Business Success through Project Risk Management
Any business is a kind of project. Any project encounters a portion of risk. If we link business management to project management, then we’ll get a framework for ensuring business success through project risk management. I know that many successful business owners and entrepreneurs understand and follow this sound idea. They realize that their business initiatives are best managed as projects, because project management offers a great set of tools for identifying, analyzing and responding to business risks and opportunities. In this article, let’s about business success and how it can reached with effective project risk management. If you have something to say about this matter, please leave your comments at the end. Thanks.
Business Success: What is it?
The success in a business can be defined as something that makes the owner feel satisfied or excited about the current state of his/her business. For most entrepreneurs, being successful means completing business goals and objectives under specific preset parameters such as time, cost, revenue, competition, image, recognition, and so on. Meanwhile, every business is specific and has certain peculiarities that make it different from other businesses. For example: an ecommerce business is successful if the traffic is monetized, SEO ranks tend to growing, page code is optimized. But for a bakery or service station all these attributes of online business success are not applicable. They obviously have some other parameters that define their success.
I regard business success as an ability to produce desired results within desired parameters. If you are able to accomplish your business goals and objectives, then most likely you know what success means for you and how to make your business successful.
Business Success is a kind of achievement in a business environment that characterizes a measurable and positive result produced upon completion of a desired business objective or goal under preset requirements (or success criteria). It is the reward a business owner gets as a result of the effort made to move the business towards a desired direction.
As it comes from this business success definition, there are two things that determine whether a business is successful or failed. These are goals and criteria.
Project Risk Management
Now let’s talk about managing risks in projects. Project management appears to be effective if project risks are responded. It means that the project manager needs to identify risks, distinguish between threats and opportunities, and then develop a responding strategy to mitigate threats and exploit opportunities.
Project Risk Management is the process of identifying, analyzing, and assessing risks to determine which risks are positive (project opportunities) and which ones are negative (project threats) and to develop a comprehensive programme or plan for mitigating the negative impact of the treats and exploiting the opportunities.
Managing risks in a project means ensuring that the project remains effective under the current state and will be effective in the future as well. The risk management process aims to make a project rather successful than failed.
There are several basic principles the risk management process should follow. They are:
- Being specific and targeted to the project
- Creating value to the project
- Being integral to the organizational process
- Addressing uncertainty and assumptions
- Being systematic and structured
- Using accurate information
- Being responsive to change
Managing Business Project Risks
Now let’s try to combine business success and project risk management. As I said above, business success is a combination of goals that are achieved under preset requirements or criteria. Risk management is an attempt to keep a project effective throughout the implementation lifecycle regardless of the problems and issues it encounters. Combining business management and project risk management means having the right understanding of the following:
- Business is a kind of project
- Any project is managed under the project management process
- Project risks should be managed under the rules defined by the process
- Business is successful when the project is effective and risks are responded
In other words, when you use project management to do your business, you gain a strong opportunity to reach business success because you have a great tool for managing business risks which actually appear to be project risks. Also: your business project is successful if it is effective.
When you learn to combine business management and project risk management, you get a new kind of management process, which is called “business project risk management“. The new process follows the mentioned principles of the risk management process and generates business success through mitigating project risks.
At the end of this article, I present my checklist of general tasks of the business project risk management process.
- Use project risk management as an integral part of your business management process. It is a best practice to identify the benefits your business gains as a result of effective risk management.
- Identify risks that surround your business project. Try to identify and include all potential risks that may either negatively or positively influence your business project. Examples of risks are: human threats, competition, procedural impacts, lack of funds, operational issues, natural events, political instability, others.
- Assign ownership to the risks. Think about what person (risk owner) in your company can be assigned to managing business project risks. It must be an expert who knows project management and clearly understands the current situation with your business.
- Assess and prioritize the risks.
You must involve the risk owner in the evaluation of all possible risks to describe their impact to the company and set up priority. You can create a risk scoring matrix that explains what risks affect the company with what amount of impact.
- Analyze the risks. Now you and the risk owner need to analyze the prioritized risks to determine their likelihood. You can make a risk simulation model that illustrates how every risk affects your business project success.
- Respond to the risks. Finally using the results of the risk analysis you need to develop a response strategy that effectively mitigates the risks and exploits the opportunities.
Once the strategy is developed, you must be sure that follows the 4C Rule and addresses all the risks that have been identified and analyzed. For this purpose you can create the risk register which illustrates the threats and opportunities of your business project. Then you need to regularly update this register to keep your strategy relevant to the real business project situation.