What is Risk Management in Project Management?Published March 29, 2018 by Karen Walsh • 4 min read
At first glance, project management and enterprise risk management have few similarities. Project management focuses on creating something new while enterprise risk management focuses on ending an existing threat. In reality, the two parallel one another which is why both can use agile processes to create stronger, more efficiently obtained outcomes.
What is Risk Management on Projects
What is Project Management?
Project management incorporates the varied activities to bring projects from the idea stage through to finalized development. These activities include the project or phase initiation, timetable creation, information distribution, change and adjustment observation, and data compilation at project completion.
What Skills Does a Project Manager Need?
Since the project manager implements the strategies, the individual must possess both strong organization skills as well as a fundamental understanding of threats and risk mitigation.
Why Do Organizations Need a Project Team?
Depending on the size of a project, a single person may not be able to engage in all of the required activities that protect the project’s success. Large projects require deadlines, objectives, and metrics to prove ongoing stability and progress.
On smaller projects, one person may be able to organize integrating these varied requirements. On larger projects, a project manager requires a team of individuals assigned to specific tasks. The project team members are responsible for smaller aspects of the project and report directly to the project manager who can review the progress.
What is Risk Mitigation in Project Management?
Risk mitigation requires project managers to analyze risks by identifying, reviewing potential impact, tracking, prioritizing, implementing a program.
How Do Project Managers Engage in Risk Identification?
Risk identification in project management involves reviewing positive and negative project risk.
Positive risks often mean opportunities but only if the project team plans appropriately. For example, completing the project ahead of schedule may mean additional sales. However, if marketing and sales have not aligned to the new timeline or if production cannot meet increased demand, this opportunity leads to reputation risk and financial loss.
Negative risks, as named, mean potential negative outcomes. For example, too many glitches can delay product development causing the opposite problem from ahead of schedule completion. If marketing and sales initiated their plans, then they have no product to provide customers.
How Project Managers Create Appropriate Risk Response
Project management risk response strategies can take the form of avoidance, transference, mitigation, or acceptance.
Avoidance means stopping the possibility of an event. In many cases, project managers cannot avoid risks.
When avoidance proves impossible, project managers may attempt to transfer risk. For example, insurance policies act as ways that people transfer risks. Instead of being responsible for costs associated with an accident, people purchase insurance policies and then transfer the accident’s cost to their insurer.
In some cases, project managers recognize the importance of accepting a risk. Accepting a risk requires acknowledgment of its existence while also engaging in a cost-benefit analysis. When the likelihood of an event’s occurrence is too low compared to the income the project can generate, then the risk may be worth accepting. In some cases, for example, the high market demand may be worth pushing deadlines forward and accepting the risk of not meeting them.
Finally, risk mitigation requires a project manager to review the risk’s likelihood and determine strategies for mitigating its potential outcome. In the case of a tight deadline, the project manager may decide managing risk means postponing the marketing strategy deployment.
How a Project’s Lifecycle Translates to Compliance
A project’s lifecycle requires agile development. Agile means engaging in a series of values and principles within project development. Agile defines its twelve core concepts as customer satisfaction, changing requirements, constantly delivering working software frequently, communication across stakeholders, providing employees with a supportive environment, efficiently conveying information across stakeholders, measuring development, promoting sustainable development, continuous enhancement, maximizing efficiency, establishing necessary architectures, and regular reflection on efficiency.
As the twelve core requirements needed for productive software development, project managers need tools to help them meet these goals.
Viewing compliance as a project requires engaging in similar agile processes that include incorporating necessary tools.
Agile incorporates the risk management process by constantly reviewing a project’s metrics to ensure that risk mitigation strategies and production targets mesh. In the same way, compliance requires ensuring that risk mitigation strategies provide companies with protection against negative risks. Viewing compliance as analogous to a project sheds light on ways to streamline the process.
How Using Automation Can Make Compliance Agile
If organizations view compliance as something similar to a software product project, they can find ways to incorporate agile’s efficiency strategies and strengthen their compliance stances.
For vendors, customer satisfaction requires compliance. Since vendors can add to their customers’ risk profiles, they need to show ongoing monitoring to ensure customer trust. With ZenGRC’s SaaS program, companies can more easily meet SOC 2 and SOC 3 reporting requirements and obtain better audit results.
Additionally, the information security space continually evolves. As hackers continue to find new ways to exploit gaps, companies must be able to constantly review their risks to prove their competitive advantage. ZenGRC’s risk heat maps and risk dashboard allow instantaneous insight into the compliance risk landscape.
Motivating stakeholders while providing communication tools means supporting compliance projects. Just as project managers need to discuss project metrics across departments, so do compliance managers. ZenGRC’s platform provides role-based authority giving employees across the organization. ZenGRC breaks down information silos allowing for better communication and thus more efficient compliance management.
Audits and self-assessments provide compliance departments and compliance managers to reflect upon the effectiveness of their controls. However, without metrics, these assessments lack sustainability. ZenGRC provides compliance managers with the insights needed to compare their controls across multiple frameworks, standards, and regulations to determine whether compliance decisions leave the company at risk.
Organizations provide project managers a varied assortment of tools that enable agile development. Yet, compliance managers must often rely solely on shared drives and worksheets. As customers and vendors increasingly focus on compliance to obtain peace of mind in scaling their businesses, compliance managers require tools to help them efficiently manage their roles.
For more information on how ZenGRC can help your organization treat compliance using an agile mindset, schedule a demo today.