Hello and welcome to another Parallel Project Training podcast. These podcasts are designed to support the APM, PMQ Exam syllabus, which is launching in September 2024. Today, we’re going to be discussing risk and issue management. I’m joined by Carmen Campos, one of our senior trainers. Welcome to the podcast, Carmen.
Hi, Ruth. Thank you.
Great, let’s get started. We’ll begin by examining the learning objective on risk and issue management from the syllabus and delve into each of the learning outcomes. Our primary goal is to understand the ability to identify and monitor risks, both threats and opportunities, and to plan and execute responses to these risks and issues.
Our first learning outcome is to understand the benefits of risk and issue management and the role of contingency planning in projects. We’ll discuss contingency planning in more detail later. Carmen, let’s start with the basics. What’s the difference between a risk and an issue?
A risk is a potential event that, if it occurs, will have an impact on the project. It may or may not happen, but if it does, it will affect the project. This impact could be on cost, time, quality, or the project’s deliverables, outcomes, and benefits.
An issue, on the other hand, is something that is currently happening or has already happened and is having a negative impact on the project. Both risks and issues can have the same types of impacts, but the key difference is that risks are future events, while issues are present or past occurrences.
That’s clear. In the learning objective, it mentions risks as threats and opportunities. Most people associate risks with negative events. How can risks also be opportunities?
This is a common misconception. While the term “risk” is often associated with negative events, it’s important to view risks as uncertainties. These uncertainties can be both positive and negative.
The PMI introduced the concept of risks as both threats and opportunities in 1996, and the APM followed suit in 1997. Although this idea has been around for over 25 years, many people still perceive risks solely as threats.
It’s crucial to understand that risks are uncertainties. They can be positive events that present opportunities, as well as negative events that pose threats.
That’s a valuable perspective. I think it would be beneficial for project managers to reflect on this idea.
Now, let’s talk about the benefits of risk and issue management. How does it contribute to project success?
The benefits of risk and issue management are similar for both. Essentially, it’s about increasing the project’s chances of achieving its success criteria, such as staying within budget, meeting deadlines, and delivering quality outcomes.
By proactively identifying and managing risks, and by effectively addressing issues, we can make better decisions, prioritise our actions, and reduce the likelihood of negative impacts.
These benefits extend beyond the project itself. Effective risk and issue management can also enhance stakeholder confidence, improve team motivation, and provide valuable lessons learned for future projects.
That’s a comprehensive overview. Moving on to the next learning outcome, we need to understand the purpose and importance of each stage in a risk management process and an issue management process.
Let’s start with the risk management process. The first stage is identification. What does this involve?
The purpose of risk identification is to capture any uncertain event that could potentially impact the project. This involves using a combination of methods, such as reviewing past projects, involving team members, experts, and stakeholders, and documenting the identified risks in a risk register.
It’s important to note that risk identification is often overlooked. It’s essential to involve stakeholders in this process to ensure a comprehensive view of potential risks.
Once we’ve identified the risks, the next step is analysis. What factors do we need to consider during this stage?
The key factors to consider during risk analysis are the probability or likelihood of the risk occurring and its potential impact. Various techniques can be used, including qualitative methods like probability impact grids and quantitative risk analysis.
It’s beneficial to involve the team in this process to ensure a shared understanding of the risks and their potential consequences.
The following stages in the risk management process are monitoring and escalation, response, and closure.
Monitoring and escalation involve tracking the identified risks, assessing their status against defined tolerances, and escalating them to appropriate levels if necessary.
The response stage involves deciding on the most appropriate course of action for each risk. This could involve avoiding the risk, reducing its probability or impact, transferring the risk to another party, or accepting it.
Finally, the closure stage involves closing out risks that have been resolved or are no longer relevant to the project.
Now let’s discuss the issue management process. How does it differ from risk management?
While the steps are similar, the focus of issue management is on addressing current or past events that are having a negative impact on the project.
The process involves identifying issues, documenting them in an issue log, analyzing their impact, escalating them as necessary, and taking appropriate corrective actions.
It’s important to track the resolution of issues and capture lessons learned for future projects.
How do risk and issue management differ between linear and iterative lifecycle projects?
The key difference lies in the approach. In linear projects, risk and issue management tend to be more structured, as the scope is defined upfront. In iterative projects, the process is more fluid and adaptive, as the scope can change throughout the project.
Both types of projects require a clear and effective risk and issue management process. However, the specific approach may vary depending on the project lifecycle.
Finally, let’s talk about governance. Why is it important in risk and issue management?
Governance provides the framework, processes, and practices that ensure the project aligns with organizational goals. In the context of risk and issue management, governance helps establish clear decision-making processes, define tolerances, and assign responsibilities.
Good governance ensures that risks and issues are managed systematically and that appropriate escalation paths are in place.
Governance is particularly important for large projects that are critical to the organization’s success.
That concludes our discussion on risk and issue management. Thank you, Carmen, for your insights.
Thank you, Ruth.
