Effective management starts with clearly defined objectives and is followed by the building of a plan with the key people who are involved and assigns tasks, timelines and reporting timelines.
As plans are executed the original assumptions are often rendered invalid by events that happen and so a good plan must include risk assessment in order to try and anticipate future potential risks. Equally a set of contingency actions are needed in readiness to respond to each potential major risks that occurs in order to prevent the plan being disrupted or hitting a road block. Assessing risks and threats to objectives is a key part of management day to day activity and not just in more formal planning activities. Given the fast moving nature of business life today, just like plans, risk assessment must remain dynamic and relevant to each stage of work.The challenge is how to do this in an effective way, here are 7 steps to manage risk:1. Take your team's top 3 deliverables for the next 90 days and for each deliverable consult your team and list out all the likely risks to that deliverable.2. Then for each risk decide how likely or probable it is to happen and rank each risk 1 to 10. 1 being low probability or almost impossible to happen and 10 being high probability, or almost certain to happen. The team's collective experience will combine to expose the most likely potential risks, focus should therefore be on the top 3 risks.3. Risks cause varying levels of damage when they happen, for each of the top 3 risks now rate them on the amount of damage they would cause. Same rating 1 to 10.4. By multiplying the ratings of probability and damage you can rank the risk overall and therefore know which one to watch out for most closely.5. For each of the top 3 ranked risks create a contingency plan to carry out if the risk starts happening.6. Next define clear warning signs of that risk starting to happen, the team must be clear about what to look out for.7. Have a simple traffic light control for your major deliverables, green means everything on track. Amber means a possible risk condition that will either improve and change back to green or get worse and go red. Red means a deliverable is in trouble and needs action. For both Amber and Red light risks there must be a clear set of recovery actions, owners and deadlines.Risk management in today's environment of fast moving events and instant communications means that it should be assessed on a continual basis to remain effective in keeping plans and deliverables on track and successful.
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