In a company, organization, event, project, and even in schools and the government, there is always a need to prepare for unpleasant circumstances. Although some issues or risks are unpredictable, people in charge of managing such businesses or events need to prepare preventive actions and solutions to take in case such circumstances ever occur. It is part of every company or institutions to have a risk management plan that enables them to foresee risks, estimate impacts, and define responses to issues. It is their cautionary method that will help them decide on what to do if ever a risk occurs.
Upon completion of a risk management plan, it is important that you create a tool you can use to record identified risks, their severity, and the actions or steps needed to be taken. It can come into various forms such as a simple document, spreadsheet, or a database system where you will be able to list down what has been mentioned before. The document or tool you decide to use will help you review and update the process that identifies, assesses, and manages risks down to acceptable levels. This guide is here to discuss the said tool in details so that you can have enough knowledge in creating one should you need it.
A tool commonly used in risk management and project management. A risk register, also called a register log is created on the early stages of a project. It is an important document in your risk management plan; it enables you to identify potential risks in a project or an organization and at the same time, it helps you record and track issues and address problems as they arise. Although it is sometimes created just to fulfill regulatory requirements, it is a necessary tool to keep on top of potential issues that can deter you from your intended outcomes.
A risk register includes all relevant information about every risk that has been identified, from the nature of that risk to the level of risk to who owns it and down to what mitigation measures that have been put in place to respond to it. Generally, a risk register is shared between project stakeholders. It allows all of those involved in the project to be kept aware of issues and as well as providing a means of tracking the response to those issues. It can also be used to flag new project issues and also to give suggestions on what course of action is suitable to solve them.
As you may know, corporate and organizational projects may face risk at a certain point in time, a risk register provides better way and means to respond or address certain issues should they arise. Overall, a risk register is a useful tool that can help in the whole decision-making process and enables managers and project stakeholders to address issues in the most appropriate and effective way. Since a risk register contains all information about identified project risks, analysis of the severity of such risks and evaluations of the possible effective solutions to apply, people involved in the project can have a guarantee that issues can be resolved as quickly as possible.
It is imminent to have some sort of risks arise during the implementation of a project, however, these risks need not be a threat to the success of the project. Risks are simply issues that can arise during a project, if properly determined in advance, solution can also be determined. Therefore, risks can be resolved more efficiently and effectively with the use of the proper tools such as a risk management plan and a risk register.
When making a risk management plan, you don’t just foresee potential risks, you also need to strategize and choose the most cost-effective solution to each risk. In that case, you need a tool that will enable you record these potential risks and enable you to map out the best way to push the project back on track should those identified potential risks arise in real life.
With that in mind, you need to identify potential risks first. Although there can be different risks for different types of projects, you should be able to clearly identify the risks that could arise on your project at hand. In addition, in a company that performs projects of almost the same nature, there may be historical data that can be reviewed to help you identify the common risks that arise on those types of projects. You can also effectively anticipate risks based on the market forces, for example, supply and demand, or based on the most common staffing or personnel issues, or even based on the weather where the project is to be implemented.
The project risks register is a systematic approach that will help you track the risks you have identified beforehand if ever it actually arise and evaluate the actions you have already set to resolve such risks. If you have already established a risk register be it in a spreadsheet, table, or a project management software, you can easily register these risks and put all the information relevant to these risks; you can then easily track these risks as well as the actions/solutions you have put in place to solve the risk if they are working or not.
Therefore, since a risk register is a risk tracking document, you have a clear vision on how these risks move and respond to the actions you have set. You have full control on how these risks can affect your project. Since the risk register gives you all the information about these risks, you also have the full disclosure on how to solve them; if the actions you have set are unsuccessful in solving the risk, you can immediately see it in your register. Thus, helping you decide on what is the best next step to take in order to preserve your project.
As you may now know, a risk register will help you record the potential risks that can arise in a project as well as track those risks should they become reality. Aside from its general purpose, what else does a risk register do? Here is a breakdown of all the things a risk register does:
The first thing your risk register does is identify the potential risks. Since you have to input the potential risks that can arise in your project, you also have to identify those risks. Together with the the team involved in the project, you have to brainstorm in identifying the risks. Since the individuals in your team is in charge of different aspects of the project, they can easily determine if such a risk can arise on that aspect. You also have to consult the project stakeholders to make sure you include their concerns and track their risks.
In addition, you have to realize that the size of your risk register will most likely depend on the complexity of your project, you have to make sure you and your team exhaust all areas of potential risks so that there won’t be any unwelcome surprises.
Your risk register will also let you vividly describe the potential risks you have identified. The thorough description of each potential risk will help you prepare should it arise. Aside from that, being too vague on the description of what the risk could entail will result to you and your team having a hard time identifying if the risk has become a reality. In addition, the capacity of the risk register to clearly and thoroughly describe each risk will result to having the appropriate and most effective actions to help solve such risks, thus, preventing it from becoming the reason for the failure of the project.
The risk register will also let you measure the severity of the impact of each risk. Since you have effectively identified the potential risks that can affect your project and you have thoroughly described each risk, you can then proceed to measure how much of an impact each risk can bring to your project should they become realities. You can foresee the damage it can bring should it be not effectively resolved. Including all the details relevant to the impact a risk can influence your project will let you determine and measure the impact it can bring to your project. Aside from that, it will let you know which risks should be addressed as soon as possible with regards to their severity.
Since you have a clear idea on the severity of the impact a risk can bring to your project, you will also have an idea how to effectively respond to it. You will have the knowledge on what actions are the most appropriate to take. In addition, you will also be able to choose the most cost-effective and efficient actions to help solve the issue brought about by the risk. This will make sure each risk is given the appropriate action based on its description and impact. Your risk register will be able to help you with this since a column is made especially for the actions needed to handle each risk.
As mentioned earlier, the severity of the impact brought about by each risk will hep your prioritize which risks to handle first. Since you will be determining the level of each risk from high, medium to low, you will be able to clearly identify which risks to address first. You have to bear in mind that you have limited time and resources when you are implementing a project, therefore, you have to be able to know which risks are okay to set aside and which to put in front. Your risk register will give you the opportunity to review the aspects that will help you decide which risks to prioritize and which to handle when there is enough time and resources.
When implementing a project, you assign different people depending on their expertise on the various aspects that a project consists. This will also be the case in assigning risks in your risk register; the person more accustomed and originally assigned on that aspect of the project should also be in charge of handling the risks that may or has occurred on that end. This is a very valuable capacity that a risk register allows you to do; if there is no person in charge of handling each potential risk, you may not know about the occurrence of such risk until it becomes unsolvable and irreversible.
Your risk register will also allow you to note the information that may not fit under the categories that may be in your risk register. It will allow you to list the information that you may think is relevant and important in the risk management of your project but simply does not belong in the other categories. Should the need for such information come, you can easily review your risk register.
There is no standard list of components that needs to be included in a risk register; however, there are recommendations from the Project Management Institute Body of Knowledge and other organizations. The components of your risk register will depend on the nature of your project as well as the concerns of your company or organization. Here is a list of some of the most common components found in a risk register:
It is important to remember that what has been listed here as the components of a risk register are only some of the possible components. There can be other components or elements such as Risk Trigger, Residual Risk, Existing Controls, Inherent Rating, etc. It is only up to the project managers and the others involved to decide what other components or elements they think is appropriate to include in their risk register.
After all that discussions, this part of the guide will now teach you how to create a strong risk register. There are three necessary steps in creating a strong and effective risk register:
Depending on what you are used to, there can be quite a few ways to effectively identify a risk in a project development and implementation. Here are some of the most important techniques you can apply to develop a listing of risks:
The last step in making a risk register is developing the risk response plan. There are several ways to react if a risk ever occurs during your project. Here are some ways to respond to risks identified in a risk register:
A risk register is a useful and effective tool that can help those involved in a project have the right mind-set when dealing with risks during the course of the project. Since a risk register contains all information pertaining to potential risks that may arise, it can help the people involved decide on what the appropriate actions should be taken in order to solve such risks. We hope that you learned about risk registers with the help of this guide, and may you find use with the given examples.