, accepting them is sometimes the only response. It entails doing nothing to minimize the chances of the risk happening. There are 2 types of risk acceptance: active risk acceptance (taking actions to minimize the impact of risks) and passive risk acceptance (taking no actions aside from documentation).<\/li>\n<\/ul>\n\n\n
\n![\"Risk](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2022\/04\/Risk-response-strategies.jpg\")
Risk response strategies<\/figcaption><\/figure>\n<\/div>\n\n\n Positive risk management strategies<\/h2>\n\n\n\n
Positive risks \u2014 i.e., opportunities \u2014 can be managed in 5 ways:<\/p>\n\n\n\n
- \n
- Exploit<\/strong> \u2014 Try to bring the likelihood of the risk occurring as close to 100% as possible. E.g., if the positive risk is a substantial bonus for completing the project early, exploiting the risk may mean diverting other resources into this project.<\/li>\n\n\n\n
- Escalate<\/strong> \u2014 Escalate the opportunity to the level that matches the objectives that would be affected if the opportunity occurred.<\/li>\n\n\n\n
- Enhance<\/strong> \u2014 Try to increase the likelihood of the risk occurring \u2014 but don\u2019t pursue it to an exploitative extent. E.g., motivating the team to put in some extra work with a bonus increases your chances of positive risk occurrence, but it\u2019s far from a guarantee.<\/li>\n\n\n\n
- Share<\/strong> \u2014 Sharing the risk entails involving a third party, usually because you are unable to seize the opportunity alone. A common example includes companies partnering to bid for a project they would otherwise be unable to land.<\/li>\n\n\n\n
- Accept<\/strong> \u2014 Accepting the positive risk simply means acknowledging it, but not making any effort to increase its chances of happening. If it happens, great; if not, no harm done.<\/li>\n<\/ul>\n\n\n\n
\n
\n\nFree project management software<\/h2>\n
Track your progress and achieve better project results with Plaky.<\/p>\n\n
\n Sign up<\/a>\n\n Download<\/a>\n <\/div>\n <\/div>\n\n\n\n \n ![\"Illustration\"](\"https:\/\/plaky.com\/learn\/wp-content\/themes\/cake-learn\/src\/images\/plaky\/banners\/landing-1.png\")
\n <\/picture>\n <\/div>\n<\/div>\n <\/p>\n\n\n\nTips on managing and reducing risks in project management<\/h2>\n\n\n\n
Now that you\u2019ve mastered project risk management, it\u2019s time to share some valuable advice from experts who have some real-life experience with managing risks.<\/p>\n\n\n\n
Tip #1: Manage risks from the start of the project<\/h3>\n\n\n\n
Our collaborator, Jeff Mains<\/a>, a 5-time entrepreneur and the CEO of Champion Leadership Group LLC, highlights how risk management is essential to the achievement of both project and business goals.<\/p>\n\n\n\n
Jeff advises implementing risk management into your project early on:<\/p>\n\n\n\n
\n\n![\"Jeff](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2023\/10\/Jeff-Mains.png\")
<\/figure>\n<\/div>\n\n\n\n\n\u201cFirst and foremost, project planning should include risk management. Early risk identification, impact assessment, and mitigation techniques are crucial. This proactive approach manages risks from the start of the project.<\/em><\/p>\n\n\n\n
Project managers should also review the risk management plan during the project. Staying watchful is essential since risks might change.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n
Tip #2: Raise risk awareness within the project team<\/h3>\n\n\n\n
Jeff also highlights the importance of joint team efforts in managing project risks:<\/p>\n\n\n\n
\n\n<\/figure>\n<\/div>\n\n\n\n\n\u201cI also emphasize risk awareness in the project team. Project managers should encourage team members to report risks without repercussions. This collaborative approach helps identify risks early and fosters risk management responsibility.<\/em><\/p>\n\n\n\n
For project success and corporate resilience, risk management should be an ongoing effort.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n
\n\ud83d\udca1 Plaky Pro Tip<\/strong><\/p>\n\n\n\n
Risk management is one of the most important project management hard skills to master. Find out how to become the best project manager here:<\/p>\n\n\n\n
- \n
- 25 Key Project Management Skills to Make You Stand Out<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
Tip #3: Don\u2019t neglect the positive risks<\/h3>\n\n\n\n
Tres Roeder reminds us that you shouldn\u2019t neglect the positive risks to fully understand the whole picture:<\/p>\n\n\n\n
\n\n<\/figure>\n<\/div>\n\n\n\n\n\u201cIt is important, of course, to be aware of \u201cnegative risks\u201d and to develop plans to prevent them from happening in the first place, or to mitigate their impact if and when they do happen.<\/em><\/p>\n\n\n\n
However, project managers should also think about the good things that can happen to their project.<\/em><\/p>\n\n\n\n
These \u2018positive risks\u2019 improve project outcomes if they occur. Positive risks should be identified and planned for, too. Only through a comprehensive understanding of both negative and positive risk will the project manager be positioned for success.\u201d<\/em><\/p>\n<\/div>\n<\/div>\n\n\n\n
\ud83d\udcd6 Now that you what risk management is, you can dive further into the topic of project management \u2014 check out our Project Management Glossary of Terms<\/a> and get acquainted with project management terminology.<\/p>\n\n\n\n
Manage your project risks with Plaky<\/h2>\n\n\n\n
The projects that effectively account for all risks are those most likely to succeed. Luckily, a dedicated project management tool like Plaky<\/a> can help you easily manage your project risks.<\/p>\n\n\n\n
In Plaky, you can get a clear overview of all your project tasks and the team\u2019s activities in boards<\/a> and react fast whenever something isn\u2019t developing as planned.<\/p>\n\n\n\n
For instance, since costs and deadlines are crucial parameters for tracking project progress and avoiding risks, you can customize fields<\/a> to keep an eye on the most important information every day.<\/p>\n\n\n
\n![\"Customizing](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2022\/04\/Customizing-fields-in-a-Plaky-project-board.png\")
Customizing fields in a Plaky project board<\/figcaption><\/figure>\n<\/div>\n\n\n Lacking communication and active collaboration leads to a rise of negative risks too. But, in Plaky, the comments<\/a> section of each item lets you communicate with your team and share updates and thoughts regularly and in real time.<\/p>\n\n\n
\n![\"Managing](\"https:\/\/plaky.com\/learn\/wp-content\/uploads\/2022\/04\/Managing-items-and-their-deadlines-in-Plaky.png\")
Managing items and their deadlines in Plaky<\/figcaption><\/figure>\n<\/div>\n\n\n Bottom line? When you have all your project information in one place, mitigating risks becomes easy \u2014 and project success entirely attainable.<\/p>\n\n\n\n
- Escalate<\/strong> \u2014 Escalate the opportunity to the level that matches the objectives that would be affected if the opportunity occurred.<\/li>\n\n\n\n
- Escalate<\/strong> \u2014 Escalation is appropriate when a certain threat is outside the project scope or the proposed response exceeds the project manager\u2019s authority. In such cases, threats are escalated to the appropriate level (the enterprise, portfolio, or program level).<\/li>\n\n\n\n
- Avoid<\/strong> \u2014 In many cases, avoiding the risk means shutting the project down because it exceeds the company\u2019s risk tolerance.<\/li>\n\n\n\n
- Top 16 Automated Project Management Excel Templates<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n
- Risk tolerance<\/strong> \u2014 the uppermost limit of a company\u2019s risk appetite. <\/li>\n\n\n\n
- Project budget<\/a>, <\/li>\n\n\n\n
- Outside experts. <\/li>\n<\/ul>\n\n\n\n
- Financial<\/strong> \u2014 Costs are one of the main project constraints<\/a>, and they can get out of control easily. Managers must keep an eye on the budget and schedule as any delays can cause additional costs and project failure.<\/li>\n\n\n\n
- Organizational<\/strong> \u2014 Mismanaging elements of day-to-day business operations, such as processes, staff, and resources, can pose a risk to the company\u2019s projects and products.<\/li>\n\n\n\n
![\"Illustration\"](\"https:\/\/plaky.com\/learn\/wp-content\/themes\/cake-learn\/src\/images\/plaky\/banners\/default@2x.png)
\n <\/picture>\n <\/div>\n<\/div>\n <\/p>\n\n\n\n![\"Illustration\"](\"https:\/\/plaky.com\/learn\/wp-content\/themes\/cake-learn\/src\/images\/plaky\/banners\/features@2x.png)
\n <\/picture>\n <\/div>\n<\/div>\n <\/p>\n\n\n\n![\"Illustration\"](\"https:\/\/plaky.com\/learn\/wp-content\/themes\/cake-learn\/src\/images\/plaky\/banners\/landing-1@2x.png)
\n <\/picture>\n <\/div>\n<\/div>\n <\/p>\n\n\n\n